Pension Reform

Illinois’ SURS Schooling Taxpayers


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View as PDF CHICAGO—Taxpayers United of America (TUA) today released the results of their updated analysis of Illinois’ State Universities Retirement System (SURS).
“SURS is in dire need of significant pension reform, much like the other Illinois state pension funds. But since individual SURS retirees are some of the highest paid employees, and therefore biggest pensioners in Illinois, the need for reform is all the more serious for both beneficiaries and taxpayers,” said Jared Labell, TUA’s director of operations.
“Last August, SURS Chief Investment Officer Daniel L. Allen sounded the alarm about the pension fund’s long-term solvency in a memo regarding their 2016 investment plan, writing, ‘SURS faces the real risk that the assets could be depleted in less than 10 years,’ adding, ‘Investment policy alone cannot close the SURS plan deficit. The deficit is too large.’ Although the narrative from government employees, union bosses, and likeminded politicians relies heavily on calls for more taxpayer funding due to skipped or decreased payments from the state, Mr. Allen points out that this is not so in this case, noting, ‘that since (fiscal year) 2011, SURS has received the full annual statutory contribution from the state of Illinois.’ So what’s wrong with SURS? It relies heavily on a defined benefit system that is costly for taxpayers and detrimental to Illinois’ overall financial health,” said Labell.

  • Total number of 2016 SURS pension beneficiaries is approximately 62,792.
  • 3,955 collect pensions in excess of $100,000.
  • 15,628 collect pensions in excess of $50,000.
  • The average 2016 annual SURS pension is $35,751.
  • The average amount that employees paid into their own pension fund is $48,764, or 5% of their estimated lifetime pension payout.
  • The average estimated lifetime payout is $947,211.
  • The average age at retirement is 61.
  • The average years of employment are 18.
  • The net return on investment for SURS in fiscal year 2015 was only 2.9%, or $593,600,000.
  • In fiscal year 2015, taxpayers were forced to pay $1,590,900,000 into the government pension fund.
  • In fiscal year 2015, SURS government employees paid $340,000,000 into their own pension fund.
  • At the end of fiscal year 2015, SURS had a 42.37% funded ratio with a $22.4 billion unfunded liability.

“Taxpayers were forced to pay 467% more into the SURS pension fund than the multi-millionaire SURS retirees paid into their own government pensions. That means that for every dollar that an SURS government employee contributed to their own retirement, taxpayers were forced to match them with a subsidy of $4.67.”
“For nearly two decades, Illinois has offered state university employees a self-managed retirement plan (SMP), similar to a 401(k), alongside the standard defined benefit plan controlled by politicians. The SMP gives government employees more power over their own retirement savings funds, makes retirement costs more sustainable over time, and protects taxpayers from budgetary uncertainty from year to year. The SMP active membership totals of 11,928 are far lower than the 69,381 active members in the old defined benefit plan, but if the SMP option was given to all current state employees and mandatory for all new hires, this one reform would go a long way in improving Illinois’ unfunded government pension liabilities.”
“As funding shortfalls accrue for SURS and the other government pension funds, Illinois’ political caste will be to blame for the bankruptcy of their constituents and the eventual reduced benefits for pensioners. Continuing the defined benefit pension system in Illinois guarantees that a constitutional crisis will ultimately erupt between the state constitution’s pension protection clause and the insolvency of the pension funds. The unions, bureaucrats, and politicians will argue for expanding the tax burden of Illinois residents to fund their pensions, but tax hikes and cutting of services will not solve this problem, only systemic reform will,” said Labell.
Leslie Heffez DMD, MS, FRCD, a retired Professor of Oral & Maxillofacial Surgery from the University of Illinois – Chicago, collects an incredible $564,298 annual pension. Retiring at only 55 years old, his total accumulated pension payout will be more than $22.3 million. Dr. Heffez tops our list for both the largest annual pension and estimated lifetime pension payout of our study. Over a normal lifetime, Dr. Heffez will collect almost double the estimated lifetime pension payout of the runner-up on our list, Clarence Bowman, former President of Illinois State University, whose estimated lifetime pension payout is nearly $12 million.”
Tapas Das Gupta, MD, Professor and Head of the Department of Surgical Oncology at University of Illinois – Chicago, no longer tops our list with the top annual pension. However, Dr. Das Gupta is number one in our study for having collected the largest pension to date, totaling nearly $4.8 million. Dr. Das Gupta was only briefly retired years ago, however, as the university rehired him after waiting the required 60 days. Taxpayers now pay for his nearly half a million dollar pension while he collects a salary and remains employed by the government.”

“Without systemic reforms, the problem of government pensions will only get worse over time. This is due to numerous factors, including the pressure from government sector unions to maintain the system for their own benefit, at the expense of the majority of taxpayers; the legal precedents that have been codified into law to uphold this unsustainable system; and the legislators who find it politically expedient to preserve the status quo.”
“What many in the political class don’t seem to understand is that there is a breaking point, and eventually ever-higher tax increases will cause taxpayers to leave their city, county, or state for areas that are more economically friendly – commonly referred to as ‘voting with your feet.’ We know this to be the case by looking at recent history, as former Gov. Quinn’s 67% state income tax hike in 2011 encouraged taxpayers to flee Illinois in droves to neighboring states like Indiana and Wisconsin, as well as Texas and Florida, according to U.S. Census Bureau data. And data released last week shows the Chicago area decreased in population last year for the first time since at least 1990, which is a horrible indicator of what’s to come for Chicago in the future, and Illinois in general, if the financial situation and government pension crisis is not dealt with soon,” concluded Labell.
*Lifetime estimated pension payout includes 3% COLA (simple interest) and assumes life expectancy of 85 (IRS Form 590).

Illinois’ SERS – Unchecked State-Sponsored Theft


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View as PDF CHICAGO—Taxpayers United of America (TUA) today released the results of their updated analysis of Illinois’ State Employees’ Retirement System (SERS).
“SERS is the third largest of the government employee pension funds in Illinois, but in some ways, it’s even more efficient at stealing wealth from hard-working taxpayers for the benefit of the politically privileged,” stated Jared Labell, TUA’s director of operations. “Not only does SERS guarantee a 3% cost of living adjustment (COLA) compounded annually, but it also guarantees additional confiscation of taxpayers’ dollars through Social Security, and in some cases, Medicare.”
“Every annual pension featured on our list of the top 200 SERS government retirees exceeds $118,000. These retired government employees are set to collect multi-million dollar lifetime pension payouts that are largely taxpayer-funded. SERS, in line with Illinois’ irresponsible fiscal record, is critically underfunded at only 35.27%. SERS falls way short of even the commonly used standard to determine the overall health of a pension fund, a funding ratio of 80%. The optimal funding ratio is, of course, 100% or greater over a reasonable period of time, but SERS fails at meeting that reduced measurement by a large margin.”

  • Total number of 2016 SERS pension beneficiaries is approximately 66,465.
  • 880 collect pensions in excess of $100,000.
  • 13,960 collect pensions in excess of $50,000.
  • The average 2016 annual SERS pension is $35,568 (Many retirees also collect SS).
  • The average amount that employees paid into their own pension fund is $36,269, or 3% of their estimated lifetime pension payout.
  • The average estimated lifetime pension payout is $1,038,456 (SS not included).
  • The average age at retirement is 60.
  • The average years of employment are 24.
  • In fiscal year 2015, taxpayers were forced to pay $1,804,319,356 into the government pension fund.
  • In fiscal year 2015, SERS government employees paid $266,139,156 into their own pension fund.
  • The net return on investment for SERS in fiscal year 2015 was only 4.79%, or $681,377,052.
  • As of the end of fiscal year 2015, SERS had a 35.27% funded ratio with a $28 billion unfunded liability.

“Taxpayers are forced to pay 678% more than the multi-millionaire pensioners pay into their own SERS pension fund annually. This means for every dollar that an SERS government employee pays into their own retirement fund, taxpayers are forced to pay $6.78!”
“Taxpayers have paid more than their fair share for these lavish government employee benefits, and yet the unions, bureaucrats, and politicians continue to push for expanding the tax burden of Illinois residents to fund their pensions, instead of calling for reform to this broken system,” said Labell. “As shortfalls in the funding of these government pensions mount, the political class in Illinois should expect nothing short of bankruptcy of their constituents to guarantee these egregious pension payments continue. After all, the Illinois state constitution currently protects only the government pensioners, and not the taxpayers, so there is undoubtedly a lopsided caste system in Illinois, created and expanded over many decades for the benefit of the minority of Illinois residents who are employed by the government.”
“For private sector retirees, the maximum Social Security payout for 2016 is $31,668, and there are no cushy, automatic cost of living increases in Social Security benefits for taxpayers that compare to those received by retired government employees. And let’s not forget, nearly all SERS members also receive Social Security benefits in addition to their gold-plated pension payments highlighted in our study,” said Labell.
“We need political courage in Springfield to halt this rapidly growing government pension debacle. Without overstepping the constitutional limitations for reform, the Illinois General Assembly could offer legislation that would immediately place all new hires into individual retirement savings accounts, like a 401(k), and enact the legislation required to allow bankruptcy of municipalities and retirement funds as a way of beginning to protect taxpayers from decades of financially problematic policies.”
“Today’s taxpayers should not be required to pay for services rendered years ago, just as bureaucrats and politicians should not be allowed to balance today’s budgets on the backs of tomorrow’s taxpayers. Reforms are unquestioningly necessary. Reform will benefit all Illinoisans economically if the tax burden and unfunded liabilities are diminished before more benefits and services are cut to perpetuate the current unsustainable government pensions.”
Sadashiv D. Parwatikar, retired from Chester Mental Health Center, tops our list with a stunning $207,623 annual pension! The accumulation of those payments, over a normal lifetime, will reach about $3.8 million. Personal contributions to that gold-plated pension were only $121,041.”
Cindy L. Benson, retiring from Personal Services – Sworn, ties with her counterpart, James C. Morrisey, for the highest estimated lifetime pension payouts of this study. Both retiring at only 50, they could each collect more than $7.6 million in taxpayer funded pension payments over the course of their retirement. Their current annual pensions are a very cushy $125,539!
Kamal Modir tops our list for the highest total SERS pension collected to date at $2,652,929. His own payment into this extravagant government pension was a mere $101,605 – or 2.5% – of his estimated lifetime pension payout.”

“Real reform must start immediately to halt the unfunded government pension liabilities, which grow exponentially as long as the status quo is maintained. Ousting politicians who answer to union thugs, rather than the taxpayers they are elected to represent, is also key to transforming Illinois from a financial pariah to an economic phoenix. Kicking political bosses out of office, like House Speaker Michael J. Madigan, who pushed for the government pension protections in the 1970 Illinois Constitution, as well as his likeminded cronies, is critical if taxpayers want to see substantive changes in the state government and our economic climate,” concluded Labell.
*Lifetime estimated pension payout includes 3% COLA (simple interest) and assumes life expectancy of 85 (IRS Form 590). Nearly all SERS pensioners also receive Social Security benefits in addition to their SERS

IMRF – The Gold Standard in Taxpayer Abuse


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View as PDF CHICAGO—Taxpayers United of America (TUA) today released the results of their updated analysis of Illinois Municipal Retirement Fund (IMRF).
“The IMRF, although touted as the gold standard in government pension funds, is just as efficient at stealing taxpayer wealth to benefit the political elite as any Illinois State pension fund,” stated Jim Tobin, TUA president.
“The entire list of the top 200 IMRF annual pensions exceeds $116,000 with multi-million dollar lifetime payouts that are largely taxpayer funded. Although the IMRF is adequately funded, that doesn’t make it fair to taxpayers, especially considering that the total unfunded liabilities for Illinois government pensions is far in excess of $111 billion.”
“All of these top 200 ‘poor civil servants’ collected salaries of at least $100,000 with some as high as $400,000. Nearly all IMRF employees are also eligible for Social Security benefits in addition to their IMRF pensions,” added Tobin. “Let’s not forget that 80% of municipal taxes, including property taxes, go to pay government employee salaries, pensions, and benefits.”

  • Total number of IMRF pension beneficiaries is approximately 119,556.
  • 478 collect pensions in excess of $100,000.
  • 5,916 collect pensions in excess of $50,000.
  • The average 2014 annual IMRF pension is $17,268.
  • The average amount that employees paid into their own pension fund is $19,030, or 4.6% of their estimated lifetime pension payout.
  • The average estimated lifetime payout is $411,998*.
  • The average age at retirement is 62.
  • The average years of employment are 18.
  • In fiscal year 2014, taxpayers were forced to pay $923,382,825 into the government pension fund.
  • In fiscal year 2014, local and county government employees paid $351,089,445 into their own pension fund.
  • The net return on investment for IMRF in fiscal year 2014 was only 5.8%, or $2,001,440,028.
  • As of the end of fiscal year 2014, IMRF had an 87.3% funded ratio with a $4.8 billion unfunded liability.

“Taxpayers are forced to pay $2.63 for every $1 the multi-millionaire pensioners pay into their own IMRF pension fund annually, or 263%. I can’t think of a single private sector employer who does that. Social Security payments by the employer are an equal match to employee payments. You won’t see any gold-plated, multi-million dollar Social Security lifetime payouts. The maximum Social Security payout for 2016 is $31,668, and there are no cushy, automatic cost of living increases in Social Security benefits. And again, let’s not forget that nearly all of IMRF members also get Social Security payments in addition to the pension payments highlighted in our study.”
“Until all government employees are moved from the current defined-benefit pension system to 401(k) style retirement savings accounts, the system will remain unsustainable and unfair to taxpayers. But this type of positive, sweeping reform cannot occur without first amending the Illinois Constitution by removing the government employee pension protection clause. However, the Illinois General Assembly could immediately require that all new government employees be placed in a 401(k) style defined-contribution plan, which would eliminate additional unfunded government pension liabilities immediately.”
“Today’s taxpayers should not be required to pay for services rendered years ago, just as bureaucrats and politicians should not be allowed to balance today’s budgets on the backs of tomorrow’s taxpayers. Let’s make necessary reforms that will benefit all of Illinois economically and finally do something that actually is ‘for the children.’”
“To help the average taxpayer understand the problem, we list the names of the pensioners and the amounts they collect in retirement,” added Tobin. “It really hits home when people see the names of their local ‘civil servants,’ people in their community that they know at least by name, and the outrageous amount of taxpayer dollars they collect in retirement while doing absolutely nothing.”
“Edward A. Anderson, retired from CGH Medical-Sterling, tops our list with a mind-boggling $306,621 annual pension! The accumulation of those payments, over a normal lifetime, will reach about $6.2 million. His contribution to that gold-plated pension was only $312,570.”
“Roy F. McCampbell tops the list for estimated lifetime pension payouts. Retiring at only 56 from the Village of Bellwood, he could collect more than $6.8 million in taxpayer funded pension payments. His current annual pension is a very lucrative $263,809. He collects this wealth from taxpayers in a community where 12.8% of the population lives below the poverty level and the per capita income is only $20,395!”
“Albin D. Pagorski tops our list for the highest total IMRF pension collected to date at $3,083,099. His own payment into this extravagant government pension was a meagre $93,910 or 2% of his estimated lifetime pension payout.”

“Illinois House Speaker Michael J. Madigan, AKA: Boss Madigan, has had the Illinois taxpayers in his death grip for far too long. Every taxpayer needs to vote in the upcoming Illinois Primary on March 15, 2016 and vote out every incumbent who has played a role in taxpayer abuse, stripping wealth from us to put in the pockets of the government retirees. The constitutional protection of this redistribution of taxpayer wealth is criminal,” charged Tobin. “The only way to enact real reform is to oust the guilty parties who answer to union thugs, rather than the taxpayers they are elected to represent,” he concluded.
*Lifetime estimated pension payout includes 3% COLA (simple interest) and assumes life expectancy of 85 (IRS Form 590). Nearly all IMRF pensioners also receive Social Security benefits in addition to their IMRF pension. Any blank spaces in the data are intentional and due to government redactions or withheld data points in response to Freedom of Information Act requests.

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Taxpayers United Of America: (TUA). is a nonpartisan, 501(c)(4) taxpayer advocacy group. Founded June 27, 1976 in Chicago, Illinois by activist and economist Jim Tobin, TUA works on behalf of taxpayers to reduce local, state, and federal taxes. In the past forty years, TUA has saved taxpayers more than $200 billion n taxes and has become one of the largest taxpayer organizations in America. Check All posts. s.

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