Taxpayers United of America’s (TUA) Director of Operations, Jared Labell, was quoted by Madison Record about the recent State University Retirement pension data analysis.
Former Southern Illinois University-Edwardsville chancellor David Werner is among the highest paid beneficiaries of a state pension system that has $22.4 billion in unfunded liability.
Werner, who retired at age 62 in 2004, receives $252,704 in benefits annually from the State Universities Retirement System (SURS). To date, he has collected $2,487,936. He contributed a total of $246,018 into his retirement. At age 85, he will have received $5,724,518 in payments – 95 percent of it from taxpayers.
In its analysis of a pension fund that benefits state university staff, administrators and faculty, Taxpayers United of America (TUA) says that SURS is in “dire need” of reform.
TUA director of operations Jared Labell said that individual SURS’ retirees are some of the highest paid state employees, and therefore are the biggest pensioners.
Labell noted that for every dollar a SURS government employee contributed to their own retirement, taxpayers matched with a subsidy of $4.67.
He said that last year, a SURS financial officer warned that the system faces a risk of having assets depleted in less than 10 years.The investment official, Daniel L. Allen,, wrote in a memo that Investment policy alone could not close the plan’s deficit because it is “too large.”
While there are 69,381 active members in the politically controlled SURS defined-benefit plan, there are approximately 12,000 active members of a self-managed retirement plan that is similar to a 401(k) style plan.
Labell said the self managed plan, which has been offered to state university employees for nearly two decades, gives government employees more power over their own retirement savings fund.
He said that the self managed plan makes “retirement costs more sustainable over time, and protects taxpayers from budgetary uncertainty from year to year.”
“If the (self managed plan) 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,” Labell said.
• 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 percent 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 percent, or $593,600,000;
• In fiscal year 2015, taxpayers paid $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; and
• At the end of fiscal year 2015, SURS had a 42.37 percebt funded ratio with a $22.4 billion unfunded liability.
“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,” Labell said.
“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.”
In its press release, the TUA listed the top 200 beneficiaries. Werner was 55th on the list.
At the number one spot was retired professor of oral and maxillofacial surgery from the University of Illinois-Chicago, Dr. Leslie Heffez, who collects $564,298 in annual benefits. Heffez retired at 55, and his accumulated pension payout is estimated to be $22.3 million.
“Without systemic reforms, the problem of government pensions will only get worse over time,” Labell said.
“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.’”