For every dollar that an employee enrolled in the State Employee Retirement System (SERS) pays into their own retirement fund, taxpayers are forced to pay $6.78, according to analysis conducted by a taxpayers' watchdog group.
“Taxpayers are forced to pay 678% more than the multi-millionaire pensioners pay into their own SERS pension fund annually," said Jared Labell, Taxpayers United of America's (TUA) director of operations.
In its ongoing review of the state's various under-funded pension plans and its calls for systemic reforms, TUA last week issued a report listing the top 200 SERS government retirees, all of whom receive in excess of $118,000 in benefits annually.
Topping the list with a $207,623 annual pension is psychiatrist Sadashiv D. Parwatikar, retired from Chester Mental Health Center. Parwatikar already has collected $2,207,725 in benefits.
"The accumulation of those (Parwatikar's) payments, over a normal lifetime, will reach about $3.8 million," Labell said. "Personal contributions to that gold-plated pension were only $121,041.”
He also stated that SERS, the third largest of the government employee pension funds in Illinois, is "critically underfunded" at 35.27 percent. Only the General Assembly Retirement System (GARS), which state legislators benefit from, fares worse in funding at 16.4 percent.
The TUA found that the total number of SERS pension beneficiaries is approximately 66,465. It also found that:
• 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 social security);
• The average amount that employees paid into their own pension fund is $36,269, or 3 percent of their estimated lifetime pension payout;
• The average estimated lifetime pension payout is $1,038,456 (social security 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 percent, or $681,377,052; and
• As of the end of fiscal year 2015, SERS had a 35.27 percent funded ratio with a $28 billion unfunded liability.
The TUA has been outspoken in its criticism of the "political class" which has favored political expediency over fixing the pension funding shortfall problem.
Labell placed blame for problems on "pressure from government sector unions to maintain the system for their own benefit and at the expense of the majority of taxpayers," as well as "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."
He said that law makers and judges have a vested interest in sustaining government pensions because they too will receive multi-million payouts, even though their pension funds are poorly managed. Their pension funds are two of the worst funded in Illinois.
Funding of the state's pension systems in order of best to worst:
Illinois Municipal Retirement Fund - 87.3 percent
State University Retirement System - 44.1 percent
Teacher Retirement System - 42 percent
Judicial Retirement System - 35.4 percent
State Employee Retirement System - 35.27 percent
General Assembly Retirement System - 16.4 percent
The state's total unfunded pension obligations are estimated at between $111 billion and $113 billion.
"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.”
In its analysis of the top 200 SERS pensioners, the TUA found that Cindy L. Benson, retiring from Personal Services – Sworn, ties with her counterpart, James C. Morrisey, for the highest estimated lifetime pension payouts of its study. Both retired at age 50 and each could collect more than $7.6 million in taxpayer funded pension payments over the course of their retirement. Their current annual pensions are $125,539.
Kamal Modir, who retired from Singer Mental Health Center in Rockford, tops the TUA 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 percent - of his estimated lifetime pension payout," said Labell.
The TUA, as well as other pension reform advocates, support changing public pension systems from the current defined-benefit system to 401(k) style retirement savings accounts - which could only happen by amending the state constitution to remove the employee pension protection clause.
Recent attempts at pension reform have failed. A bill passed by the state legislature in 2013 was struck down by the Illinois Supreme Court last year when it sided with public unions in ruling that the state was obligated to protect public worker pensions.
Legislation introduced by Republican lawmakers this session would give retired government workers a choice in collecting benefits over several years, or cash out immediately but with a smaller lump sum. The bills remain under consideration in the House Personnel and Pensions Committee.