The Illinois Supreme Court ruled in May that pension benefits flowing to government retirees can never be “diminished or impaired.” A new investigation into state and local pension records reveals this ironclad protection can extend beyond the grave.
From 2010 to 2014, 11 of Illinois’ 15 largest pension funds paid out $2.2 million in pension benefits to more than 1,000 dead people. Those funds later tried to recoup the payments to deceased pensioners, according to a joint investigation by the Better Government Association and the Chicago Sun-Times. When including overpayments to workers on disability and workers who have lost their pensions because of felony convictions, 13 of the largest funds paid out nearly $3.5 million in improper pension benefits over the five-year period.
The most expensive single case occurred between 2004 and 2010, when $200,000 in pension payments was deposited into a bank account that had belonged to William A. Galvin Jr. A city of Chicago truck driver, Galvin died in October 2004.
Right now, Illinois’ government pension funds rely heavily on family members’ and health insurers’ reporting of pensioners’ deaths – a faulty and easily gamed system. Gov. Bruce Rauner in July signed legislation requiring the Department of Human Services to conduct a monthly crosscheck of its aid recipients with the death records kept by the Department of Public Health. The same requirement should extend to all state and local pension funds in Illinois.
The nation’s most severe pension crisis – which politicians have proposed solving through historic tax hikes – demands as much.
Illinoisans should also keep in mind that shoddy record-keeping in this area wouldn’t be such an issue if government employees were enrolled in 401(k)-style retirement plans rather than the antiquated defined-benefit plans provided to government workers currently.
Austin Berg is a writer for the Illinois Policy Institute.