Cullerton Pension Hiked a Year After Retirement

From The Center Square:

Op-Ed: Senate President John Cullerton set to collect $2M pension

Due to a pension sweetener available only to veteran Illinois lawmakers, Cullerton’s annual pension will soon be more than he ever made from his Statehouse salary.

Illinois’ second-longest serving lawmaker announced Nov. 14 that he will retire in January 2020.

But the departure of Senate President John Cullerton, D-Chicago, highlights one example of how pension sweeteners Illinois lawmakers passed decades ago are putting taxpayers on the hook for extravagant benefits today.

Cullerton is set to receive more than $2 million in state pension payments over the course of his retirement, should he live to age 85. He will take home nearly $4.2 million if he lives to age 95, which is $1.3 million more than he would have received without the special sweetener.

Here’s how it works:

Cullerton’s starting annual pension will be nearly $83,000, which is 85% of his final salary of roughly $97,600 a year.

For most state retirees, the next year of retirement would come with a 3% automatic pension increase, bringing Cullerton’s pension to $85,500 a year.

But in July 2021, Cullerton will see his pension checks explode to nearly $128,000 a year, a 54% increase.

How?

For each year he served at the Statehouse since 2003, when he turned 55 years old, Cullerton received an extra 3% increase to his eventual pension payment.

After retirement, all of those increases are then applied to Cullerton’s pension as part of his first cost-of-living adjustment.

Should Cullerton retire in mid-January, he will have collected 3% increases for 17 years, good for a 51% pension boost.

That will stack on top of his automatic first-year adjustment of 3%, coming to a total pension hike of 54%, according to his pension fund’s response to Freedom of Information Act requests.

After that, he will continue to see a 3% bump each year.

This little-known benefit comes from a 1989 bill sponsored by former state Sen. Emil Jones Jr., which allows lawmakers who were elected prior to 2003 to hoard pension “spikes.”

Cullerton, who was House Speaker Mike Madigan’s floor leader in the House at the time, was a member of the committee that finalized the bill. It passed both chambers with bipartisan support.

“(F)or those members of the General Assembly right now who … have maxed out … they are still contributing to that retirement system,” Jones told his colleagues at the time, according to the Chicago Tribune.

“So all this does is give them a little 3% on their own money.” He was referring to lawmakers who had already maxed out their pension at 85% of their salary.

The same bill established a 3% automatic cost of living adjustment for all retired state workers and Chicago city workers.

This benefit alone doubles a retiree’s pension in just 25 years.

Even without the special sweetener provision, the 3% automatic benefit increases would bump Cullerton’s annual pension to more than $120,000 by the time he turns 85.

Illinois public employees and lawmakers pay into their pension systems over the course of their careers.

But those contributions are quickly recouped, and often pale in comparison to the benefits.

Over his 40-year career in Springfield, Cullerton contributed a little over $277,000 to the General Assembly Retirement System.

He will make back that entire contribution in less than three years.

The pension deals offered to other workers have been just as generous, if not more so.

The average retired Chicago public school teacher makes back his or her career pension contribution after just five months of retirement.

The average career employee (30 years of service or more) in the Illinois State Employees’ Retirement System retires at age 56 and takes home a lifetime pension benefit of $1.7 million, while contributing just $54,700 over the course of his or her career.

The average career employee in the Illinois Teachers’ Retirement System retires at age 57 and takes home a lifetime pension benefit of $2.3 million, while contributing $113,500 to the system over the course of his or her career.

Across Illinois, overpromised retirement benefits have left residents with record pension debttax hikes and skyrocketing pension costs, which now account for a quarter of state spending.


Comments

Cullerton Pension Hiked a Year After Retirement — 5 Comments

  1. This was Senate Bill 95 (SB 95) which passed while Cook County Democrats Michael Madigan was House Speaker and Philip Rock (Oak Park) was Senate President.

    SB 95 was signed into law signed into law as Public Act 86-0273 (PA 86-0273) on August 23, 1989 by Republican Governor James Thompson.

    SB 95 > PA 86-273.

    The law has many other pension benefit hikes, passed while the state pensions (TRS, SERS, SURS, JRS, GARS) were underfunded, since the state pensions have always been underfunded.

    That hiked pension contributions, even though contributions were inadequate before the law.

    The law is also known as the Thompson Ramp, which preceded the Edgar Ramp.

    Ramp is another word for non actuarial employer contributions.

    Another chapter in the the Illinois Pension Scam saga.

    http://www.ilga.gov

  2. Isn’t Illinois pension math awesome?

    Is it legalized taxpayer theft?

  3. My sunshine blogger has been retired for about 140 years by now. Is there any information available out there about how much his sunshine pension is costing our honest, fiscally responsible, law abiding, family values, God-fearing, gun-clinging, suffering taxpayers? Any obsessive compulsive disorder loser out there who may want to entertain the masses with some irrelevant information? Stay tuned…335 days…tic, tock, tic, tock, tic, tock, tic, tock, tic, tock, meeeeeeeeoooooooooooowwwwwwwwwwwwww…

  4. In other words the five Illinois state pensions (TRS, SERS, SURS, JRS, GARS) have always been a Ponzi scheme.

    That’s because the State did not annually contribute enough money to cover the expected payouts, yet kept hiking salaries and benefits.

    The Illinois Pension Ponzi Scam.

    A Ponzi scheme is where new investor money is needed to cover payouts to previous investors.

    In this case the investors are Illinois taxpayers.

    TRS = certified teachers and certified administrators

    SERS = state employees

    SURS = university employees including community colleges

    JRS = judges

    GARS = General Assembly, which includes the State House and Senate and thus John Cullerton.

  5. A pension is a type of retirement plan that provides monthly income in retirement. Not all employers offer pensions. Government organizations usually offer a pension, and some large companies offer them.
    With a pension plan, the employer contributes money to the pension plan while you are working. The money will be paid to you, usually as a monthly check in retirement, after you reach a specific retirement age. A formula determines how much pension income you will receive once you are retired.
    The formula a pension uses is based on a combination of the following:
    Your years of service with the company offering the pension
    Your age
    Your compensation
    For example, a pension plan might offer a monthly retirement benefit that replaces 50% of your compensation (as measured by taking an average of your pay over your last three years of service) if you retire at age 55 and have at least ten years of service. With that same pension, if you work longer and retire at age 65 and have thirty years of service, the pension might provide a retirement benefit that replaces 85% of your compensation. More years usually means more money.
    Pension plans must follow specific rules set out by the Department of Labor. These rules specify how much the company must put away each year into an investment fund in order to be able to provide you a defined pension amount in the future.
    Your pension benefits will be subject to a vesting schedule which is an incentive program determines how much you would get depending on how long you have been with the company. For example, you may have to work for the employer a minimum of five years before you would be eligible to receive a pension. Your company determines in advance what this schedule will be, so check with the human resources person to find out how long you have to work there to get benefits. (Note: Any money you put in voluntarily is always vested immediately.)
    Most pension benefits are taxable. When you begin taking pension income, you’ll need to determine if you should have taxes withheld from your pension payment. If after-tax money was contributed to the pension, a portion may be tax-free. Sometimes with pensions paid due to disability, a portion of the benefit may be tax-free. These tax-free situations, however, are limited. It is best that you plan on paying taxes on any pension income you will receive.
    If your employer offers a pension, they can decide to terminate it. In such a situation your accrued benefit usually becomes frozen; meaning you will get whatever you’ve earned up to that point, but you cannot accumulate any additional pension income.
    In some cases, pension plans were managed poorly and were not able to pay out all of the promised benefits. If the pension plan was a member of the Pension Benefit Guaranty Corporation (PBGC) then in this circumstance, some benefits are protected for pension plan participants.
    The advantage of a pension plan is it provides guaranteed income. Unfortunately, many companies have stopped offering pension plans. This means the burden of saving for retirement falls on you. You must figure out how to save enough to create your own pension-like income in retirement.
    Most pension plans have been replaced by 401(k) plans which offer a variety of investment choices. Most 401(k) plans do not offer a way to invest in something that provides guaranteed income, however, new rules have allowed for something called a qualified longevity annuity contract (QLAC) within 401(k) plans. QLACs can provide guaranteed income to you in retirement. If your company offers this option you can invest in it to create guaranteed income for your retirement.
    To create your own future retirement income you’ll need to do several things:
    Figure out how much to contribute to your 401(k) plan if your company offers one.
    Contribute the maximum amount to IRA’s every year.
    Learn about other investment options that provide future sources of guaranteed income.
    One other option is to figure out how to get a pension by finding an employer that offers one.
    Please praise this prodigious research. Stay tuned…334 days…tic, tock, tic, tock, tic, tock, tic, tock, tic, tock, meeeeeeeeoooooooooowwwwwwwwwwww…

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