Legislative Pension System Most Underfunded

From The Center Square:

Even if underfunded lawmaker pension system ends, taxpayers still on the hook for $320 million

(The Center Square) – The Illinois General Assembly Retirement System, or GARS, is only 16 percent funded. 

This could be the year lawmakers end it, but that will come with a cost to taxpayers.

Some incoming state lawmakers are opting out of the underfunded pension system for Illinois legislators.

“Holding elected office should be about serving the communities you represent, not collecting a lavish taxpayer-funded retirement through a pension system that is already seriously overburdened,” state Rep. Chris Bos, R-Lake Zurich, said.

Bos’ office said as of 2019, the average legislative pension was $64,408 annually, up from $47,061 in 2008.

The most recent audit of GARS from the Illinois Auditor General pegs the funding ratio at 16.48 percent.

That audit for the year that ended June 30, 2020, showed of the 176 potential legislators that could take part in the fund, there were only 124 active members in GARS.

There were 427 benefit recipients costing the fund $26.2 million for the year.

The net position of the fund was $63 million of a total of $382 million in overall liability, or just 16.48 percent funded.

It’s the worst-funded of the state’s five public employee pension funds.

Advocates for pension reform like Wirepoints President Ted Dabrowski say it’s time to end lawmaker pensions.

“If there’s one way to start pension reform it should be with their plans, we should move them to 401(k) style plans immediately,” Dabrowski told WMAY. “Pension checks may bounce in the future and these legislators have just dramatically failed to manage it.”

State Sen. Robert Martwick, D-Chicago, chairs the GARS board of trustees. He said the system doesn’t work as intended because very few lawmakers serve long-term in the General Assembly.

Lawmakers have to serve eight years to be vested in the fund, he said, and said some calculations show the average ranges from five years for House Democrats and under 3 years for House Republicans, as an

“So, we should find alternative methods for them to save and this could be some sort of deferred compensation/401(k)-style benefit and contributions to social security,” Martwick said.

The reality is even if the fund were to end today, taxpayers would still be on the hook for nearly $320 million of the unfunded liability for retired legislators, he said.

“We would have to find that money out of our budget and find a way to pay that off and cap it off, if we end the General Assembly Retirement System,” Martwick said.

“That doesn’t mean we shouldn’t do it.

“Maybe we’re at a point where it just makes sense.”

Even without the $320 million unfunded liability, Illinois taxpayers are still on the hook for more than $140 billion in unfunded liability from other public sector pension funds.

= = = = =

$320 million is not a small number, but when divided by $140 billion, it is a rounding error.

All state employees already have a deferred compensation option. It acts like a 401(k) and is called a 457 plan. When I worked for the Illinois Department of Central Management Services, that division was under my supervision. I promoted it to legislations, many of whom did not know it existed.

Many 401(k) plans have an employer match. I believe some public deferred comp plans do also.

In 1996, I think, as a GOP Spokesman on the Transportation/Public Safety Appropriations Committee, I was among those briefed at the end of the session on a proposed deal with the state employees union.

State employees would forego a raise for one year in return for an improved defined benefit pension plan.

I had just read the weekend edition of one of the St. Louis papers in which what Missouri was doing with regard to state employee pensions.

There a law had passed which provided for half of retired employees’ benefits to be define benefits and half to be defined contributions. (I do not remember if an employer match was included for the defined contribution portion.)

I told of the Missouri action and asked the Jim Edgar Administration briefer if we could not follow suit.

The answer was we could not because the deal had already been cut.

This was also the legislation which delayed payment of what was owed the pension fund that has been such a problem for at least the last ten years.

Finally, let me thank taxpayers for paying for my quite generous pension (my W-2 says it was $102,645.24 in 2020) and remind all that I was not in office when the 3% annual compounding bill was passed and signed by Governor Jim Thompson.


Legislative Pension System Most Underfunded — 3 Comments

  1. Taxpayers perhaps should be on the hook for the ORIGINAL amount of a yearly pension when the government person retired. Taxpayers should not be on the hook for the annual amounts added to a pension per the 3 percent cola.

    The cola must be abolished. It is grossly unfair to taxpayers who now work, or previously worked in the private sector and are collecting annual pensions of a fixed amount. Colas for pensions in the private sector are extremely rare.

    With a cola, a teacher who retired at age 55 will double his/her pension at age 80. This does not make sense and in no way can it be justified. Also, it is immoral.

  2. Typical Illinois politics.

    The answer was we could not because the deal had already been cut.

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