Six-Figure Pension Payouts Soar
Over the past year, the number of government retirees in Illinois drawing a yearly pension of $100,000 or higher has ballooned by more than 18 percent, putting added pressure on the state’s underfunded pension systems, a new analysis shows.
The number of government retirees getting six-figure retirement payouts grew to 14,320 – up from 12,056 the year before.
Those getting six-figure pensions include retired cops, lawmakers, judges, teachers — and an oral surgeon from the University of Illinois at Chicago believed to be the state’s only half-million-dollar-a-year government pensioner. Leslie Heffez, 59, a former UIC professor now in private practice in Highland Park and Chicago, is believed to have the highest public-employee pension in the state — $547,862.
That’s according to an analysis of the Better Government Association’s online pension database of more than 459,000 people in the state’s 16 largest government retirement funds, including those for state, county and city government employees.
The number of government retirees who, like Heffez, are collecting pensions of $300,000 a year or more nearly doubled last year — to 23, up from 12.
Seven get at least $400,000, according to the analysis.
If Heffez lives another 22 years — the average life expectancy for a man his age — his pension would top $1 million a year, and he would have collected a total of more than $19 million from the State Universities Retirement System, the analysis found.
Pension records show his contributions to the retirement system totaled $768,610.
Heffez didn’t return messages. SURS officials had no comment.
Speaking generally about the increase in six-figure pensions, Tim Blair, executive director of the State Retirement Systems, says, "Any time you increase the out-go of these funds . . . it makes a bad situation worse."
The State Retirement Systems consists of three pension plans – the largest covering state government retirees, with $14 billion in assets and 767 people collecting six-figure pensions.
The increasing number of lucrative pensions isn’t the main reason that pension funds for government employees are facing major shortfalls, though, says Tony Martin, secretary of the Firemen’s Annuity and Benefit Fund of Chicago — Chicago firefighters’ pension fund.
"It’s a multidimensional problem," says Martin. "You can’t just blame the benefits."
Illinois’ unfunded pension liability tops $111 billion, Cook County’s is more than $6 billion and Chicago’s is nearly $30 billion, records show.
Chronic underfunding by governments, investment losses and generous annual cost-of-living increases are also to blame, pension experts say.
Even with the growing number of six-figure pension payouts, most government retirees get relatively modest pensions. In the Illinois Municipal Retirement Fund, for instance, the average yearly payout is $14,265, according to the analysis.
The number of retirees collecting six-figure payments in 2015 is roughly 3 percent of the 459,139 public-employee pensioners in the 16 big funds. Yet that tiny pool soaks up a lot of cash — $1.7 billion, or 11 percent of this year’s total pension payout of $15.6 billion, according to the analysis.
- A majority of the six-figure pensions – 72 percent of them — were concentrated in two state funds: SURS and the Teachers’ Retirement System of Illinois. A total of 10,341 retirees getting those big pension payouts were members of SURS or TRS. The university system has just 42 percent of the money it’s estimated to need to cover long-term retirement obligations. TRS — the retirement plan for suburban and downstate teachers — is 41 percent funded.
- The state’s judges pension system and the General Assembly Retirement System had the highest percentage of retirees collecting six-figure pensions (48 percent), followed by the Metropolitan Water Reclamation District of Greater Chicago fund (11 percent) and TRS (6 percent).
- Beyond the 16 big funds, there are hundreds of smaller public-sector pension plans covering retired suburban and downstate police officers and firefighters. Among their largest pension recipients: Retired Niles Fire Chief Harry Kinowski, drawing $141,988 a year in pension benefits, and Frank Marzullo, Berwyn’s retired public safety director, getting $139,995.
- At $298,000, Edward Andersen has the highest pension in the Illinois Municipal Retirement Fund, which covers suburban and downstate municipal employees. Andersen was president and chief executive officer of CGH Medical Center, a 99-bed hospital owned and operated by the municipal government in downstate Sterling.
- Former Bellwood village official Roy F. McCampbell has the second-highest IMRF pension at $257,000. McCampbell is now under indictment, charged with stealing more than $500,000 from village coffers.
State lawmakers passed sweeping pension reforms, signed by then-Gov Pat. Quinn in December 2013, that would have raised the retirement age, limited cost-of-living increases and imposed caps on pensionable salary for state government workers.
But unions sued, and, in June, the Illinois Supreme Court agreed with them that the law violated the state constitution’s pension-protection clause.