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+--- Thread: Retiree Gets $224,000 Pension For 18 Years Worked (/showthread.php?tid=1075)
Retiree Gets $224,000 Pension For 18 Years Worked - ClassicalLib17 - 07-19-2010
This is the norm in our bankrupt, corrupt, inept state and local governments.
Retiree Gets $224,000 Pension For 18 Years Worked
Posted: July 14, 2010
By Bill Zettler
Why Illinois Pensions Are in Trouble: $29,238 Gets You $3.5 Million in Pension Payments.
You don't have to work long in the Illinois public schools to get multi-million dollar pensions. For example there is John Conyers who worked in Illinois at Palatine Elementary District 15 for 18 years and now has a pension of $224,006 per year after retiring in 2003.
Conyers actually retired with 30 years "Service Credit" although he only worked 18 years in Illinois. He did this through a state pension process called "Purchased Optional Credit." Under this plan you can use your work years and salaries in another state, pay a discounted contribution and use those years, up to 10, in calculating your pension.
Of course, any discount to a public employee is an additional tax on Illinois taxpayers. And this one is a very big tax.
He also used about 2 years of sick leave credit.
So work 18 years, take 2 years sick leave credit and 10 years Optional Credit and you get a $224,000 pension.
Let's examine how much this costs Illinois taxpayers over the retiree's expected lifetime.
First his outrageous salary schedule - 58% increase over 3 years:
2000 - $223,000
2001 - $250,000
2002 - $300,000
2003 - $353,000
So he has 30 years service credit (only 18 work years) at 2.2% per year or 66% of the average of his last four years or about $185,000 pension to start with, increased by 3% per year leaves him with $224,000 pension today.
If he had received his pension only on the 18 years he actually worked his starting pension would have been about $110,000, bad enough but a lot better than $185,000.
So how much did Mr. Conyers have to pay to increase his pension by $75,000/yr? Exactly $29,338.27, less than one-half of the first years increase. What a good deal for Mr. Conyers! What a terrible deal for Illinois taxpayers.
The total pension payout over a 30-year life expectancy including the automatic COLA of 3% for a starting pension of $185,000 is $8.8 million and for a starting pension of $110,000 is $5.3 million, a difference of $3.5 million for an investment of $29,238.37.
I don't want you to think I am picking on Mr. Conyers. Mary Van Der Bogert worked 13 years for Winnetka SD 36 and now has a pension of $164,000 after getting two years credit for sick leave and buying 7 years credit for $34,000. Those credits are worth about $3 million in extra pension payments over a 30-year life expectancy.
In all, 80 K-12 retirees worked less than 30 years for $100,000+ pensions.
What public good is served by paying out $3 million pensions for $30,000?
There is certainly a personal good but where is the public good? What exactly is the justification for making people multi-millionaires with public tax dollars? Are there not better public purposes for the $3 million (on top of $5 million, remember) than adding to the wealth of an already vastly over-compensated public employee?
Homeless shelters are bursting at the seams, food pantries are empty and services for poor seniors are cut by $48 million but we can find $3 million to add to a $5 million pension for someone from Colorado who lived in Illinois for 18 years?
What the next governor should do.
The next governor needs to stand up and say that paying excessive salaries and pensions to public employees is immoral. That is not the proper or fair use of taxation nor does it do what taxation should do: provide for the common good.
The old, the sick and the hungry deserve the benefit of those taxes for that is truly providing for the common good. Using those taxes to enhance the multi-million dollar pensions of public employees who only spend a fraction of their careers in Illinois is in fact an immoral use of those tax dollars.
And he needs to emphasize the lack of transparency. Why are transactions like this not pubic knowledge? Why do we have to tweeze these facts out of decadal old bureaucratic archives to bring them to the public's attention? Could it be that politicians and bureaucrats don't want us to know? Of course they don't. This is evidence of nonfeasance at best, malfeasance at worst.
Bill Zettler is a free-lance writer and consultant specializing in public sector compensation. He can be contacted at this email address. Click here to read more by Mr. Zettler.