Sen. Martwick, chair of Illinois Senate pension committee, actually talks about reforming lawmaker pensions (Part 1) – Wirepoints

By: Ted Dabrowski and John Klingner

It’s been several years since we’ve heard an Illinois Democrat talk pension reform, but in the last 30 days, Sen. Bob Martwick (D-Chicago) has mentioned the need for reforms twice.

The first time occurred in February when Martwick, who chairs the lawmaker pension fund’s board of trustees, told WMAY that the retirement plan for legislators doesn’t work as intended.

“Maybe we’re at a point where it just makes sense….We should find alternative methods for [lawmakers] to save. This could be some form of deferred compensation/401k-style benefit and contributions to Social Security.”

Martwick also shared concerns about what to do with the fund’s shortfall of more than $300 million. The state has no plan on how to deal with that shortfall, or the billions in unfunded pension debts at the state’s four other state-run plans – the ones that cover teachers, university workers, state employees and judges.

Wirepoints has often made the case that reforms in Illinois should start with the lawmaker pension fund, known as the General Assembly Retirement System (GARS). Specifically, along with other key reforms, GARS should be shut down and all new and current state legislators moved to a 401(k)-style plan going forward. Here’s why:

For one, lawmakers created the pension mess in Illinois, and they should take the lead in fixing it. Their own plan is one of the worst-funded in the country. GARS has just 17 cents for every dollar it needs today to ensure it can make its payouts in the future. It’s by far the most insolvent of Illinois’ five broken state-run pension plans.

Last year, GARS had just $63 million in assets to pay out nearly $28 million in annual benefits, meaning it had enough money to make payouts for just 2.3 years. To be healthy, pension plans should have at least 20 years of payouts on hand. 

The only reason GARS doesn’t go broke immediately is due to the millions of additional dollars taxpayers are forced to pour into the pension fund annually. GARS receives a bailout each year worth nearly three times the legislature’s payroll to keep the plan alive. 

Salaries for legislators in 2021 will total $9.8 million and yet taxpayers will be forced to dump nearly $27.3 million in additional money into the pension fund. Effectively, Illinoisans are paying almost four times over for their politicians, once for their salaries and another three times for their pensions.

In all, GARS has an official 2020 debt of $311 million. No legislator has presented a plan for how to close that shortfall, so that’s left taxpayers holding the bag year after year.

Second, reforming lawmaker pensions is entirely within their control. There are no public unions involved with GARS. The constitution’s pension protection clause isn’t a roadblock either, as long as the General Assembly passes reforms that only impact new lawmakers. The only real issue is the lawmakers themselves and their unwillingness to reform.

Reforming pensions for current lawmakers would require a constitutional amendment and lawmakers have significant control over that, too – they can vote to put a pension amendment on the 2022 ballot.

Third, many lawmakers have already rejected a pension. A third of the state’s current crop of lawmakers have already opted-out of participating in GARS. The bipartisan list includes long-term lawmakers like Rep. Marty Moylan (D-Des Plaines) and Rep. Tom Morrison (R-Palatine) and freshmen like Rep. Dave Vella (D-Rockford) and Adam Niemerg (R-Teutopolis).

That block of 59 lawmakers can do the right thing by voting to end pensions for all politicians going forward.

Fourth, Illinois needs a path to reform its remaining retirement debts. While ending lawmaker pensions will do little by itself – GARS’ shortfall is just 0.2 percent of the $140 billion in official pension debts – it will make reforms more likely. 

A successful transition to 401(k)s, in conjunction with COLA changes, can prove that broader reforms will improve portability, retirement security and help fix Illinois’ finances.

Sen. Marwick isn’t the only one that’s speaking up about ending GARS. Freshman Rep. Dave Vella (D-Rockford), one of the 59 lawmakers who has opted out of a pension, has recently filed a bill that would end pension benefits for all new lawmakers going forward. It’s a step in the right direction.

“Our legislators are meant to be public servants working on behalf of all Illinoisans, but too many have decided to use public office and taxpayer dollars to cushion their own retirement,” Vella said. For example, former House Speaker Mike Madigan has retired with a pension benefit that will jump to $149,000 next year and will continue to grow from there.

Overall, former career Illinois politicians receive an annual pension of nearly $90,000 and can expect to collect close to $2 million over the course of their retirements. The Illinoisans they are elected to serve, meanwhile, don’t earn anywhere close to that level of retirement benefits.

We’ll cover Sen. Martwick’s other comments about the state’s pension systems and the potential of 401(k)s in Part 2 of this piece.

Read more about Illinois pension crisis and Wirepoints’ solution:

• Wirepoints’ Pension Solutions homepage
• Illinois’ record-setting pension debt jumps to over $300 billion
• Illinois Pensions – Overpromised & Overgenerous
• Public safety payrolls or pensions? Illinois cities’ impossible choice.
• Coronavirus impact may push Illinois state pension debt to over $300 billion