Loophole will let Brandon Johnson collect public pension now worth $1.1M

Loophole will let Brandon Johnson collect public pension now worth $1.1M

Mayoral candidate and Chicago Teachers Union organizer Brandon Johnson is eligible to collect an estimated $1.1 million pension through the Chicago Teachers’ Pension Fund despite only teaching for four years. His future path could yield a public pension worth over $2.8 million.

Chicago mayoral candidate Brandon Johnson is currently set to receive a pension worth an estimated $1.1 million through the Chicago Teachers’ Pension Fund, even though he only taught for four years.

But he could boost his pension significantly beyond $1.1 million if he keeps his job as a Chicago Teachers Union organizer or uses a state law to leverage his service as a Cook County commissioner.

Johnson was previously employed as a teacher at Chicago Public Schools, where he was a Tier 1 participant in the Chicago Teachers’ Pension Fund. Johnson was only a social studies teacher for four fiscal years, from 2008-2011, according to data from the Illinois State Board of Education. Then he went on to work for the Chicago Teachers Union as a paid activist.

Because of a loophole in Illinois’ pension code, Johnson appears to have been allowed to continue to participate in the Chicago teachers pension, even though he was no longer a school employee. Normally, teachers must work at Chicago Public Schools for five years to become eligible to retire with a pension.

The Illinois Pension Code allows Johnson to continue to accumulate creditable service towards his pension as a result of his employment with CTU, because he was a participant in the teachers pension system prior to 2012. This loophole has since been closed for those who began participating in the pension system after Jan. 5, 2012.

As a CTU employee, Johnson has received an additional 12 years of service credit with the pension system – enough time to become eligible to receive a pension in retirement. Johnson’s retirement benefit from the teachers system will likely be based on his union salary, which has averaged nearly $90,000 annually during the past four years. He earned an average of less than $58,000 during his four years of teaching.

Johnson’s current service credits with the teachers pension make him eligible to retire at age 62 with full benefits. If he does so, he would be expected to receive nearly $1.1 million in pension payments during retirement.

If he keeps his job with the Chicago Teachers Union, it would raise his pension payments substantially as he accumulates more years of creditable service.

If Johnson works for another 13 years, reaching age 60, his pension would double to an estimated $2.2 million based on his current salary. Should his salary keep pace with expected inflation, Johnson’s pension will be worth an estimated $2.8 million.

The now-closed loophole leaves Johnson on course to receive millions despite only teaching for four years.

But that's not all: Johnson was elected as a Cook County commissioner in 2018, making him eligible to participate in the Cook County Pension Fund. While he will not be able to receive credit for contributing to multiple retirement systems concurrently when he retires, he could stand to benefit in other ways.

Should Johnson’s employment with CTU end, he could accumulate 10 years of service credit in the Cook County Pension Fund to become eligible to draw a retirement from the county independently. That would give him a pension from both the Chicago Teachers’ Pension Fund and the Cook County Pension Fund. Even if he doesn’t ultimately vest in the Cook County fund, Johnson could still get a boosted pension under the Illinois Retirement Systems Reciprocal Act.

The reciprocal act gives retiring Illinois public employees the option to receive a pension based on the combined service credit earned within eligible retirement systems. Often it allows a larger pension payout and for the person to collect a pension earlier than if they had to retire independently from funds.

The reciprocal act could allow Johnson to collect pension benefits from Cook County regardless of whether he participates for the minimum 10 years. It could also allow him to retire earlier and collect larger payouts than he’d otherwise be eligible for.

While it remains unclear exactly what Johnson’s eventual pension package will be, the dire financial state of Illinois’ public sector retirement funds is very clear. These practices can make it worse.

The Chicago Teachers’ Pension Fund currently has an unfunded liability in excess of $13.8 billion and a funding ratio of 47%, while the Cook County Pension Fund has $6.3 billion in unfunded liabilities and a funding ratio of 67%. In total, Illinois has $210 billion in state and local pension debt – though ratings agencies such as Moody’s Investor Services estimate the figure to be much larger.

Fixing Illinois’ broken pension system and protecting retirees and taxpayers will require constitutional pension reform. Former Mayor Rahm Emmanuel and soon-to-be former Mayor Lori Lightfoot both called on state lawmakers to pursue constitutional pension reform at the end of their terms. Chicago’s next mayor should leverage the position to lobby state lawmakers to pursue these reforms, rather than cash in on the flaws.

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