Madigan will retire with $2.9 million public pension after contributing just $350,000
Because of a pension sweetener for politicians that Madigan helped create, the former speaker’s pension will spike more than $66,000 the year after his first full year of retirement, then grow 3% each year thereafter.
Former Illinois House Speaker Michael J. Madigan will start receiving $7,100 in monthly pension benefits starting in March, but just more than a year later his benefits jump 78% to $12,600 per month.
The next year will bring him $66,000 extra thanks to a special pension sweetener available only to politicians, which the former speaker helped pass. It was eliminated for lawmakers elected after 2002.
Madigan is projected to collect more than $2.9 million in lifetime pension benefits, assuming he collects them for 17 years. He contributed just over $350,000 during his 50-year career, or 12% of his total expected payout. He’ll get that back within three years
His pension sweetener comes from a provision that allows lawmakers to “bank” 3% cost-of-living increases while still working for each year of service after 20 years or age 55, whichever comes first. Because Madigan, 78, retired after Jan. 1, he will receive the benefits boost starting July 1, 2022. He “banked” 25 years of increases, according to the retirement system.
The sweetener increased former Illinois Senate President Emil Jones Jr.’s pension by 50% to $122,334 a year after he retired in 2008. It will also allow former Senate President John Cullerton to retire with a pension that will spike to $128,000 just a couple years into retirement.
Madigan will receive immense personal benefits from the broken pension system he was instrumental in creating. The former speaker’s fingerprints can be found on nearly every bill for the past 30 years that enhanced pension benefits, borrowed money to cover their costs, or shorted contributions to the systems. The system he will draw from, the General Assembly Retirement System, is the worst-funded of the state’s five public pension systems with just 17% of what it is expected to pay out.
Madigan was also a delegate to the 1970 state constitutional convention that created the current pension clause. That clause now prevents any changes that would make the system more sustainable and affordable.
While the speaker was supportive of an effort to fix the pension system with structural reforms in 2013, and was a sponsor of reform legislation in the House, that effort was ruled unconstitutional by the Illinois Supreme Court in 2015. The court interpreted the pension clause as prohibiting any changes to retirement benefits for current workers and retirees, including not only benefits earned for work already performed, but also the future growth rate in those benefits. Since then, Madigan has made no serious effort to fix the pension mess.
During Madigan’s tenure as the longest-serving legislative speaker in the nation’s history, Illinois’ credit rating fell from AAA, the highest, to just one notch above junk-status, the lowest of any state in history. Combined pension debt of the five state retirement systems has grown from $5.94 billion in 1982 to $144.4 billion at the end of fiscal year 2020.
Illinois’ pension crisis is the most severe public policy challenge facing the state and contributes to nearly every other fiscal and economic problem.
The only viable solution to Illinois’ pension crisis starts with a constitutional amendment to allow for reductions in future benefit growth for current workers and retirees. A constitutional amendment filed in the General Assembly in 2020 – House Joint Resolution Constitutional Amendment 38 – would have done just that.
If passed, an amendment mirroring the expired HJRCA 38 would open the door for reforms such as the Illinois Policy Institute’s “hold harmless” pension reform plan, which would save the state roughly $2.4 billion the first year and more than $50 billion through 2045. The plan would also fully eliminate the state’s pension debt during that time.
Recent polling from the Paul Simon Public Policy Institute found 51% of Illinoisans support “an amendment to the Illinois Constitution that would preserve state retirement benefits already earned by public employees, but would also allow a reduction in the benefits earned in the future, whether by current or future employees.”
The end of Madigan’s tenure in the Illinois House presents an opportunity to undo his dual legacies of debt and corruption. Fixing the pension system through constitutional reform is crucial to turning around Illinois’ fiscal and economic crises.