Tricks of Democrat Mayor to Boost his Lifetime Pension to $184,000 a year…over 10 Times his Salary

PUBLIC EMPLOYEES RETIRING IN LUXURY ON THE BACK OF TAX PAYERS Democrat Richard M. Daley, former Chicago Mayor, weaseled his way to receive lifetime pension benefits that far exceed his contributions. Summary of the tricks: Daley stands to collect $184,000 annual pension for the rest of his life, because he was allowed to receive a pension based on his $216,210 salary as city mayor while making payments to the state pension system (GARS) based on his $17,500 starting salary as a state senator. He boosted his pension by rejoining the legislative pension plan for just one month to qualify to receive 85% of his mayoral salary. Daley was also allowed to pay $6,000 to purchase pension credits worth 10 years of service to cover his unfinished term at the state legislature or General Assembly. Richard M. Daily’s political work: ● 1972–1980: Illinois State Senator ● 1981–1989: Cook County State’s Attorney ● 1989–2011: Mayor of Chicago

Report via Sweetness & Light:

Two years into his reign as Chicago’s longest-serving mayor, Richard M. Daley took advantage of the state’s convoluted pension system to significantly increase his potential payout while saving $400,000 in contributions, a Tribune/WGN-TV investigation has found. Daley, a former state senator, made it happen by briefly rejoining the legislative pension plan in 1991. He stayed there just one month before returning to Chicago’s municipal pension fund, but the switches made him eligible for benefits worth 85 percent of his mayoral salary — a better rate than all other city employees receive. He was just 49 years old at the time. Even if Daley had never won another election, he could have started collecting a public pension at age 55 of $97,750 a year. Without the steps he took, his public pension benefits at that age would have been worth just $20,686. …When he retired last May, his pension benefits had grown to $183,778 a year — about $50,000 more than he would have otherwise received.  […] His own public pension, meanwhile, will end up costing taxpayers all over the state. Records show that his contributions to the statewide General Assembly pension fund weren’t nearly enough to cover the benefits he receives. […] Daley spent less than eight years in the state Legislature, having left office with more than two years remaining on his term to run for Cook County state’s attorney in 1980. But that same year, he asked to purchase pension credits covering his unfinished term for about $6,000 in extra contributions, as allowed under Illinois’ generous pension laws. The move gave him a total of 10 years of service. […] Yet under another obscure state law, Daley was able to transfer his years of service with Cook County and the city of Chicago to the state legislative pension fund without making additional contributions. That’s because the transfer was based on his decade-old legislative salary of $17,500 — even though his pension would be calculated using his mayoral salary, then $115,000. Had the costs of the transfer been based on Daley’s actual pay, he would have been required to pay in about $540,000, according to a Tribune/WGN-TV analysis based on the state’s formula for pension credit transfers. Instead, he simply transferred the $128,000 he had accumulated in the city and county funds, saving more than $400,000 in contributions. Daley eventually retired with a state pension based on his final mayoral salary of $216,210 — 12 times his old legislative pay. The $183,778 in public pension benefits that Daley now receives is divided up between GARS [General Assembly Retirement System] and the municipal pension fund. Under the state’s convoluted reciprocal system, the GARS plan pays the former mayor $117,629 a year, while the municipal pension plan pays him $66,149. Yet Daley paid far more in pension contributions to the municipal pension plan than he did to the GARS plan. More tricks: Under Daley’s watch, former Chicago Federation of Labor President Dennis Gannon was given a one-day city job that allowed him to collect a public pension based on his $200,000 private union salary. In 1995, when Daley wanted to fund his school reform package, his administration pushed legislation that allowed it to divert $1.5 billion from the Chicago Teachers’ Pension Fund over a 15-year period. All the while, Daley blessed benefit increases for city workers without ensuring that payments into the funds would cover the costs, a problem worsened by the economic downturn. Today, the combined unfunded liabilities of Chicago’s four pension funds have grown to nearly $20 billion, which doesn’t include the $6.8 billion shortfall at the teachers fund. The city’s pension debt is not only damaging Chicago’s financial stability, but also breeding cynicism about government’s ability to provide modest pensions to the people who teach the city’s children, collect the garbage, run into burning buildings and keep the peace.

MORE – http://articles.chicagotribune.com/2012-05-02/news/ct-met-pensions-daley-20120502_1_higher-union-salaries-public-pension-pension-funds – http://chicago.cbslocal.com/2011/04/29/daley-set-to-collect-nearly-200000-annual-pension/ Videos – Mayor Daley Latest Politician in Long Line of Pension Abusers – Richard Daley the New Face of Pension Abuse – America’s Pension Mess

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