The Internal Revenue Service has issued rules that will possibly lower pension payouts for some retired Connecticut state employees, or force others to pay money back to the state retirement system, according to a memorandum from the Office of the State Comptroller. In some cases, the pensioner may see an ...
Top Connecticut state pension hit $297,614 last year
The line item for state employee pensions is one of the fastest-growing items in the state budget. This year, the state will contribute $1.5 billion – almost ten percent of the General Fund – to the state employee pension fund, which still won’t be enough to put a dent in the unfunded liabilities.
According to new information released by the Yankee Institute on its website CTSunlight.org, 885 retirees received pensions over $100,000 in 2015 — including 12 who earned pensions over $200,000 a year.
Connecticut pays out the highest average pension benefit to state employees, at $39,172 per retiree, when compared to other states, according to Census data.
The median household income in Connecticut is about $69,000.
The top pension payout goes to John Veiga, a retired University of Connecticut professor, who received $297,614.10 in 2015. With a guaranteed 2.5 percent increase, Veiga’s pension will jump to more than $306,000 in 2016.
His pension puts him in the top 3 percent of wage earners nationwide.
To get a guaranteed benefit of $100,000 a year, a private-sector retiree would have to invest $1.9 million in an annuity. This means that, in terms of assets, many state retirees are millionaires.
When you ask the unions if this is right, they like to point out that the employees earned their money, and it shouldn’t be taken away.
Funny, that’s what many Connecticut taxpayers say as well.
If Connecticut lawmakers are going to make a dent in the budget deficits facing our state over the next three years and beyond – likely to reach $1 billion this year, and $2 billion for each of the two years after that – they have to find a way to get union leaders to the table to renegotiate state employee benefits.
For years, union leaders and politicians played politics with the pension funds. Without serious reforms, this will continue into the future, which will put Connecticut’s fiscal health at even greater risk.
To solve this problem new state employees should be enrolled in a defined contribution, 401(k)-style retirement plan.
However, if this is not politically feasible, there are other options to reform our pensions to help get our long-term liabilities under control:
- Set pension benefits in statute instead of in negotiated agreements;
- Increase employee contributions;
- Limit cost-of-living increases to inflation;
- Divide the risk of underfunding between taxpayers and employees;
- Eliminate the use of overtime in calculating pensions; and
- Cap pensions at the state’s median income.
Center for Retirement Research estimates 4 percent funding drop in Connecticut state employee pension system
The Center for Retirement Research at Boston College issued a report on the pandemic’s effect on state and municipal pension systems and listed Connecticut’s State Employee Retirement System as one of the ten worst-funded pension plans in the country. The report projected SERS would see a 4.6 percent decline in ...