Joined by union officials and members on Thursday, Gov. Ned Lamont pitched his new CT2030 transportation plan to leverage federal loans with toll revenue. But the plan also essentially guarantees that $21 billion in transportation projects will be awarded to unions who backed Lamont in his 2018 gubernatorial bid and ...
Number of state retirees getting six-figure pensions grows 30 percent in one year
The number of retired state employees receiving six figure pensions jumped by at least 30 percent since 2016 and more than 1,000 percent since 2010.
According to a report by the Hartford Courant, there are now “nearly 1,400” retirees who received more than $100,000 in pension payments over the course of 2017.
That figure has grown from 1,030 in 2016, and a mere 110 just eight years ago.
The highest pension payment remains well above $300,000 per year for John F. Veiga, a former UConn business professor. Connecticut’s highest pensions are actually in violation of federal IRS standards, which limit defined benefit payments to $215,000 per year.
Pensions are often associated with low-paying or blue collar jobs, but some of Connecticut’s most highly paid employees, including professors in its university system and doctors working in the UConn Health Center, are also the beneficiaries of the state’s beleaguered pension system.
Non-unionized managers, political appointees and, of course, lawmakers also receive state pensions. According to figures presented by the State Comptroller’s Office, Connecticut has more than 11,000 employees making over $100,000 per year.
Highly paid positions in state government, naturally, receive higher pension payments and those payments grow significantly year over year due to cost of living adjustments.
According to the SEBAC benefits contract, retirees — including those making six figure incomes — receive a minimum 2 percent cost of living adjustment every year. That COLA can range as high as 7.5 percent depending on inflation.
But that rate is much higher than social security recipients receive. Between 2012 and 2017, social security increased a total of 7.2 percent, according to the Social Security Administration. 2011 was the last time social security received a COLA of more than 2 percent.
However, during that same period, Connecticut state retirees have received an increase of at least 10 percent. This amounts to at least another $10,000 per year for a retiree earning six-figures.
The COLA formula for pensions was recently amended as part of the SEBAC concessions agreement. Under the new terms, the COLA will be determined using the Consumer Price Index, similar to the method used for social security. The COLA will match the CPI if the cost of living increase is less than 2 percent. If the CPI is greater than 2 percent, pensioners will receive a reduced rate.
However, those changes will only affect employees who retire after 2022. The vast majority of retirees will continue with minimum 2 percent COLA increases.
Pensions were at the forefront of hearing by the Commission on Fiscal Stability and Economic Growth on Wednesday.
According to a report compiled by J.P. Morgan, 35 cents of every tax dollar goes toward paying for Connecticut’s past debts, including pension and retiree healthcare liabilities, leaving less revenue for government programs and services.
The Commission, which is tasked with making recommendations as to how to get Connecticut back on track, is examining the pension problem as it is one of the fastest growing expenses in state government, outpacing revenue growth.
Yankee Institute, which presented some of its research to the commission during the Wednesday hearing, suggested a possible cap on pensionable income of $100,000 for new employees. A study of Connecticut’s pension system estimated this one reform could save nearly $24 million over two years.
Connecticut’s teachers may be better off with a 401(k) style, defined contribution retirement plan than under Connecticut’s massively underfunded pension system, according to some number crunching. Assuming a 6.5 percent employer match and adjusted for inflation, a defined contribution plan could yield similar retirement savings to that of the existing ...