How many collecting Illinois pensions have moved to other states, and how much did they take with them?
More than 71,000 people collecting public pensions from six statewide retirement plans have moved out of Illinois, taking more than $2.4 billion annually with them.
That's roughly 18% of all the pensioners in those systems, according to a Daily Herald analysis of financial data obtained through public records requests with the six pension programs.
Florida leads all migration destinations with 14,030 Illinois pensioners, followed by Arizona and Wisconsin with more than 5,600 Illinois public pension recipients now living in each of those states.
According to a National League of Cities report, 90% of retired public employees generally stay in the area where they worked. But Illinois' higher migration rate for public pensioners mirrors the ongoing population decline in the state, which has seen a drop of 157,000 residents since 2013, according to U.S. Census Bureau estimates.
The ripple effects of the outbound migration of pensioners is the loss of their buying power, less representation in Congress and decreased federal subsidies. Combined, the six pension funds in the analysis will pay out nearly $13.9 billion this year, with about 82% of that staying in Illinois.
All states experience some migration of pensioners to other areas. Although there are no national comparisons, a check of several other states shows Illinois' departure rate among pension recipients is higher. About 16% of Iowa's pension recipients have migrated to other states, according to officials at the Iowa Public Employees' Retirement System. In 2015, California pension officials reported roughly 15% of their public pension recipients relocated to another state.
“We already know there's an issue with older individuals and higher property taxes,” said Jeremy Groves, an assistant professor of economics at Northern Illinois University. “Which might explain why Wisconsin is such a high migration destination, especially if they're moving to the southern area, because they're still close to Illinois while escaping that property tax burden.”
The analysis included nearly 400,000 retirement, survivor, disability and other annual payouts from the Illinois Municipal Retirement Fund, Illinois Teachers' Retirement Fund, State Universities Retirement System, State Employees' Retirement System, Illinois Judges' Retirement System and the General Assembly Retirement System. Information from the Cook County Pension Fund, Chicago Public Schools pension fund and the nearly 700 separate suburban and downstate police and fire pension funds was not available, but those funds represent thousands more pensioners.
Some experts believe some pensioners stay because Illinois is one of the few states that do not tax retirement benefits. Two of the others are Florida, the top destination for Illinois retirees with public pensions, and Texas, at No. 7.
“There are two main reasons why people make these migration decisions. One is a lower tax burden, and the other is lower cost of living,” said Adam Schuster, director of budget and tax research at the Illinois Policy Institute, a conservative government finance research group.
Retirees from the state university system are most likely to leave Illinois. More than 22% of state university pensions are now sent out of Illinois, representing almost $600 million a year.
The teachers pension system provides the largest amount of retirement benefits annually. More than $1.2 billion of the nearly $6.4 billion in payouts this year will be made to 25,203 pensioners living in other states, about 21% of recipients.
More than 14% receiving pensions from IMRF, the statewide pension system with the most members, live out of state and receive about $315 million a year.
Meanwhile, former state government employees are most likely to stay put. Only 13% of state employee retirees with pensions have left Illinois, accounting for a little more than $300 million in pension money, according to the analysis. That's up from 12% living out of state in 2014, according to a Reboot Illinois report from four years ago.
Illinois public pension recipients who leave the state average pensions of $34,053 a year, compared to an average pension of $35,573 for those who stay put.
But those who retire to 15 states or U.S. territories have higher average annual pensions. Ten pension recipients now living in the U.S. Virgin Islands average an Illinois pension of almost $43,000 a year, according to the analysis. Another 143 who retired to Hawaii average Illinois pensions of $39,575.
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Pensions recipients on the move
More than 71,000 recipients of Illinois public pensions totaling more than $2.4 billion this year live in another state.
Where Illinois pension recipients go (Total dollar amount)
1. Florida: 14,030 ($529,839,736)
2. Arizona: 5,834 ($212,155,440)
3. Wisconsin: 5,673 ($181,232,579)
4. Indiana: 4,850 ($157,210,709)
5. Missouri: 4,384 ($140,564,621)
Destinations with highest average Illinois pensions (# of Illinois pensioners)
1. Virgin Islands: $42,866 (10)
2. Hawaii: $39,575 (143)
3. New Mexico: $39,236 (646)
4. South Carolina: $38,372 (1,297)
5. Florida: $37,765 (14,030)
Source: Daily Herald analysis of IMRF, TRS, SURS, SERS, GARS, JRS data