Z-Gram 01: Should any retired teacher have a pension of $399,652 per year?

Beverly Harvison retired in 2000 on a pension of $62,000/yr. after teaching at Du Page HSD 88 for 26 years. Somewhere along the way she married District 88’s Superintendent Robert Lopatka and he retired in 2004.

Lopatka died shortly after retiring but before then he managed to set up what is called a “Reversionary” pension for Beverly (Harvison) Lopatka that provides almost $200,000 per year. A Reversionary pension is one in which a person about to retire (Robert Lopatka) takes part of or all of his pension/annuity value (about $5 million in Robert Lopatka’s case) and transfers it irrevocably to someone else in this case Beverly Lopatka.

Why would anyone want to transfer pension wealth to another person? Well one reason would be a serious or terminal illness. If you were fairly certain you did not have long to live it would make sense to transfer as much of the $5 million value of your pension to the benefit of your healthy spouse.

But the problem with reversionary pensions is the cost is transferred to the taxpayers because reversionary pensions distort the standard life expectancy tables. If Robert Lopatka had not been able to transfer a huge amount of his pension wealth before he died then any money value remaining in his $5 million pension account would have reverted to TRS and the taxpayers. That is how annuities are supposed to work. Some people live longer and some shorter thus averaging out to the lowest cost possible.

And Beverly Lopatka would not have been left in poverty if the Reversionary pensions were not allowed: she also receives a survivor pension from Robert Lopatka of $111,000/yr. in addition to her own current pension of $89,000/yr.

So here is Beverly Lopatka’s pension breakout:

  1. Her pension based upon her 26 years of teaching      $  89,998
  2. Her survivors pension from her husband                       $ 111,542
  3. Her reversionary pension                                                     $ 198,121

In January of 2013 Beverly Lopatka received an annual COLA increase of $11,600. Her total pension payout to date is $3.4 million and her lifetime payout based upon her life expectancy is over $10 million. Not bad for a former English teacher.

So to answer the question posed in the title: No retired teacher should have a pension of $399,652 per year. It is just another rip-off of the taxpayer for the benefit of the teachers.