BOSTON – Gov. Deval L. Patrick yesterday outlined his priorities for “comprehensive” reform of state and local government pension plans in Massachusetts.
“The gaming of the public retirement system by a few undermines the system’s credibility and ultimate sustainability for all public workers and makes citizens question the integrity of their government,” he said. “This is unacceptable.”
Patrick – citing the work of the Mass. Legislature’s Joint Committee on Public Service’s Blue Ribbon Panel on Pension Classification and the House Special Committee on Pensions – urged that legislators target “the most extreme” pension abuse by including the following measures in the reform legislation now being considered by the House:
• Eliminate the “uncommon and excessive benefits” in the Massachusetts Bay Transportation Authority pension system, aligning the MBTA plan with the statewide pension plan.
• Limit the definition of “regular compensation.” For the purpose of calculating annual benefits, change the definition to include only wages and salary, eliminating non-salary items such as housing and transportation allowances.
• Eliminate the “one day, one year” provision. By granting some public employees a year of credit for as little as a day of work, this provision “can boost a pension by thousands of dollars a year,” the governor noted. “Pension credit should be accrued only for actual time employed.”
• Prohibit pension-credit buybacks. Public workers currently are allowed to purchase or “buyback” pension credit for years served as an unpaid local official, gaining access to the same benefits as full-time salaried worker for “a minimal monetary contribution.” And these purchases often are made toward the end of an employee’s career, depriving the pension system of the investment gains that would help support these “enhanced” benefits, the governor’s office said.
• Eliminate “dual service” and double pensions, by changing the rules that now allow some employees to qualify for and collect two separate pensions.
• Trim disability retirement benefits. Change the salary formula for accidental disability retirements, to end the payment of higher benefits to those who had served a temporary assignment in a higher-paid position.
• Phase out “Section 10” termination benefits. For new hires and those newly elected, eliminate the Section 10 provision that allows public employees who lose their jobs after at least 20 years of service to collect an enhanced pension before the standard minimum age of 55. And tighten eligibility and oversight of the program for those already in state service.
“The economic crisis presents us with significant opportunities to confront issues we have avoided in the past,” Patrick said. “There is broad consensus that our pension system is in dire need of reform. If we can seize this opportunity and others like it, our commonwealth will be stronger in the long run.”
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Closing regulatory loopholes, ending pension abuses and restoring public trust in the government pension systems are “a critical component” of the Massachusetts Recovery Plan Patrick unveiled last week, his office noted. The plan aims to combine state, federal and private-sector efforts to achieve immediate gains by investing in “road, bridge and rail projects that put people to work today and providing safety net services that sustain people who are especially vulnerable during an economic crisis.” In addition, Patrick wants to build “a better tomorrow through education and infrastructure investments that strengthen our economic competitiveness, prepare workers for the jobs of the future and support clean energy, broadband and technology projects.”
Patrick yesterday also offered praise to “all of my partners in the legislature for their commitment to addressing loopholes and outdated practices, especially at this time of economic hardship.”
News and information from the Mass. Governor’s Office are available at www.mass.gov.
