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Labor and Personnel Pension reform enacted, but study continues
Gov. Deval Patrick yesterday signed into law a wide-ranging pension reform bill that will close a number of loopholes that have been exploited to boost retiree benefits.
The legislation came in response to a series of damaging reports about abuses of the pension system, such as including housing allowances as part of regular compensation, allowing legislators who retire or lose an election to begin receiving retirement benefits immediately, counting volunteer service on state or municipal boards as creditable service, and basing disability retirement benefits on a temporary promotion.
The following are highlights of the new law:
• Compensation is now defined as base salary. The law specifically excludes housing, clothing allowances, and automobiles from counting toward regular compensation.
• A state, county or municipal employee who serves in a position, whether appointed or elected, that receives compensation of less than $5,000 annually can no longer count it as creditable service.
• Disability retirement allowances will be calculated on the regular compensation the employee received for the 12 months preceding the disabling injury.
• The pension liability funding schedule was extended from 2028 to 2030.
The law applies to current and future employees and elected officials in all public retirement systems in Massachusetts.
Despite these changes, the MMA argues that the system is still in need of substantial reform. The MMA has been calling for a much tighter definition of disability so benefits go only to those who are truly disabled, a system that would allow for partial disabilities, reform of the group classification system, and a review of contribution rates.
The Special Commission on Pension Reform, created by the Legislature last year to conduct a comprehensive study of the state’s pension system, has a Sept. 1 deadline for issuing its recommendations.
• Download summary of pension reform legislation (976K PDF)
• Download text of pension reform legislation (308K PDF)
Labor and Personnel Pension reform enacted, but study continues
Pension reform enacted, but study continues
Gov. Deval Patrick yesterday signed into law a wide-ranging pension reform bill that will close a number of loopholes that have been exploited to boost retiree benefits.
The legislation came in response to a series of damaging reports about abuses of the pension system, such as including housing allowances as part of regular compensation, allowing legislators who retire or lose an election to begin receiving retirement benefits immediately, counting volunteer service on state or municipal boards as creditable service, and basing disability retirement benefits on a temporary promotion.
The following are highlights of the new law:
• Compensation is now defined as base salary. The law specifically excludes housing, clothing allowances, and automobiles from counting toward regular compensation.
• A state, county or municipal employee who serves in a position, whether appointed or elected, that receives compensation of less than $5,000 annually can no longer count it as creditable service.
• Disability retirement allowances will be calculated on the regular compensation the employee received for the 12 months preceding the disabling injury.
• The pension liability funding schedule was extended from 2028 to 2030.
The law applies to current and future employees and elected officials in all public retirement systems in Massachusetts.
Despite these changes, the MMA argues that the system is still in need of substantial reform. The MMA has been calling for a much tighter definition of disability so benefits go only to those who are truly disabled, a system that would allow for partial disabilities, reform of the group classification system, and a review of contribution rates.
The Special Commission on Pension Reform, created by the Legislature last year to conduct a comprehensive study of the state’s pension system, has a Sept. 1 deadline for issuing its recommendations.
• Download summary of pension reform legislation (976K PDF)
• Download text of pension reform legislation (308K PDF)
Written by MMA Legislative Director David Baier
