Briefing: Pension Reform
Gov. Deval Patrick recently signed legislation into law to eliminate loopholes in the state’s pension system. The new standards, advocates say, will save taxpayers money and will restore public trust in state oversight of public retirement systems. The law includes common sense modifications to state law that will apply to current and future employees and elected officials in all public retirement systems.
What changes does the law make?
Among the many reforms, the major changes include the removal of the “one day, one year” provision that previously allowed elected officials to claim an entire year of service for only one day of work. The bill also removes the “termination allowance,” which was previously granted to elected officials who failed to be nominated or re-elected.
Who will be affected?
According to news reports, as recently as June 8, House Speaker Robert A. DeLeo argued that the proposed reforms should affect new hires only. (Nearly half of the 200-member legislature is on track to be eligible for early, enhanced pensions.) But DeLeo stepped down on that issue, which smoothed the way for the bill to apply to all current employees who retire after July 1.
What is Governor Patrick saying?
“For decades, the public has clamored for improvements in our pension system to close the loopholes and eliminate the gamesmanship,” said Patrick in a press release. “Because of the leadership of the senate president, the speaker, members of the conference committee and the legislature, we are now going to deliver on pension reform in Massachusetts. This is a very, very good day.”
What does the future hold?
The new legislation calls for the establishment of a commission to review broader changes and issue a report by Sept. 1. According to Michael J. Widmer, president of the Massachusetts Taxpayers Foundation, future changes might include limiting the maximum amount for state pensions or increasing the number of years used to determine an employee’s pension, which could result in substantial savings.
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