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Senate Continues Reform Agenda, Closes Pension Loopholes

March 31, 2009

March 31, 2009

(Boston) – A week after passing comprehensive legislation to overhaul the state transportation system, the Senate today continued to push its reform agenda with unanimous approval of a bill that will tie off loopholes in current pension laws to end abuses and save taxpayer money.

“The time for talk is over,” Senate President Therese Murray (D-Plymouth) said. “The Senate’s actions today are aimed at fixing the system and restoring the public’s trust in government. While most public employees play by the rules, there are still too many who cheat the system by taking advantage of ambiguities in the law. That’s going to change.”

“The state’s pension system is an important benefit for state workers who chose generally low-paying careers in public service over the private sector,” stated Senator Karen Spilka (D-Ashland).  “There are examples, however, of individuals who exploit loopholes to increase pension payments at a high cost to the state.  The Senate legislation is just the beginning of important fixes to state pension laws to close these loopholes.”

“These abuses have gone on too long,” said Senate Ways and Means Chairman Steven Panagiotakos (D-Lowell), a lead sponsor of the bill. “This legislation is the start to meaningful pension reform that will shut-down egregious loopholes in the system. Some of the changes proposed in this bill are no-brainers and long overdue. It’s time to get them done.”

The bill directs the currently-established Blue Ribbon Commission on Pension Reform to review broader issues within the system, such as capping large pension payments, and make comprehensive reform recommendations to the Legislature by September 1, 2009. Additionally, the Joint Committee on Public Service, chaired by Senator Thomas McGee (D-Lynn), will be looking at further reforms.

“This bill demonstrates that the Senate is serious about holding public servants to the highest standards,” Senator McGee said. “Though very few public employees have used these loopholes to game the system, those few have caused the public to lose faith in the many honest, hardworking public servants who work on their behalf every day. Today we have taken a strong first step in rolling back those loopholes and restoring the credibility of the state pension system.  I commend the Senate President and the Chairman of Ways and Means for insisting that we address these issues, and that we address them immediately.”

The Senate legislation contains seven common-sense reforms of our public pension system:

  • Re-defines “regular compensation” to exclude housing allowances, use of motor vehicle and travel;
  • Removes the “one day, one year” provision that allows elected officials to claim an entire year of credible service for working one day in a calendar year;
  • Eliminates the ability of municipal officials to receive pension credit for service in an unpaid position;
  • Reforms the current accidental disability retirement benefit for individuals who are injured while temporarily filling in for their supervisor;
  • Removes a provision that allows elected officials to claim a “termination allowance” based on the failure to be nominated or re-elected;
  • Aligns MBTA employee pension with the state system. Eliminates the 23 years and out for future T employees. (This reform was also included in the Senate transportation reform bill passed last week.);
  • Reforms dual-service pensions so that an individual cannot combine the compensation from two positions to artificially increase one’s pension. An individual who is a member of two or more systems will receive benefits as if retiring separately from each system.

The Senate pension reform package was strengthened today by several amendments that were approved on the Senate floor, including one that prevents local and state employees as of January 1, 2010 who make less than $5,000 from receiving pension credit. Another raises the vesting years for future elected officials from six to 10 years, bringing them on par with all other public employees.

The bill now goes to the House of Representatives for further action.

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