Governor Signs Pension Reform Bill
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"Today, we make good on a promise to the public to restore trust in government," said Patrick. "I am proud to be standing alongside Senate President Murray and Speaker DeLeo and commend the Legislature for taking this critical step to eliminate the abuses and gamesmanship that for too long have threatened the system's credibility and ultimate sustainability for all public workers."
The Legislation includes reforms that will apply to both current and future employees as well as elected officials, ensuring that necessary change can begin immediately. The Special Commission on Pension Reform continues to examine additional issues, including instituting dollar limits on benefits, reforms to disability retirements and system administration improvements. The commission's report on a broader pension system overhaul is due on Sept. 1, and the governor said he stands ready to work with legislators on additional reforms based on those recommendations.
Murray described it as "a major step forward" in fixing the a system that allowed unfair advantages.
"For the public to have trust and confidence in public officials we have to bring government pension standards in line with everyone else. We cannot allow excesses to persist," DeLeo said.
The law targets loopholes that have allowed some to exploit the system and unfairly boost their public pensions. Among the loopholes the law closes is the so-called "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. The law also removes a provision that allows elected officials to claim a "termination allowance" based on the failure to be nominated or re-elected.
In addition, the law also:
■ Defines "regular compensation" to specifically exclude certain monetary benefits like housing, lodging, travel, automobile usage or annuities for the purposes of a pension benefit calculation.
■ Strikes current provisions that allow certain officials to establish pension credit for service in positions that have no compensation. Officials and employees currently serving in a position earning $5,000 or less in compensation will be ineligible for credible service after their current term expires, or by July 1, 2012, whichever occurs first.
■ 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, unless they are vested in both systems before Jan. 1, 2010.
■ Extends the "vesting" requirement of elected officials from six years to 10 years.
■ Eliminates a loophole that allows individuals receiving pension benefits to return to work and receive a full salary in addition to pension benefits if the individuals are classified as "consultant" or "independent contractor.
■ Allows for other reforms to increase efficiency in the retirement system, such as the direct deposit of retirement benefits.
The governor has set pension reform as a cornerstone of his change agenda, and he has previously commended legislators for seizing this opportunity for reform and working to fix a broken system, particularly as the Commonwealth continues to face unprecedented fiscal challenges. Patrick said he is hopeful a consensus can be reached soon on reforms to the state's transportation network and ethics and lobbying rules.
Work to strengthen the state's transportation network and ethics and lobbying rules continues, and Governor Patrick has said he is hopeful a consensus will soon be reached on those matters as well.
