Gov. Deval Patrick signed landmark pension reform legislation on Tuesday to close loopholes, eliminate abuses and reduce long-term costs to the state’s retirement system.
“Today, we make good on a promise to the public to restore trust in government,” said Patrick.
Last week, Massachusetts lawmakers unanimously approved a bill to overhaul the pension system and shut down some of its most egregious abuses.
The bill ends a “termination allowance” for lawmakers who were not re-elected and eliminates a “one-day/one-year” rule allowing elected officials to be credited with a year’s service for just one day’s work in a calendar year.
It also limits the definition of “compensation” to wages and salary, banning the use of housing benefits, car-related costs and other bonuses to inflate pensions.
The changes apply to both current and future state workers.
The bill won bipartisan support in both chambers.
State Sen. Scott Brown, a Wrentham Republican and member of the conference committee that wrote the final, compromise version of the bill, said the measure sends the message that lawmakers have heard the frustrations of Massachusetts residents.
“We put some common sense back into the pension laws so people can’t grab every last cent,” he said.
But others said the bill doesn’t go nearly far enough to make the systemic changes needed to bring about real savings in the pension system.
Senate Minority Leader Richard Tisei, R-Wakefield, said one proposal not included in the bill would have changed a rule that allows employees who are fired to immediately begin collecting their pensions.
“What is costing the Commonwealth millions of dollars are all these state employees who get fired a day after they reach their 20 years,” Tisei said. “We’re leaving a lot of abuses on the table.”
Critics said that by going after the most obvious abuses — the “low-hanging fruit” — the bill shortchanged taxpayers who wanted more substantive changes.
“I guess we need to get our ladders out and our pruning shears to go after the high-hanging fruit,” said state Sen. Robert Hedlund, R-Weymouth.
A legislative blue ribbon commission has been appointed to recommend additional changes to the pension system. Their report is due Sept. 1. Those recommendations could include putting a cap on the total level of pension benefits and fixing abuses to the disability pension system.
Some lawmakers expressed skepticism, however, saying that any momentum for additional reforms could be lost by the time the report is released.
Among the other provisions in the bill are measures that end a provision letting workers receive credit for years of service when they were holding unpaid jobs and extend the pension “vesting” requirement for elected officials from six years to 10 years.
Another measure prohibits employees who retire and then are hired back as consultants or independent contractors from adding more years to their pension, which instead would be based solely on whatever hours they had when they retired.
Also, it bars the so-called “king for a day” rule that allows workers who serve for as little as one day in a higher-paying position and are then injured to base their disability pension calculation on that higher salary. Instead, workers have to use their average salary from the prior 12 months.
The bill applies to everyone who retires after July 1, 2009.
Lawmakers are still awaiting final compromise versions of transportation and ethics reform bills. Patrick has threatened to veto a 25 percent increase in the state sales tax approved by the House and Senate unless they deliver all three reform bills to his desk first.
Lawmakers say the tax increase is needed to avoid the harshest of budget cuts.
(Associated Press)
