Gov. Deval Patrick and Massachusetts legislators announced a plan on Tuesday to curb rising pension costs.
After eliminating loopholes in the pension system in 2009, the new bill would raise state workers’ retirement age, remove incentives to retire early and prevent elected officials from “double dipping.”
As one of the biggest pressures on the state budget, the Massachusetts pension system is expected to cost $20 billion at taxpayers’ expense. The bill would attempt to save $5 billion over 30 years as well as $2 billion in health care costs.
The proposal, announced by Patrick, Senate President Therese Murray and House Speaker Robert DeLeo, elevates the retirement age for all state workers and elected officials from 55 to 60. It would also extend the age that retirees can receive full benefits from 65 to 67 and remove incentives to retire at the minimum age by cutting their benefits.
It also would calculate a retiree’s pension benefits based on the amount of time the employee has worked versus the highest five years of salary instead of a three-year period. However, some hazardous professions such as state troopers, police officers and prosecutors would be allowed to retire early.
In addition, Patrick said the bill would stop elected officials from using their pensions while receiving a public salary, known as “double dipping.”
Changes were sought out after Middlesex Sheriff James DiPaola exploited a loophole allowing retirees to run for paid public office while still receiving their pension.
DiPaola would have received a yearly pension of $98,500 while receiving an elected officials payment of $123,000. The sherriff committed suicide after admitting his plan in November.
Patrick said the reforms are necessary to achieve his goal in reinforcing the pension system beyond eliminating loopholes.
“The problem was not created overnight and it will not be solved overnight,” he said on Tuesday in a press conference. “I support the defined-benefit program, but without these reforms, it is not sustainable.”
The proposal will save the state from spending a $1 billion payment in the coming fiscal year while sparing estimated layoffs to pay the cost.
“Unlike the 2009 and 2010 legislation which simply closed long-standing loopholes, these proposals offer a more comprehensive reform of the pension system which strengthens its long-term financing while preserving a generous retirement program for state and municipal employees,” Michael J. Widmer, president of the Massachusetts Taxpayers Foundation, said to The Boston Globe.
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