LEGISLATURE PASSES PENSION REFORM LAW

Current Retirees Not Effected By Benefit Changes

JUNE 11, 2009: The Massachusetts Legislature has passed sweeping pension reform legislation that will not only impact the pension benefits of future public employees, but could also alter the benefits of current active employees as well.
However, the debate surrounding pension reform and the legislation passed today does not impact the pension benefits now being received by current retirees. Changes could impact those retiring after June 30, 2009.

All along, the controversy surrounding pension reform has centered on which group of public employees would be impacted by the changes in retirement law. While most of the reforms proposed by the House were prospective in nature (new hires), House conferees agreed to the position taken by the Senate and Governor that applied the reforms to active employees.

The bill (S2079) is now on the governor's desk, where it is expected to be signed into law within the coming days. There are concerns that some aspects of the bill may violate the contractual rights of current active employees. Those concerns will likely end up being addressed by the courts, when and if an aggrieved employee files suit.
One provision of concern to the Association is contained under Section 16. It allows retirement boards to require the direct deposit of pension benefits. While the Association encourages members to use direct deposit, it opposes any mandate to force enrollment. Members should be free to choose the method that works best for their personal circumstance.

Reform Commission

Contained within S2079 is a section, which expands the scope of the Special Commission on Pension Reform. Originally created in July 2008, the Special Commission has now been in operation for several months. Its mission is to review the current public retirement system and make recommendations for improvement or, in some cases, reform.
The seventeen-member Commission's mandate, as set forth by the Legislature, instructs it to study contribution rates, vesting periods, benefit calculations, portability, COLA benefits, and virtually all other aspects of public retirement. Other than enhanced COLA benefits, no consideration is being given to altering the benefits being paid to current retirees.
"Members should know that their retirement benefit cannot be reduced or changed. Other than studying ways to address a higher COLA base or increasing survivors benefits, retirees are not the subject of this Reform Commission," concluded Association President Ralph White, who is a member of the Commission.

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