PENSION REFORM PHASE II

Legislature Awaits Commission Report

SEPTEMBER 2009: With a September 1 report deadline, the Special Pension Study Commission has been working vigorously throughout the summer preparing its report and recommendations for legislation to the House and Senate.

This much-awaited report will actually be Phase II of pension reform, a top priority of the Governor and Legislature. Phase I was earlier addressed by the Legislature in June, when it repealed three highly publicized pension perks available to elected officials, among other steps.

However, the Senate President, House Speaker and Governor all indicated that Phase II (Special Commission) was the key to addressing pension reform and that the September report was paramount to the future of the Commonwealth's public retirement plan.

The 17-member Commission is chaired by Alicia Munnell, the Director of the Center for Retirement Research at Boston College. Although there is no co-chair, Peter Diamond, Professor of Economics at MIT, closely fits that role during the many discussions of cost factors and analysis that occur during debate of the multitude of ideas and concepts on the table.

"There is a cross-section of members of the public, private and government sectors on the Commission. This has resulted in a number of proposals, some reasonable, some good but just not plausible and others neither good nor plausible," said Ralph White, a Governor's appointee to the Commission.

"In fact, a few proposals, in my opinion, were well off-base and disparaging to our retirement system, which basically is a very good system," said White. "But not everyone agrees with my proposal either on how to best handle the COLA and its base. I am optimistic, however, that the Commission's majority, at least, will agree on a COLA base that is acceptable by the Legislature to act upon."

A major issue that was brought forward from an earlier Blue Ribbon Panel on group classification which recommended that our retirement system should have only two groups, public safety and all others in what is now considered to be Group 1. "This would eliminate those employees who have been classified in Group 2 for good reason, especially those who work in the Dept. of Developmental Services (formerly Dept. of Mental Retardation), with direct care of residents, many of whom are lifetime residents. Their salary average is $32,000 per year for doing a humane job that no one appreciates except the families of the residents. Group 2 should not be eliminated," said White.

One of the more controversial proposals is to restructure our group insurance rates whereby retiree insurance premium payments would be tiered to length of service. Currently all retirees of a retirement system pay the same rates. This plan, which would be statewide has caught fire and seemingly gained support among the majority of the Commission members. Commissioner Ralph White is in favor of retaining the current policy.

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