“With this program, we’ve sought to address the major issues currently affecting public retirement,” according to Hill. “It’s a comprehensive approach, offering sensible solutions.”

You will find below a brief summary of the bills, each contained within the appropriate subject matter heading. The complete listing of bill numbers and sponsors will be included in the March edition of the Voice. Editor’s Note: Please be aware that this listing marks the very beginning of the legislative process for the bills outlined  below. There will be a public hearing on each bill during the upcoming months, after which time further action can be considered.

Currently, the cost-of-living-adjustment (COLA) is determined by applying the percentage increase (i.e., 3%) to an eligible retiree’s pension, up to their first $12,000 of retirement benefits, which is the maximum COLA base. The $12,000 maximum base was established in the landmark COLA legislation (Chapter 17) enacted in 1997.

This bill has two major parts - the first relating to the state employees/teachers’ retirement systems and the other for local retirement systems. Under the state/teacher portion, the maximum COLA base is increased from $12,000 to $16,000.  In order to accomplish this without an immediate increase in the pension appropriation, the state/teacher funding schedule is extended from 2023 to 2026.

The second part is local option legislation, which allows local retirement systems, with the approval of the appropriate legislative body, to increase the $12,000 to a higher maximum base. This bill also enables the local systems to extend their pension funding schedule beyond 2028, if they so elect.

$15,000 Minimum Pension
In 1999, the Legislature established a $10,000 minimum pension for state/teacher retirees who have at least 25 years of creditable service. Long-term retirees of municipalities, regions, counties, districts and authorities are not currently eligible for this minimum pension.

Since then, inflation has been eroding away the present value of the minimum pension for these long-term retirees. Therefore, it is now appropriate for the Legislature to consider raising the minimum pension to $15,000.

Furthermore, this bill would grant local officials with the discretion (option) to offer a $15,000 minimum pension to their retirees who have at least 25 years of creditable service. It is noted that the legislation contains language that ensures the $15,000 minimum pension is granted to retirees who were career employees, and not part-time elected officials.

Survivors Minimum Pension
At the present time, survivors of active employees who die prior to retirement of a non-work related cause (MGL Ch. 32, section 12 (2) Option (d) ) receive a minimum annual pension benefit of $3,000. Having been set at the current level since 1990, the bill would raise the benefit to $6,000 annually.

Surviving spouses of accidental disability retirees, who die of a cause unrelated to their disability, currently receive a base survivors pension of $6,000. This base amount has been in place since 1994, when it was raised from $3,000. In keeping in line with inflationary pressures, this bill raises the base level to $9,000 a year.

Right to Remarry (Retroactive Application)

In 2000, the Legislature lifted the restriction that prohibited survivors (other than those receiving Option C pensions) from maintaining their pensions if they remarried. However, the restriction was eliminated for survivors, who remarried on or after July 1, 2000, but not for those who remarried before then. This bill would allow those survivors, who had remarried before July 1, 2000 and subsequently lost their pensions, to regain their pensions prospectively (from the law’s effective date).

Retroactive Option C Calculation
Anyone, who retired on or after July 1, 2004, will have the ability to select an Option C retirement benefit based on a new mortality table. The new table replaced the 1928 mortality table, which had been in effect for some 60 years. Under this proposal, the pensions of anyone, who retired prior to 7/1/04 and chose Option C, would be recalculated using the new table.

Raise Basic Life Coverage
In order to offer a more comprehensive life insurance benefit, this bill raises the basic life insurance benefit for state retires who are insured through the state’s Group Insurance Commission (GIC) from $5,000 to $10,000. Since municipalities already have the option of setting higher life insurance benefits, no further legislation is required at the local level.

GIC Composition
Under the current law, the governor chooses and appoints the state retiree representative to the GIC. In order to best serve retiree interests, this bill would allow this Association to chose our own GIC representative. It also grants the same right to the MA Teachers Association.

Medicare Part B Refund
Currently, the Commonwealth has the discretion whether or not to refund the Medicare Part B premium that is paid by retirees and survivors who are insured through the GIC. Since 2002, no refund has been paid. This bill requires the GIC to pay the refund at the same contribution rate as currently paid by those retirees and survivors (either 85 or 90%, depending on date of retirement).

The bill also adds a provision to the municipal Medicare acceptance law (MGL Ch. 32B, section 18), requiring municipalities that mandate Medicare enrollment to reimburse retirees for the cost of the Part B Premium. This requirement would only apply to those communities adopting section 18 after the law’s effective date.

GASB Funding Schedule
Beginning this July, the state and, on a staggered basis, municipalities must disclose their liability for future retiree healthcare costs in their financial reports, according to accounting standards, known as Statement 45, which were issued by the Governmental Accounting Standards Board (GASB). GASB also encourages that these liabilities be pre-funded, in much the same manner as pensions, in order to maintain a strong bond rating for the state and municipalities.

This bill requires that the state establish a schedule for pre-funding the future healthcare costs for its retirees and earmark any of the federal funds, that it receives from the Retiree Drug Subsidy (RDS), toward these costs. Any funds, allocated under the schedule, would be invested by the state’s Pension Reserves Investment Management (PRIM) Board. It also includes local option provisions, that allow municipalities to do the same. A municipality can elect to have any funds, allocated under their schedule, invested by the the local retirement board or PRIM.

Survivors Insurance Retention
With the exception of Option C survivors, all other survivors, regardless whether they remarried on or after July 1, 2000 and are allowed to retain their pension benefit, or remarried before then and lost their pensions ( see “Right  to Remarry” above), forfeit their health insurance benefits. This bill would allow survivors to remarry without losing their personal insurance coverage.

GIC Appeal Process
The bill would grant retirees, insured through the GIC, with the right to appeal the denial of coverage, prescription drug copayments, and rejected claims before the GIC commissioners. This process is modeled on that established under the MassHealth Plan, which provides enrollees with an appeal process.

Reinstatement of Health Insurance
Periodically there are retirees who, for various reasons, drop their health insurance coverage with the public employer from which they retired, opting, in most cases, into a private sector plan instead. While they are usually allowed to rejoin their former insurance plan, some municipalities have refused to reinstate retirees in their plan. A municipality’s refusal to reinstate a retiree, stems, in part, from the fact that existing law could be more clear and concise on this issue. This bill would codify both case law and federal statutes that require retirees be allowed to rejoin their respective plans. 

Non-Contrib Vets Tax Exemption
Those retirees, who have creditable service prior to 1939 and are veterans, were entitled to receive what is a non-contributory pension, whereby their accumulated pension contributions were refunded to them. However, these pensions are subject to state income tax. This bill would prospectively grant the non-contributory veterans the same tax-exempt status as all other public pensioners receive.

Extend New Definition Of Veteran
In 2004, legislation was enacted that expanded the definition of veteran to include those who served during non-wartime periods, as well as National Guard duty in very limited cases. Unfortunately, this law was only applied prospectively, from 8/26/04 forward.

That meant the expanded definition of veteran did not apply to those, who retired on a superannuation (regular) retirement before 8/26/04 and had non-wartime military service (or National Guard duty in very limited cases). These veterans were not eligible for the veterans bonus (up to $300 annually), despite their military service.

Under this bill, the new definition of veteran would be extended to include those, who have the requisite non-wartime or National Guard duty and retired on a superannuation retirement before 8/26/04. If enacted, they would then be eligible to receive the veterans bonus prospectively from the effective date of the law.

Disability Reexaminations
Under the current law, the Public Employee Retirement Administration Commission (PERAC) is required to periodically reexamine  disability retirees regardless of their age or the length of time that they’ve been disabled. We believe that such an open-ended process is unnecessary and wasteful. This bill would end periodic medical reviews of disability retirees, who have been reexamined, at least once, and retired on disability for longer than ten years, unless the retiree requests a reexamination by PERAC.

Earned Income
By law (Section 91A), disability retirees are allowed to work in a limited capacity and earn supplemental income in order to help support their family. They are restricted in the amount of money they are allowed to earn according to a statutory formula. However, the language in Section 91A is vague as to what constitutes earned income and, unlike other provisions in the pension law relating to disability retirees, does not include a mechanism that allows the statutory formula to be adjusted for inflation. This bill defines earned income and creates an indexing feature to the $5,000 monetary cap, which is included in the statutory formula, in order to allow the permissible amount of a retiree’s earnings to be adjusted for inflation.

Conversion of Disability Pension
Under this proposal, a retiree receiving a disability pension can opt to convert their disability pension over to a superannuation (regular) retirement. In doing so, the retiree would no longer be considered disabled for pension purposes and would take a reduced superannuation pension. Once a retiree converts, they would no longer be restricted from gainful employment in the private sector.

Non-Veteran Ordinary Disability
Active employees, who can no longer perform the essential duties of their job due to a non-work related cause, are eligible for what is known as an ordinary disability pension (Section 6). If found to be disabled, a vested employee (10 or more years of service) is then allowed to retiree with a disability pension. Those, who are veterans, receive a pension equal to 50% of their previous twelve month average. Non-veterans are eligible for a pension based on a special formula that treats them as if they are age 55, with a 1.5% age factor. The pension is then calculated as 1.5% x their actual years of creditable service.

This bill changes the age factor, put in place in 1945, to reflect the longer life expectancy of today’s society. It proposes treating non-veterans, who apply for an ordinary disability retirement after the effective date of the law, as if they are age 60, by using an age factor of 2.0. In the unlikely event that a veteran would receive a greater benefit under the enhanced formula, they could elect to have their benefit calculated using it.