Changes Will Help Secure the State's Financial Future
November 3, 2011
BOSTON — Representative Jen Benson joined her colleagues in the House today in passing groundbreaking pension reform legislation, which will save Massachusetts an estimated $6.4 billion.
"In my three years of service I have heard from many constituents who had questions and concerns about the pension system," said Benson. "I believe this further reform addresses actuarial changes and closes loopholes while still serving the needs of the dedicated public employees of the Commonwealth. We must ensure the system is sustainable to protect the needs of all residents moving forward."
Last month, Standard & Poor's increased the state's bond rating from A- to AA+, stating "Standard & Poor's believes that Massachusetts' active management of future cost pressures is important." The passage of the current legislation puts Massachusetts in a position to maintain this new bond rating and strengthen it in the future.
The bill contains many important reforms. The legislation sets the minimum age at 57 for Group 1 employees. By doing so, this keeps the same 10 year retirement window that currently exists in the calculation table. Also, members who enter service after January 1, 2012 will now have their pension based on an average of 5 years of regular compensation instead of 3.
The bill also pro-rates retirement allowance for future employees who have served in more than one Group (Group 1, Group 4, etc), by taking into account the number of years of service in each Group. Current workers will also be required to serve at least one year in a group at the end of their career in order to retire from that group. Anyone entering the system after pension reform will be subject to the group proration clauses. The legislation also creates a cool-off period, requiring an individual retiring from a position to wait at least 1 year until they can hold that public elected position again. Finally, the bill establishes commissions to study Other Public Employee Benefits, pension classification and disability retirements.
