Massachusetts Senate approves pensions bill

The bill contains a number of provisions aimed at eliminating many of the loopholes the governor said had "allowed public employees to abuse the state's pension system" (www.globalpensions.com: 23/03/09).

In particular it eliminated the controversial "one day, one year" provision which granted some public employees an entire year of creditable service for as little as one day of work.

Massachusetts State Senate minority whip Robert Hedlund said: "It's unfortunate that it took a stream of exposes by the media and an outraged populace to convince Senate leadership that these reforms are needed."

He added: "The good news, however, is that this bill is a great first step towards cleaning up the system, and starting to win back some of the trust we have lost from the voters."

The Bill also prohibits public employees who have two jobs from claiming a pension based on the combined salaries.

It also aligns the Massachusetts Bay Transportation Authority pension system with the state system, which, the governor said, put heavy strains on the transit agency finances burdened by US$8bn of debt.

The bill also included a prohibition of bonuses for state pension fund managers during years that the fund accrues a loss and a requirement that legislators who file bills making changes to the pension system include a statement outlining how much the changes will cost and identifying where the money for the increased cost will come from.

One provision offered by the Republican Caucus, but rejected by the Democratic majority would have capped pensions at 400% the state average.

Another rejected amendment would have prevented public employees working a full-time and a part-time job from retiring early based on the part-time job's retirement rules.

The Senate Bill adopted today requires a special commission to study both of these issues.