(State House, Boston) – State Representative Christine Canavan (D-Brockton) joined her colleagues in the House this week in passing groundbreaking pension reform legislation, which will save Massachusetts an estimated $6.4 billion.
“With the passage of this pension reform legislation, the House takes another step aimed at saving taxpayers money and securing the financial future of our state,” said House Speaker Robert A. DeLeo (D-Winthrop). “Two years ago, the House voted for major reforms of our systems of pension, transportation and ethics. More recently, we initiated and passed municipal healthcare reform, which will save cities and towns more than $100 million. Not only are we taking steps to weather the worst economic downturn since the Great Depression, we are leading the nation in taking measures to preserve the economic health of our state for future generations.”
“This latest installment of pension reform is an important step in the ongoing effort to provide an efficient and well-run retirement system for current and future employees,” said Representative Brian S. Dempsey (D-Haverhill). “I am proud that this legislation provides fairness to current employees while providing financial stability for the system going forward.”
“I applaud Speaker DeLeo and House Ways and Means Chairman Dempsey for their leadership and commitment to improve our pension system,” said Representative John Scibak (D-South Hadley). “The common sense changes in this legislation will achieve significant savings, ensure the long term viability of our pension system and protect the investments of current and future employees.”
“Being the grandmother of 6 little ones, it is very important to me that we secure the financial future of our great Commonwealth and make smart decisions that will benefit our future generations,” said Representative Christine Canavan. “With the passage of the pension reform bill, we are ensuring positive changes that will do just that.”
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 the following highlights:
• Minimum retirement age. Sets the minimum age set at 57 for Group 1. By doing so, this keeps the same 10 year retirement window that currently exists in the calculation table.
• 3-5 year pensionable income averaging. Members who enter service after January 1, 2012 will have their pension based on an average of 5 years of regular compensation instead of 3.
• Group Proration. Pro-rates retirement allowance for 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. Allows an opt-in for current employees.
• Group-based retirement limitation. Requires that someone serve one year in a group at the end of their career to retire from that group. Only applies to current employees, as anyone entering after pension reform will be subject to the group proration clauses.
• PERAC governance. This includes procurements conflict of interest, addresses financial disclosures, and education for board members.
• “Cool off” period. An individual retiring from a position must wait at least 1 year until they can hold that public elected position again.
• Study of future costs. Will establish commissions to study Other Public Employee Benefits, pension classification and disability retirements.
