I found this to be a tad on the mind-boggling side.
The real estate developer chosen by Governor Deval Patrick to distribute billions of dollars in federal stimulus money has been receiving a state pension ever since he was fired from his job at a state development agency in 1995, according to state records…. [U]nder a Massachusetts pension law intended to protect patronage hires from retribution, his firing entitled him to begin collecting an enhanced state pension while he was in his mid-40s….
State retirement records show that Simon has been paid $29,000 to $32,000 a year since December 1995 with his enhanced, early pension. He has collected $403,751.84 in all, according to state records.
Supposedly Mr. Simon will forego his pension payments while in his new job. But here’s a particularly nasty bit.
Simon, who also worked in the 1970s for Senate President William M. Bulger and for the Massachusetts Land Bank in the 1970s and 1980s, did not have the required 20 years of state service when he was fired.
So to qualify for his early pension, he took advantage of another quirk in state law – the ability to include pension credit for nonstate jobs. Simon asked the Essex County retirement board to have time he served as a $150-a-year member of the Ipswich School Committee added to his pension.
The board refused, but Simon appealed to a state administrative judge, who eventually ruled in his favor and awarded him five years of School Committee time.
You know, it’s this kind of thing that makes folks who aren’t reflexively anti-government want to pull out their own fingernails. Governor Patrick campaigned successfully on the notion that people should put down their cynicism about government. That’s all well and good, but government has a role to play in that equation: it needs to make a conscious effort to eliminate the practices that have built up that cynicism in the first place. And I’m afraid that the pension system, with all of its quirks and loopholes and back alleys that all seem to wind up with able-bodied people in their 40s receiving a pension, is Exhibit A.
Simon’s got his pension, and there’s not much to be done about that. Seems to me the least he could do, if he really wants to oversee the stimulus, is decline the $150,000 salary and take $1 a year instead (as I already suggested). It’s not like he needs the money, and it would send the right message.
David, 2/3 of us here in the Commonwealth is pulling down a pension. I guess I figured it was public knowledge. I’m getting $35,000/year because I use the tolls on occasion, and my neighbor is near six figures because she spent a week temping at UMass-Dartmouth. I always thought this was par for the course.
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p>Are you saying that you don’t get a state pension??
Pensions for everyone — problem solved!
…not one paid sick day, either. Not eligible!
Will his State pension be recalculated to include this salary in his pension when it resumes?
To ask this question is to answer it. Top three years, baby!!!
I think it should be based on the median salary over a range, say median over seven years. Assuming that salary goes up or stays the same every year, it means your salary you were making on the 4th year before the end. In other words, based on the salary you were making 3 full years before you retired.
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p>This really cuts out the pension-based incentive to get a big paying salary for a year or two before retirement. You’d have to hold that job for four full years for it to kick in to your pension, and that makes the move not really a hack job for pension benefits in the first place.
Seriously. If we’re going to keep this awful system because its such a political sacred cow, why not just base the pension off of average salary. As in average of all years of employment. If you were a trash collector for 15 years, then 15 years of your pension base will key off of that, no matter what ridiculous commission job you manage to land.
Is that it means that you can get punished in your pension. Consider two employees:
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p>A: works for the state for a few years, goes to grad school, comes back and does a job for the state for 20 years.
B: works in the private sector, goes to grad school, does the same job as A for the state for 20 years.
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p>Who deserves more pension? Certainly B doesn’t deserve more than A, but he’ll get more because you’re basing it on average salary.
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p>That’s if everything is balanced correctly for inflation, which is a big if.
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p>As for gary’s point slightly downthread, a median salary helps to alleviate this a bit… it forces the person to take a job with the state for four years instead of three. That’s certainly an improvement for a few reasons.
* Person less likely to take the job “for the pension” if they’ve got to do one more year of time
* Hack appointment less likely if we’re “stuck” with the hack for one more year of time
* Reduce turnover at the top spots, since appointments (hack or deserving) will have an incentive to stay at that spot for another year
* Pay one year less pension for each hack, who now stays four years instead of three and therefore stays for one more year
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p>I’m not arguing that this plan is the best, or that the numbers are right. I do think it would help reduce the hack incentive while not serving collateral damage to the civil service lifers.
If they do, is the retiree (second time around) eligible to re-calculate his pension?
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p>Will re-calculation include both the higher average salary and the higher age at (second) retirement?
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p>And does he retain the doubling of pension that he was awarded the first time around?
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p>And with the new, higher pension, will he look for retroactive pension payments for his first period of retirement?
I hear you. How about a 20-year average (or whatever it takes to fully vest for a particular tier)? I’m not an expert, but I think you could do this. In the example above, A’s stint in state government wouldn’t give him a lower pension than B. But he wouldn’t get more either. Unless he opted for a higher tier of service (say, 25 years). In calculating his 25-year average, however, he would have to include his lower-paid pre-grad school years. I really don’t think this would affect your typical state worker, teacher, etc., who works in one job or area for his/her entire career. It would end the practice of setting the pension off some “capstone” position. But I think we should all be able to agree that this practice is not in keeping with the idea of a pension being a reward for a career of service.
I have no idea how many years you need to be in to qualify for any pension. I thought it was 10, but that’s really hazy memory for me. In any case, if it is 10 years, then the argument I made for A vs. B still applies where A worked for 1 year, left to go to grad school, came back for 10 vs. B who just worked for the latter 10. A’s average will be lower than B, and that doesn’t seem fair.
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p>So, how about this: take the median of the minimum qualified time, say 10 years. In the case of an odd number, the median is the mean of the two middle years (by definition). This prevents A from being screwed. Example:
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Year Sal_A Sal_B
2008 $80,000 $80,000
2007 $78,000 $78,000
2006 $75,000 $75,000
2005 $72,000 $72,000
2004 $70,000 $70,000
2003 $68,000 $68,000
2002 $65,000 $65,000
2001 $62,000 $62,000
2000 $60,000 $60,000
1999 $58,000 $58,000
1990 $20,000
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p>In this example, the pension basis for A is the median salary of the best 10 years of his career: ($68,000 + $65,000)/2 == $66,500. The pension basis for B is the median salary of his 10 year career: ($68,000 + $65,000)/2 == $66,500. Person A, who worked another year a decade earlier for very low salary ends up with the same pension basis, not a lower one. If the pension is higher for more years served, he gets the boost due to longevity. Using the mean screws A.
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p>It also means that if in 2005 each of them got a massive raise, their pension basis wouldn’t actually move one bit. They’d have to stay working until 2011 to get that raise fully into their basis (2001…2010 has middle years of 2005-2006).
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p>The nice part about using the median salary is that it doesn’t reward big boosts at the end, and doesn’t penalize small salaries at the beginning, or working an extra year at low salary. Using mean of highest 3 overemphasizes the salary at the end of the career, which is too easily boosted by an overly top-heavy managerial structure.
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p>It’s not hack-proof (nothing is), but it would help prevent hackary. It also means that six years on the school board plus 4 years working on the state gives you a median salary of zero (or close), helping to reduce the ability to use volunteer-ish positions as basis for a large state pension.
Actually, I miscounted on the median. Should be ($70k + $68k)/2 == $69k. Fundamental idea remains.
Using “average” salary with these ridiculous town boards that Simon and Brennan (and many others) managed to get counted as part of their pension tenure, their pension base for those years would be the $300 stipend they got for serving on the library board or whatever.
This scam has been going on for years.
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p>Get a minor job with a Town, say as moderator paying $200 per year or maybe Library Trustee in some towns, and hold it for at least 10 years, then seek some full time state job paying a real salary for 3 years and presto! pension based on the 3 years.
But that doesn’t stop an opinion based on the fallacy.
The rules are complicated. If you can explain them, you’d be helping everyone.
say that you can suspend receiving pension payments, usually so that you can work in a job that normally contributes to the retirement system, but that when you resume, there is no recalculation.
Do you really think this is about a pension and whether or not Simon should make $150,000 or $1? This is about our elected officials appointing corrupt people to positions of tremendous power. But I’m sure it won’t be a problem, Simon seems like an honorable guy, the money will be spent wisely…NOT.
David, I was going to comment on your original thread with a guess that the job would last just over three years so this guy could sweeten his pension.
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p>I pulled the comment thinking that I was being way too cynical and that he surely didn’t have government experience (and hence no pension to enhance).
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p>I guess my instincts were correct. How awful. And really what a slimy way of getting the pension by claiming School Committee service.
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p>Thank you for front-paging this.
It’s an odd decision that allowed School Committee service to qualify as pensionable. PERAC sets the local pension options, and School Committee service isn’t one of the options.
is that based on current law, it would seem that taking the job for $1 a year would reduce his pension, no?
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p>It’s one thing to ask a guy to work for free; it’s another thing to ask him to pay you every year for the rest of his life for the privilege of working for you for free.
Pretty sure it’s top three years, not last three years.
But, isn’t the pension based on the top three years of salary, not the most recent? Did I miss something?
I ended that first sentence with a question mark because I have no idea how it really works. Top three years makes more sense than last three for precisely this reason (and likely some others too).
We can play around the edges (top five years vs. top three!), but they should take this opportunity to take a meat cleaver to the state pension system. Social Security + matching 401k funds. Solves this problem, and a bunch of others too. I’m surprised the public sector union apologists aren’t on this thread defending the system.
Dozens of plans littered around the state; enormous underfunding; full pensions being paid to people in their 40s; Governor and Legislature making budget decisions based on the pension’s 1/1/08 balance even though everyone knows the actuarially balance skidded by 40% or thereabouts by the end of 2008; endless stories of politicians scamming great benefits.
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p>What will it take to put a stake the defined benefit vampire?
I worked for 17 years as a mental health worker in the state mental health system. When I left (’95) I was making about 25K/year. The job involved working weekends and holidays. We worked with people with serious problems who were not always happy to be there. We didn’t have the resources we needed for the people we worked with.
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p>Public employees are not all highly paid hacks. Many are janitors, kitchen workers, clerical workers, people who work with abused children, people who find solutions for people with disabilities, etc. People with bosses telling them what to do every day. Regular working people.
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p>And like everyone else who works for a living they deserve a decent pension. And they fight for that through their unions, as all workers who have that opportunity do.
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p>Something needs to be done to stop the type of abuses we read about. But not at the expense of the vast majority of working public employees.
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p>That means whatever the solution is, we should keep a defined benefit plan. We should not join the current race to dismantle American workers’ retirement benefits by moving toward defined contribution plans. And we should not base pensions for career people on pay rates they were making many years before they retire.
Speaking as someone who must “do their homework” to do the work I do – seems to me that either “the folk doing the appointing” did NOT do their homework – ergo the omission in the official PR biography OR they thought the rest of us were too stupid to find out/notice or to numbed by the amount of self-dealing on Beacon Hill to care.
On the other hand, does it make sense to disqualify people for a position because giving it to them would increase their pension?
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p>That makes little sense to me — yet this is the path the pundits lead us down when they frame each hire in terms of “here’s how much he would increase his pension”.
It’s that this guy, in his 40s, began receiving a state pension even though he was at that point busy building his real estate empire (and no doubt making a ton of money doing so), having rammed his pension through the system by counting dubious years that he served on a local school committee.
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p>In other words, it’s that he looks like another one who has figured out how to game the system to the tune (so far) of about $400,000, with plenty more to come. And this is the guy we think should be doling out $2 billion in stimulus money — and being paid $150K for it?
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p>Does not compute. [/robot voice]
I think we should give him a raise. Perhaps only then will he not feel entitled to steering some of this money into his own pocket or the pockets of our elected officials. Or did you think Blogo and Willkerson were the only politicians in it for the money?
And this isn’t just some guy who happened to get a pension:
This (very, very wealthy) guy proactively made the ridiculous argument that his school board service should entitle him to a pension. Amazingly, for this state anyway, he was actually denied by the pension board. He then appealed their decision to some ALJ. And to date, he’s taken over $400,000 out of the retirement system. He’ll probably clear close to a cool million before he dies.
Couldn’t we find get a MA Spending Czar who didn’t get an inappropriate state pension starting at age 44?
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p>Couldn’t we get a Treasury Secretary, Chief Performance Officer nominee and HHS Secretary nominee who paid their taxes properly?
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p>Can’t we expect, as one qualification for people appointed or elected to positions of high authority, for them to have conducted their own financial affairs correctly?
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p>Are there not enough qualified people out there who don’t have tainted personal financial records?
governor does anything right. He has no control over his message(s).
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In a job that depends on the bully pulpit, Patrick is neither bully or “pulpiteer.” He’s shown almost no leadership beyond gay marriage.
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p>Yellow Dog