Public pension chaos attracts scrutiny
when he was fired three years ago as the state’s correction commissioner, Michael Maloney stood ready to take his medicine – but hoped for a little sugar to help it go down. Maloney, who was ousted in the wake of the controversy over the prison killing of defrocked priest John Geoghan, sought to be placed in the same retirement category as corrections officers and other front-line public safety officials, a change that would have increased his annual pension payout from $41,000 to more than $82,000, according to a Boston Globe account at the time. The state retirement board turned Maloney down, but his request cast a spotlight on the case-by-case way in which individuals and groups of employees sometimes get favored pension status.
“Confusion is the only way to react to a system that has no logic to it whatsoever,” says state Rep. Jay Kaufman, a Lexington Democrat who is House chairman of the Legislature’s Joint Committee on Public Service. As many as 200 bills are referred to the committee each session petitioning to have an individual position or group of workers moved up, by statute, in the state’s four-tier system for classifying retirement benefits. Meanwhile, the state retirement board reviews 30 to 50 applications a month from workers asking to be assigned to a higher pension group administratively.
Hoping to tame a retirement-classification beast that has fed for decades off political influence, Kaufman and his public service committee colleagues in March appointed a blue-ribbon panel of outside experts to recommend reforms to the retirement classification system.
Among those at one time added to the second tier, whose members can retire five years earlier than those in the first tier at the same level of pension benefits, were all employees of Cushing Hospital, a now-shuttered state facility in Brockton. The highest pension category, Group 4, includes, along with various public safety officials, “licensed electricians” at the Massachusetts Port Authority, along with a handful of other Massport trades. The long list of Group 4 jobs also includes “the conservation officer of the city of Haverhill.” A Group 4 classification allows workers to retire 10 years earlier than those in Group 1 at the same level of pension benefits.
“It’s nuts. It’s no way to run a railroad,” says Alan Macdonald, executive director of the Massachusetts Business Roundtable and a member of the special review panel. “Frankly, if you happen to have an influential legislator on your side, you’re likely to be able to make the switch.”
says even the idea of higher
pensions for hazardous jobs
may be ripe for review.
Alicia Munnell, director of the Center for Retirement Research at Boston College and chairman of the special pension panel, says even the premise of favorable retirement benefits for more hazardous jobs may be ripe for review. The promise of reward in retirement may “inhibit movement in and out” of these jobs, impeding career advancement, says Munnell, a former member of the President’s Council of Economic Advisors. Higher pay during the working years might be a more appropriate reward, she says.
Pensions are a touchy subject in the public sector, where rich benefits are often seen as compensating for modest pay scales. That makes pensions a “potential third-rail issue,” says Macdonald. Kaufman describes union leaders as “understandably at least attentive, if not nervous,” about the classification review.
But one union official says changes would be welcome if they leveled the pension paying field. “An evaluation of the group classification system is long overdue,” says Jim Durkin, a spokesman for AFSCME Council 93, which has about 35,000 members in Massachusetts. “Dealing with inequities in the system through hundreds of petitions each legislative session has clearly proven to be problematic.”“My whole life is devoted to making sure people have secure retirements, so we’re not out to hurt people,” says Munnell, a nationally recognized expert on retirement issues. “But we want a system that will stand up scrutiny.”
“Could this be a hard sell?” asks Kaufman. “Yes.”