Boston University Statehouse Program
This article was also published in The Lowell Sun.
Several employee and retiree advocates spoke out on Tuesday against an Andover representative’s bill that would majorly shake up the way Massachusetts calculates pensions for its workers.
House bill 2565, filed by Rep. James Lyons — a Republican who represents Andover, Tewksbury and Boxford —would alter the pension system by basing future state retirees’ pensions off of their average annual compensation for the entire span of their service, rather than their three to five highest-earning years.
Lyons said this would drive overall pension costs down, but opponents who spoke at the Legislature’s Committee on Public Service hearing Tuesday said the bill would hand retirees the short end of the stick.
“I’m looking in a broader picture and saying if we base the pension on the course of their entire earnings, that seems to me to be more fair,” he told The Sun in an interview Tuesday afternoon.
He said his bill would help curb abuse of the pension system. Under the current model, he said, employees will move to a higher-paying job just for the last three years of their career in order to get a higher pension. This is simply unfair, he said.
“My job as a legislator is to protect the taxpayers,” he said. “How anyone can say that’s fair to the taxpayers confuses me.”
Lyons did not testify at the hearing.
Shawn Duhamel, who represents MassRetirees and the Massachusetts Association of Contributory Retirement Systems, told the committee that Lyons’ bill is a “very bad idea that, very frankly, should never see the light of day.
“Quite honestly the facts will show (the bill) would be absolutely devastating to our members, as well as the taxpayers here in Massachusetts,” he said.
In an interview after the hearing, Duhamel said the state’s current system works well and the proposed change would undercut retirees. Other states, such as Nebraska, have tried pension systems similar to Lyons’ plan, he said, and they didn’t end well.
“The numbers just didn’t work out,” he said. “We don’t think that it’s a good deal for the employees, the retirees or the taxpayers.”
Under current state law, pensions for most retired state employees are calculated using the employee’s three highest-earning years. The Legislature passed a major pension reform bill in 2011 that extended that period to five years for employees hired after April 2012.
Michael O’Reilly, a legislative agent for the Boston Firefighters Local 718 union, said he is opposed to the bill because it takes into account years when the employee’s salary was not very high, hence lowering their pension allowances.
Firefighters in Boston especially, he said, have a low starting salary and are not even considered fully paid until their fifth year.
“If you had to calculate your pension over a career average, and you take in those first five years into consideration, way down here,” he said, reaching his arm toward the ground, “it’s really going to throw it off.”
Some pensions for retirees who worked lower-paying jobs are already so reduced, O’Reilly said, that they’re barely above the poverty line.
“Now if you’re going to take their career averages when they very first started, that’s who you’re really going to hurt the most with that bill,” he said.
Bill Rehrey, the executive vice president and legal counsel for MassRetirees, said Lyons’ proposal is unnecessary because the 2011 legislation was “very good, comprehensive reform.”
“We feel that that reform has already taken place,” he said after the hearing.
O’Reilly and Rehrey also testified to the committee and voiced their opposition to Lyons’ bill.
Lyons has filed this bill at least two times before, and each time it stalled after the committee hearing. He said he hopes the bill sparks a conversation on Beacon Hill about the commonwealth’s pensions system.
“It’s time we have a discussion about this and what it’s actually costing the taxpayers,” he said.