Massachusetts made little progress in closing pension loopholes and bringing benefits closer to private-sector levels before Gov. Deval Patrick took the reins. So even if the latest plan doesn't go far enough, it's another step in the right direction.
His proposal, which has the support of legislative leaders, raises the retirement age for the vast majority of public employees by two years.
This and other provisions would apply only to new employees, not existing ones, so the savings would accumulate very slowly. That's not ideal, but if we waited for lawmakers to cut their own benefits, we'd never get anywhere.
If the plan becomes law, new general workers and elected officials will reach full retirement age at 67, just like private-sector workers taking Social Security if they were born in 1960 or later. Other workers who can collect full retirement benefits earlier, such as police and firefighters, will still have that benefit, but time will be added to their service as well. Public safety workers in Group 4, for example, will be able to take full retirement at 57 instead of 55.
Earlier retirement, with reduced benefits, has been a sweet deal for many public retirees, because they could receive more money by collecting for additional years than they could by boosting their years of service. That formula will be changed to eliminate the extra incentive to retire early.
Another change is the increase in the number of years of earnings that are averaged to calculate benefits. Patrick said last year he supported raising the number from three to five, and that's what his plan would do. An even higher number would more accurately reflect a person's career earnings, but this represents an improvement.
Right now, the three-year average makes it easy for a well-connected employee to dramatically raise his or her retirement benefits by getting a high-paying job for a few short years after a long career at lesser pay.
Patrick's plan also includes what he calls an "anti-spiking" rule to curtail that practice. The anti-spiking rule provides that in the absence of a promotion or new job, a worker cannot receive an annual raise in pension-creditable earnings of more than inflation plus 7 percent.
But the rule may be too weak because it does not apply to "bona fide" promotions or job changes. A system that protects favored employees could easily deem a job change legitimate. The Patrick administration should think about how it can tighten that rule or demonstrate that rigorous standards will be used to prove "bona fide" status.
Unfortunately, those and other changes will make only a small dent in the state's unfunded pension liability of about $20 billion. The administration hopes to save $5 billion in pension costs and $2 billion in retiree health costs over 30 years. The unfunded liability could go down, of course, as the economy improves and pension investments fare better.
Patrick's plan won't eliminate every pension problem; no legislation could. But it represents a necessary change, and one that another governor might have chosen to ignore.
Good-government advocates must now be on the lookout to ensure the proposal doesn't get watered down before it becomes law.
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