The Globe is reporting today on the ability of some local and state employees to gather extra (and earlier) pension benefits by invoking a 1945 state law that gives the richer benefit to twenty year employees who have had their jobs phased out. From the Globe:
The law, passed in 1945, was intended to protect longtime public employees from politically motivated purges, guaranteeing them immediate and significantly higher pensions if their jobs are eliminated or if they are dismissed after at least 20 years on the job. Typically, workers in the state retirement system must wait until they are at least 55 to begin receiving a pension. Unions continue to defend the provision as necessary to help protect workers from being fired or to cushion the blow if they are.
The story highlighted the benefits received by employees of the financially strapped Massachusetts Turnpike Authority.
At the financially troubled Massachusetts Turnpike Authority, for instance, six former employees, including high-level Big Dig managers who were in their 40s and 50s, have taken advantage of the law to reap a combined $3.7 million in pension and lifetime health insurance benefits beyond what they would receive under normal pension rules, an average of more than $610,000 each.
The expenses, calculated by the Globe, were confirmed by the Turnpike Authority, based on state actuarial data on life expectancy and an examination of hundreds of pages of pension records. Many critics, including a few high-ranking state officials, believe that the law that allows for the enhancements should be repealed.
Based on these estimates the Globe has estimated system wide costs.
Extrapolating the costs of the turnpike managers across the entire pool of 386 employees, the state’s tab for all such enhanced pension commitments over the last five years could be as high as $235 million. Using a more conservative estimate, with workers making half as much as the Turnpike Authority officials, the commitment for enhancements over the last five years would be $115 million.
The Globe cited some of the individual cases involved. Here is just one.
Eric J. Waaramaa is among the Turnpike Authority officials who received such enhancements. In a 22-year career with the state and the authority, he worked his way up from planner to the authority’s chief financial officer. But he was terminated last year without explanation, according to a letter dated Jan. 1, 2007, resulting in a $42,036-a-year pension. At the time, Waaramaa was 45 and earning about $105,000 a year. If he had waited till 55, his pension would have been $33,688 a year.
Since then, Waaramaa has worked at the MBTA as deputy director of financial planning, at a salary of $86,142. He picked a 401(a) retirement plan at the MBTA, under which the agency contributes about $6,900 a year toward his retirement.
These stories on some of the abuses of the system are coming when folks are feeling some real pain out there, and quite frankly create a political backlash against all government employees. As we prepare for a referendum on abolishing the state income tax those standing against such a draconian measure should hope that proponents do not have the money to run sixty second ads highlighting some of the things talked about in the Globe today. No real reform could translate into no income tax after November!