Mass. Governor Proposes Pension Reforms

January 29, 2004 (PLANSPONSOR.com) - Massachusetts Governor Mitt Romney has proposed a slew of changes to overhaul the state pension system.

Romney released his reforms to target alleged abuses that state employees engage in to boost their retirement coffers. The abuses, Romney estimates, have contributed to the state’s $12 billion in unfunded pension liability, according to an Associated Press report.

One of Romney’s proposals would bar state employees from counting car and housing allowances in their pension calculations. Another would end the practice of basing pension payments on the average of a retiree’s three highest-paid years of service rather than the employee’s entire salary history. A third prong of Romney’s broad reform package would bar elected officials from gaining an extra year of pension credit by simply showing up for work on January 1.

While these changes will not affect most of the state’s employees, Romney said, it would address the “relatively egregious abuses of the past.”

“Over the past year, all of us have become quite aware of loopholes that have allowed state employees to sometimes ‘game’ the pension system,” the AP cites Romney as saying. “That leads to the cynicism of the public about public service and I believe it also leads to unnecessary expenses for the taxpayers.”

Romney’s proposal would require all future changes in the pension system to be calculated and paid for within three years. Additionally, Romney said this would address the Legislature’s practice of giving concessions to unions, by promising them additional pension benefits that do not have to be paid for until years later.

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