According to the Boston Globe, the benefit plan allowed veteran teachers to take a pay raise – known as enhanced longevity pay – typically for three straight years, and if it was used during a teacher’s last three years – when pensions are calculated – it boosted the pension total.
The ruling by the Public Employee Administration Commission only affects future teacher contracts.
The pension benefit caught on in the 1990s, but not without alarm from pension officials fearing that the provision would be too costly for the state, the Globe reported. In some school systems, teachers could boost pensions by as much as $6,700 a year, but the increase for teachers in other communities was a more meager $1,200 to about $4,000 a year.
In a suit, Massachusetts’ retirement system claimed that the payments were too high in at least 18 school districts. The system claimed that added payments cost it $6 million to $10 million a year and those payouts were not justified by the amounts the teachers themselves had paid into the system.
The Massachusetts Teachers Association fought the change, but acquiesced last week, when it reached an agreement with the retirement system that said no more than $6,500 in longevity pay would be counted toward calculating a pension.
Teachers who were denied part of their pension by the pension fund will now get retroactive payments. According to the Globe, the new regulation will not completely end the practice of longevity pay, but simply says the money cannot be counted when pensions are figured.