The Governor attempts to use a few high profile examples of possible pension abuses to drastically cut the retirement benefits of rank and file members of the pension system. Make no mistake, the Governor’s so-called pension reforms are an attack on the retirement benefits of thousands of cops, firefighters, teachers, social workers, and other state and municipal employees.

Specifically, the Governor proposes:

• Instituting a pension cap. Without question this is the most troubling of the Governor’s proposals. He suggests replacing the current practice of using the three highest consecutive earning years to determine a worker’s pension with a complicated scheme that penalizes workers who are promoted or who otherwise receive anything other than the most modest of pay increases over the course of their careers.

• Eliminating the Section 10 benefit. Section 10 allows workers whose positions are eliminated and who have 20 years of service to receive a pension as if were 55 years old. The Governor proposes eliminating this provision entirely, thereby harming laid off workers.

• Increasing the interest rate on creditable service purchased. The Governor’s proposal is designed to make it nearly impossible for workers to purchase creditable service from the Peace Corps, out-of-state teaching, time in the armed forces, and other creditable service. Curiously, he proposes increasing the interest rate on buying service but does not offer a comparable interest rate calculation when workers take their money out of the system.

• Requiring payment within 3 years of any pension enhancements. The Governor proposes that all enhancements to the pension system (ERIPs, Group reclassification, etc.) be paid within 3 years. Despite his claims of fiscal prudence, this is a poorly disguised attempt to prevent future enhancements to the system. There is no reason to require payment within 3 years when the benefits and implications may not be realized for decades.

• Pro-rating pension time for members of Groups 1, 2, and 4. It is unclear what overall effect this change would have, although it would definitely serve to lower some workers’ already modest pensions. This provision needs thoughtful analysis. Furthermore, we wonder why workers in Group 3 (the State Police) are excluded from this provision.

• The Governor is trying to use an extremely limited number of pension "scandals" to mask his assault on public employees. The average pension for Massachusetts’ public employees is currently just over $19,000/year. Is it these pensions, those of our former firefighters, human service workers, and police officers that Romney believes needs reforming?

• Recent actuarial studies have shown that new workers are actually contributing so much to the system that they are paying for close to 100% of their own pensions. How, then, does the Governor justify initiatives intentionally designed to cut the pension benefits for workers who are already essentially paying for their own pension?

• The Governor would have you believe that the high cost of funding pensions is because of so-called abuses of the system and ERIPs. This is simply untrue! Today’s high costs are the result of the Commonwealth paying nothing into the system for decades. The Legislature has already set the course for resolving the so-called pension problem by establishing and following a reasonable payment schedule for paying off the unfunded liability.

The Governor’s proposed changes to the public employee pension system are far-ranging and complex. In general, we find these proposals to be responses to isolated anomalies in the system. The complexity of the system does not lend it self to legislating in response to anomalies – such changes inevitably result in unintended consequences for thousands of workers.

We could propose a variety of pension reforms that would, for example, stop the practice of having workers pay for 100% of their pensions, insure adequate cost-of-living adjustments for retirees, and more appropriately balance the number of years of service with age in calculating pensions.