Won't Happen Tomorrow, but the Six-Figure Public Pension Is Headed for Extinction

Friday, August 10, 2012

The day will come when the Massachusetts legislature will have to put a cap on pensions paid to public employees, say $70,000 a year. 

This won’t happen soon, but a pension cap is an historic inevitability, here and across the nation, no matter how ferociously and long the public employee unions fight it.  Two factors will bring it about:

One, local and state budgets will not be able to sustain a slew of pensioners drawing six-figure annual payouts at a time when so many other priorities will be demanding taxpayer dollars.

Two, average folks will refuse to continue plush public pensions because they will have to work longer than most public employees, will enter retirement without any pensions themselves, and will increasingly resent having to provide certain public pensioners with a lifestyle they could never have themselves.

I’m not talking about the average man or woman who retires from some department of municipal or state government after 30 to 35 years on the job and receives only a modest pension. 

According to the Service Employees International Union, seven out of 10 public employees get less than $30,000 per year in retirement.  No one can live large on money that small.  God bless those folks.

No, my candidates for pension caps are those who make up the relatively small group collecting pensions in excess of $100,000 per year. 

In 2009, The Republican newspaper of Springfield reported that 106 state retires, including 60 professors, administrators and others from the University of Massachusetts, fell into this category. (Municipal retirees were not accounted for in this story,) 

That number has no doubt grown in the interim, but I’m sure it remains small in comparison to the total number of state retirees.

When the legislature of the future is enacting that cap on public pensions, maybe it will also decide to alter the state law that allows many police officers and firefighters to retire fairly easily on tax-free disability pensions because they have heart ailments automatically presumed to be work-related.

Section 94 of Chapter 32 of the Massachusetts General Laws states, in part:

“…any condition of impairment of health caused by hypertension or heart disease resulting in total or partial disability or death to a uniformed member of a paid fire department or permanent member of a police department, or of the police force of the Massachusetts Bay Transportation Authority, or of the state police, (etc.)… shall, if he successfully passed a physical examination, which examination failed to reveal any evidence of such condition, be presumed to have been suffered in the line of duty, unless the contrary be shown by competent evidence.”

This issue came to the fore again recently when the first woman-commander of the Massachusetts State Police retired at age 58 and the Boston Globe reported that she had been granted a disability pension in the range of $163,000 a year because of a heart condition.

One hundred and sixty-three thousand dollars works out to $13,583 per month, $446.57 per day.

“Based on calculations reviewed by several public pension specialists,” the Globe said, this person “may save about $25,000 a year in lower federal tax bills by receiving a disability pension…”

This is legal, of course, and most of us would take advantage of such a benefit if we were in a position to do so.  But that doesn’t make it right or fair.

Would it really hurt any retiree making over $100,000 to pay federal income tax?

I don’t think I’d have a problem, though, with the newly retired State Police commander paying no taxes if she was getting $70,000 a year instead of $163,000.

And I don’t think I’d have a problem with any police officer or firefighter benefiting from the presumption that his heart disease was work-related if it could be documented that he had undergone an annual physical, exercised regularly, not smoked, maintained a proper weight, and followed medical guidelines if diagnosed with high cholesterol or elevated blood pressure.

As someone I know in the health insurance industry once aptly put it, “I’m willing to insure you for your bad luck but not for your bad behavior.”

No comments:

Post a Comment