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Appropriations Committee Passes Call for Study of Pension Spiking

by | Apr 25, 2011 5:16pm () Comments | Commenting has expired | Share
Posted to: Labor, State Budget, Pensions

The Appropriations Committee passed a measure Monday that would require the Programs Review and Investigations Committee to conduct a study aimed at curbing retirement “spiking” by state employees.

Spiking refers to the act of boosting one’s retirement benefits. Since pension benefits are calculated in part by averaging income earned during the highest earning three years, this is typically done by taking on additional overtime during the last three years.

Some supporters of the concept said that curbing the practice may not require a study.  Sen. Rob Kane, R-Watertown, said that the committee could try to address the issue on its own. He offered an amendment to that end.

It would have adjusted the statute to require retirement income to be calculated by the highest five years of income, rather than the highest three.

“This is an issue that affects our bottom line when it comes to retirement. So rather than using, what I believe right now is three years, we should extend that look back to five years,” Kane said.

Rep. Linda Schofield, D-Simsbury, said she didn’t understand how changing the calculation period from three to five years would address the problem.

Wouldn’t someone looking to spike their pension, just spike the last five years instead, she asked.

Kane said that over a longer period of time, the average would likely be much lower. Schofield said she would like to see the measure go further than that and eliminate spiking when it is inappropriate but she said that there may be scenarios when it is appropriate.

Appropriations Committee Chair Toni Harp, D-Hartford, said that a study was important. Rushing into the issue as she said Kane’s bill would, may have unintended consequences, she said.

“I believe that the idea of having Program Review and Investigations looking at it is really important to make sure we get all the details about what has been done, how it’s done and how we should be correcting it,” she said.

Sen. Beth Bye, D-West Hartford, asked how the amendment would impact collective bargaining agreements. Kane said it would certain impact them but based on statutes in place, the committee has the ability through the retirement commission to adopt the legislation.

Rep. Craig Miner, R-Litchfield, said that there will be implications to all the issues the legislature addresses surrounding retirement. But he said that commissioning more studies does little to address the problem of spiking.

“What Senator Kane and I are worried about is that another study is going to end up on another shelf and if we’re worried about whether negotiations need to happen, they’ll have to happen at the end of this task force as well,” he said.

A study would just be one more year the committee failed to make a definitive decision that spiking is something that should change, he said.

Ultimately, Kane’s amendment failed but Sen. Len Suzio, R-Meriden, also talked about altering the measure’s language. Suzio asked that the language dictating the study be written more broadly to include more considerations about what goes into the calculations of pension benefits.

As written the measure seems to instruct the study to focus on a single pension limitation, he said, adding that it should be addressing the entire calculation. Miner agreed.

“This is only one piece of what occurs in the process of raising someone’s pension amount,” he said.

Miner said selecting one specific section is not the best way to address the problem.

A staff lawyer confirmed that the language does seem to apply only to one provision of the statute but admitted “this statute makes my eyes roll back in my head.”

Harp said it’s important to be mindful of collective bargaining , another reason she said the study will be important. The bill passed without amendment but Harp agreed to continue working with the committee’s Republican leadership to tailor the study to be as useful as possible.

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(8) Archived Comments

posted by: newview | April 25, 2011  10:03pm

Why do these governing bodies of intelligent people repeatedly get to get together and collectively don’t have a lick of common sense?  Where is the basic breakdown of any semblance of intelligence when these folks breakout for debate? 

OK… look…here’s something real simple you folks under the golden arches don’t have to rack your brains about to wrap your arms around something “reasonable”... remember that stuff?

Here it is..follow closely

1.  Apply the pay scale and pay group an employee is at.  If non-union, base it on base pay minus all “incentives”.

2.  Apply a standard maximum deviation from that pay scale 5% upward (or whatever), whatever that number is… and that is the absolute maximum that an employee may claim in retirement benefits if they worked the overtime to qualify for that benenfit.

3.  End of story!

4.  End of study!

5.  Move on to something more creative like pulling your heads out of the sand!

posted by: CT Jim | April 26, 2011  7:52am

Don’t these same legislators like Kane and Schofield both include thier mileage reimbursement in claculating their pensions??? Must be sweet getting a $17,000 a year pension for a part time job. Not to worry i’m sure good ol Linda will land a job in the administration for her last three years and instead get one of those $100,000 a year pensions. I’m sure dhe would do the right thing and refuse it. NOT!!!

posted by: timelord | April 26, 2011  10:03am

The simplest formula of all, and the only one that makes any sense, is to base retirement SOLELY on base pay, not overtime and expense reimbursement or anything else. No spiking would be possible.

posted by: OutOfOutrage | April 26, 2011  12:58pm

OutOfOutrage

Great point Jim. I think we should only allow people who are free of sin look into the state’s misguided policies.  Perhaps the GA could bring in Jesus as a consultant to look into this.  They seem to like consultants.

posted by: Noteworthy | April 26, 2011  1:31pm

We don’t need any more study. We all know what they do - they all spike the OT and the adult day care managers allow them to do it. Since state employees are unable to police themselves, including legislators, there should be a state law that bars using overtime, expense reimbursement or any other add on when calculating state pensions. Period. If they want to count OT, then go to a 401K plan with a defined contribution. That’s what most of us real working folks “enjoy.”

posted by: hawkeye | April 26, 2011  10:16pm

timelord:  You are the only one who makes common sense. Compute retirement SOLELY on base pay.

Otherwise, who are playing “spiking games” in the computation process.

posted by: ... | April 26, 2011  11:19pm

...

This is a great step towards creating government efficiencies and I applaud our more conservative legislators for pushing this legislation.

There are risks in any legislation proposed, but within 5 years we need to reconsider how our state negotiates and works with the thousands who work within our state.

Not only does the process of payment (salary) and on-site benefits need to be reviewed within a bi-partisan/leaning conservative committee. But the retirement process also need to be looked at and reformed. It is the duty of our legislators and government to make sure our great state workers are fairly paid and benefited for their work without abusing the taxpayers generosity.

posted by: timelord | April 27, 2011  12:15am

Jonessac12: calculating retirement pay based solely on base pay (no overtime or other reimbursements) was NOT a conservative idea.  It was a libertarian idea. No Big Government loving D or R would ever propose it and the unions would go nuts. That’s why we need to get the idea out there as quickly as possible.

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