Appropriations Committee Passes Call for Study of Pension Spiking
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.