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Senator Moore optimistic for retiree COLA base to be increased, Reform of "Option C" expected |
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BOSTON, August 31, 2005 - After years of pushing for reforms in the rules governing pensions of public employees, one key senator believes this legislative session will bring good news for thousands of state and local retired public employees. Since the time when he was Senate Chair of the Legislature’s Committee on Public Service in 1997-98, Senator Richard T. Moore (D-Uxbridge) has filed legislation and lobbied his colleagues to increase or remove the cap on COLA, or cost of living, increases. Now, after months of intense study, a proposal is nearly finished to raise the $12,000 COLA base to a higher level. Under current law, state and local workers who retired usually receive an annual cost of living increase from the Legislature. For several years, the amount has been 3%, however the increase is only given for the first $12,000 of an individual’s pension regardless of how much the pension may be. That means, that no retiree gets more than $360 a year increase. Senator Moore is the sponsor of Senate Bill No. 1534, one of several measures proposed to raise the $12, 000 cap on COLA’s. His bill would increase the cap to $25,000. The state’s Public Employee Retirement Administration Commission (PERAC), is nearing completion of an actuarial study relative to raising the COLA base above its current $12,000 level. Senator Moore said that the study’s results and recommendations are expected by the end of the year. Once the COLA study is complete, Senator Moore explained that he and his legislative colleagues will have the information they need to push for passage of a bill to reform the COLA system. "The PERAC study and report is essential first step at raising the base,” Senator Moore noted. “Given the amount of money involved and the complexity of the issue, we could not proceed without this study," he added. "We’ve known for some time that increasing the base is expensive, but without specific actuarial data, it wasn’t possible to move the bill through the legislative process.” Senator Moore believes that with the Pension Fund in sound financial position, and with some creativity with the pension funding schedule the COLA reform can be achieved, adding, “Retirees have waited patiently for eight years, and, I believe, now is the time to move forward." Option C Under Review Of great interest to a number of retirees is legislation to recalculate Option C. As many as ten separate bills, including one filed by Senator Moore, Senate Docket 2297, are under consideration to recalculate the Option C retirement based on an updated mortality table. This provision of retirement law provides a lower annual benefit to a retiree in order to allow a continuing benefit to the spouse if a retiree dies. Last year, controversy arose when the Legislature instructed PERAC to implement a new updated mortality table for active employees, which is used to calculate Option C retirements. The table that had previously been in use for more than 60 years was based on 1928 life expectancies. PERAC made the new formula effective several months earlier than originally planned and a number of those who retired in the last six months of 2004 were unaware that the benefits in Option C were, in reality, close to those provided by Option A which provides a higher level of benefits to the retiree with no continuation for a spouse if the retiree should die. Senator Moore believes that many of those who retired in 2004 would have chosen to provide for their spouse (Option C) if they had known that the reduction in benefits was less drastic than under the old schedule. Senator Moore’s proposal would allow those who retired in the last six months of 2004 or their surviving spouse, to reconsider which option they wish to have. “I am very optimistic that this gross injustice will be corrected by the Legislature in the coming months,” Senate Moore explained. For more information, log on to Senator Moore’s official web site at www.senatormoore.com |
