'Double dip' retirees drive public costs: Reform measures eye retirement age
New Hampshire law allowing public employees to retire, collect pensions, then work other public jobs needs reform, said Democratic state Rep. Laura Pantelakos.
Like many, she calls the practice "double dipping."
"They're able to live high on the hog and they're still working, but getting double pay," said Pantelakos of Portsmouth. "And they're taking a job someone else could've had."
State law allows employees in the New Hampshire Retirement System to retire after 20 years of service and begin collecting pensions that were funded by the employees and taxpayers. As a result, public employees can retire in their 40s, collect pensions from the retirement pool for decades and work other public jobs.
Meanwhile, the NHRS has an unfunded liability of $3.5 billion, said Marty Karlon, public information officer for the NHRS.
And in 2009, the Legislature reduced its contributions to the state retirement pool from 35 to 25 percent, meaning municipalities have to pay more. The state is scheduled to resume paying 35 percent in 2012.
Karlon told Seacoast Sunday it's illegal to collect a pension while working a full-time job that requires mandatory retirement contributions. But post-retirement public employees are allowed to work part-time jobs, he said. For teachers that means 30 hours or less a week and for all other public employees, he said, any second job of less than 35 hours a week is considered part time.
A local example is Michael Magnant, who retired in July 2009 as Portsmouth's police chief, took advantage of a now-expired benefit to collect $117,963 in unused sick and vacation time and a month later began work as Rye's town administrator. State law allows Magnant to collect his police pension while working the administrator job, as long as the new job is "a clearly defined, truly part-time capacity in a part-time position that does not require mandatory NHRS enrollment."
Magnant's Rye job is described as three days a week, at $44.61 an hour, or $55,673 a year.
The NHRS is fighting media requests for the release of names of pension recipients with their corresponding pensions. The Portsmouth Herald filed a Right To Know request for the names and pensions of all Portsmouth retirees, while the New Hampshire Union Leader requested information about the state's top 500 pensioners. The Union Leader won a superior court judgement, which the NHRS is appealing to the N.H. Supreme Court.
"I think it should be illegal for a government worker to retire, collect a pension, then go work at another public job," said Portsmouth resident Erik Crago. "The mere fact that this is allowed shows that there is blatant disrespect for taxpayers." Crago, a member of the Association of Portsmouth Taxpayers, said "the best jobs" today, based on pay and benefits, are in government.
"Unfortunately, those high-paying jobs come with high-paying retirement pensions that taxpayers have to fund," he said." I think it's a flawed system that needs repair."
Karlon said if the state retirement office discovers someone is collecting a pension while working a full-time public job, "their pension would stop and they would be contributing again."
He said the state retirement system relies on employers and whistleblowers to report infractions and if a breach is discovered, the state seeks restitution.
Some employers "try to skirt it," he said, adding it's "somewhat hard to police." Karlon said he could not disclose specific examples.
If a retired public employee is elected or appointed to a new job, said Karlon, the rules change and "it's up to them if they want their pension."
And why wouldn't they want to collect? Because they could re-enroll and accrue more service time, meaning a higher pension down the road, Karlon explained.
Newly elected Rockingham County High Sheriff Michael Downing said he's collecting a NHRS pension based on contributions he made as a state trooper and Salem police officer. Downing said he also got credit for Army service.
Asked if he'll continue to collect his pension while sheriff, or re-enroll, Downing said, "I have no intention of going back into the system."
William Fenniman was the subject of many news stories for retiring in 2007 as Dover's police chief, collecting more than $200,000 in bonuses and for unused time off, then accepting an appointment as head of the state Division of Juvenile Justice.
"Yeah, everybody was pissed that he got a golden parachute," said Steve Arnold, a retired Portsmouth police detective and representative for the New England Police Benevolent Association. "But if I could negotiate that for every one of my members, I would in a minute."
After retiring as Hampton police chief, William Wrenn was tapped by Gov. John Lynch to serve as the state's corrections commissioner. According to the NHRS, he's opted to collect his pension.
So too has William "Skip" Sullivan, who retired as Hampton's fire chief then went to work as Rye's fire chief.
One form of pension reform endorsed by Pantelakos during the last legislative session was a law change mandating that public employees work 25 years instead of 20 before becoming eligible for a pension.
"I know police officers and firefighters have stressful jobs but five more years wouldn't hurt them," she said. "It's been done in other states and it works."
Recently retired at age 75, Pantelakos said public employees contributed to and earned their pensions, but should work another five years before collecting. Every time it's brought up, she said, "It gets shut down by the unions."
"If they go on at age 21 and off at age 46," she said, "it is not going to hurt and will help cities and towns."
Newly elected state Sen. Nancy Stiles took an early retirement after 30 years with the Hampton school department at age 52. She said her monthly pension is less than $1,000 a month, which she called "not a big investment."
And because she's a state pension recipient, she said she's recused herself from voting during past votes when she served in the House, because "it affected my personal income." "So I'm trying to be cautious about which ones I vote on," she said.
With that disclosure, Stiles said she would "look favorably to increasing the retirement age."
She also said she'd look favorably toward other retirement reforms, but only for new hires, not employees currently in the system.
Arnold agreed, cautioning that any changes to current contracts could spark class action suits involving a massive numbers of retirees.
"You'd see a mass exodus in the upper echelon" of police and fire departments across the state, he predicted. "And that would cause an enormous draw on the pension system. Anyone in the system with tenure would go."
By starting with new hires, he said, any financial benefit of raising the retirement age would not be realized until at least 20 years from now.
Recent 'Return to Work' laws in other states:
Arizona, 2009: Retirees may not receive their pensions if they return to work in less than 12 months.
Connecticut, 2006: Retired teachers may return to work in a position designated as a subject shortage area for that school year.
Florida, 2009: Retirees are prohibited from receiving both a pension check and a paycheck for one year.
Georgia, 2008: Teachers who have been retired for more than 12 months may return to work and still receive retirement benefits.
Hawaii, 2008: State and county governments may hire public employee retirees as long as they have a one-year waiting period before being rehired.
Indiana, 2007: Retired teachers may be rehired if they are not participating in an early retirement program and retired on or after age 62.
Illinois, 2006: Teachers are allowed to return to work for 120 days or 600 hours without entering into active service. "Double dipping" was banned in 2010.
Kansas, 2006: The salary limit on rehired retirees' increased from $15,000 to $20,000. No salary limit was placed if the retiree returns to work for a different employer than the one they retired from. In 2007, a $20,000 salary earnings limitations for rehired retired licensed public school employees is eliminated.
Kentucky, 2008: State, county and state police system members are required to have a 3-month break in service before returning to employment. Teachers who return to work may have their retirement benefit waived and then have retirement benefits recalculated on the basis of the additional service.
Maryland, 2008: Local school systems are required to reimburse the State Retirement and Pension System for the offset of pension benefits for retired teachers rehired by their former employers that result from late or non-reporting of reemployed retirees who are exempt from the offset.
Michigan, 2010: "Double dipping" ban is enacted.
Mississippi, 2010: State agencies that rehire retired workers are required to contribute toward appropriate retirement plan and extend the waiting period before rehiring.
Montana, 2009: Retirees with 30 or more years of service may be reemployed as teachers, specialists or administrators on a full-time basis by a school district without the loss or interruption of their TRS benefits. The school district must demonstrate before hiring a retired teacher that they have been having severe difficulty in finding a qualified individual to fill the vacancy.
New Mexico, 2010: "Double dipping" ban is placed.
New York, 2006: Beginning in 2007, retired state employees, county employees, police, and fire retirees may only receive $30,000 in public employment without a reduction of retirement benefits.
South Dakota, 2010: Three-month waiting period before retirees may be rehired is enacted.
Utah, 2010: Ban on double dipping is placed.
Virginia, 2006: Employees who retired from a state career other than a teacher are now allowed to teach in a critical shortage position while still receiving a retirement check.
West Virginia, 2009: A retiree can return to work and continue receiving a retirement check as long as the compensation they receive at work does not exceed $15,000.
Source: Snell, Ronald K. "Pension and Retirement Plan Enactments." National Conference of State Legislatures.