double dipping | Pension360

New York Senator Explains Why He Chooses to “Double-Dip”

Pension360 yesterday covered the quirk in New York law that allows lawmakers to file for retirement, collect a pension, but stay in office and continue collecting their normal salary, as well.

Nine lawmakers filed for “retirement” this year. But on Tuesday, one of those lawmakers explained what his motivations were for taking advantage of the legal loophole.

New York State Sen. John DeFrancisco explains his motivations:

“A state statute that was enacted long before I was first elected to the Senate allows state employees who are 65 or older to retire and also earn an income in a state position. This applies to all state employees.

In the past, many state employees, including legislators, have retired and continued to work in state government. I was eligible to do so three years ago, but chose not to. This year, I decided to file for retirement.

If I did not file and died while in office, my wife of 46 years would not receive my valuable retirement that I have earned over the last 37 years. Instead, she would receive a modest lump sum benefit. The older I have gotten, the more I have come to understand that I cannot risk depriving my spouse of what she is entitled to, and what I have earned.

Granted, I could simply retire and not serve any longer. However, now that Republicans have regained control of the State Senate, Central New York would be better served by my returning to my Senate seat, as a majority member and Chairman of the Senate Finance Committee.

So in balancing these factors, I decided to file my retirement papers, effective January 1, 2015, and to continue to serve in the State Senate.”

New York Lawmakers “Retire”, Collect Pensions, But Don’t Leave Office

A quirk in New York state law allows certain lawmakers to “retire” without actually leaving office – letting them collect their pensions while still on the job and earning their normal salary.

From the New York Post:

A wacky loophole in state pension law allows legislators who are at least age 65 and elected before 1995 to retire for pension purposes.

In essence, the double dippers — many of whom make $100,000 or more between their base legislative salary of $79,500 and leadership stipends — will be giving themselves pay hikes of 30 percent to 100 percent, depending on years of service.

The legislators re-elected last month who filed for retirement with the state comptroller’s office are a bipartisan bunch.

They include five Republican senators — John DeFrancisco of Syracuse; John Bonacic of Orange County; Kemp Hannon of Nassau County; Kenneth LaValle of Suffolk County; and Tim Libous of Binghamton.

In the Assembly, three Democrats and one Republican filed for the added benefit — Jeff Aubry (D-Queens); Gary Pretlow (D-Mount Vernon); William Magee (D-Madison County); and David McDonough (R-Nassau).

“It’s a loophole that shouldn’t exist. But as long as this is the law, people are going to exploit it,” said Assemblyman Michael Fitzpatrick (R-Suffolk).

Fitpatrick has introduced legislation that would require elected officials and government workers to enter a 401(k)-style pension system.

E.J. McMahon of the Empire Center agreed. “If legislators were in a 401(k)-type system, like the vast majority of their constituents, this simply wouldn’t be an issue. The existing system shouldn’t simply be mended, it should be ended.”

The lawmakers defended their actions. They told the NY Post:

“I had a heart attack 10 years ago,” said Aubry, 67, first elected in 1992. “Everyone has to look at their own situation. I don’t know if this makes a huge difference to people in my district.”

Aubry, who makes about $100,000, expects a monthly pension of about $2,400 or close to $30,000 extra a year.

Bonacic, 72, told The Post his wife would collect lower benefits if he dies in office without being retired.

“If I were to die while in active service in the state Legislature, the law does not allow my wife to collect my pension. I put this decision off for as long as I can, but I thought it was appropriate at this time to protect my wife,” he said.

Pretlow, 65, said he was thinking of his own mortality.

“I’ve been to six funerals in the past two weeks, 28 to 55 years old. No one was older than me. Life is short,” he said.

In total, nine state lawmakers will be “retiring” this year without leaving their job.

Photo by Tim (Timothy) Pearce via Flickr CC License

Video: Lessons From Pension Reform in Utah

In the video above, former Utah senator Dan Liljenquist talks about the pension reform efforts he sponsored in Utah from 2008-2011 and what other states can learn from those efforts.

Liljenquist sponsored bills that ended “double-dipping” in the state, moved new hires into a defined-contribution plan and ended pension benefits for Utah lawmakers.

New Hampshire Supreme Court Limits “Double-Dipping”

A New Hampshire Supreme Court ruling Tuesday limited “double-dipping” – the term used when a public worker retires and later rejoins the public sector and earns a pension and a salary at the same time – but didn’t restrict it entirely.

Reported by SeaCoast Online:

The New Hampshire Supreme Court issued a decision Tuesday ruling that state pensioners cannot work more than 32 hours a week at a public job while collecting their state pensions.

The decision upholds current state law, but leaves an unanswered question about retirees who work public jobs for more than 32 hours a week and less than full time, said Marty Karlon, spokesman for the New Hampshire Retirement System.

The case was brought to the state’s highest court on appeal by Scott Anderson, a retired Plaistow police officer, who worked post-retirement jobs for the towns of Plaistow, Atkinson and Hampstead. Anderson argued that state law allowed him to work up to 32 hours a week for a municipality, while collecting his pension, so he believed that meant he could work up to 32 hours a week for each of the three towns.

Anderson previously lost his case in the Merrimack County Superior Court and appealed to the Supreme Court.

The retired police officer argued that because pre-2012 law referred to post-retirement work for “an employer,” instead of “one or more employers,” it allowed state pensioners to work for up to 32 hours a week for multiple employers. Tuesday’s Supreme Court decision notes that the Legislature intended the singular “an employer” to include the plural “one or more employers.”

“Thus, contrary to Anderson’s contentions on appeal, when he retired in 2011, he had no right, vested or otherwise, to work up to 32 hours per week or 1,300 hours per year for more than one NHRS employer,” Monday’s Supreme Court decision states.

Double-dipping has been an issue in New York and New Jersey as recently as last month.

John Bury On New Jersey’s Pay-to-Play Allegations: Let’s Move On To The Real Problems

John Bury is an actuary that tightly covers New Jersey pension news over at the blog Bury Pensions. He has an interesting perspective on the latest pay-to-play allegations thrown at Christie.

Bury’s point: if the pay-to-play allegations are true, it’s par for the course. But there are bigger issues with New Jersey’s pension system, and those issues are the ones we should worry about. Here’s Bury’s post in full:

____________________

By John Bury, Bury Pensions

“It’s a cheap political stunt based on shoddy, distorted reporting from an individual [David Sirota] who over and over again has been shown to be biased, willfully inaccurate, and just flat out wrong,”

– NJ Governor Chris Christie spokesman Kevin Roberts responding to allegations in an AFL-CIO lawsuit

He may have some points – though not the ones I would make:

Like the double-dipping non-issue I do not see Chrisitie allegedly steering investment contracts to campaign donors as the state Retirement System’s biggest problem. Remember, this is New Jersey. Find me someone who has donated to a politician or party who does not expect (and get) payback of some sort.

How about a law firm where the lawyers get together each election cycle to give $30,000 to the campaigns of freeholders and somehow wind up with annual billings from that county of over $1 million. That’s legal here so what’s the problem with hedge fund honchos working the system we have, though much less blatantly than DeCotiis according to Fortune Magazine?

Then there’s the issue of criticizing a rate of return of 16.9% (or 15.9% or 15.5%). Imagine you get any one of those as an annual return in your own portfolio. Are you complaining? The question in New Jersey is whether those Alternative Investment assets being reported are really there. I don’t think so.

Finally, there is this reality:

THE PLAN BARELY HAS 50% OF THE ASSETS NECESSARY TO ANNUITIZE ONLY (YES ONLY) THE RETIREES, WITH THE OTHER 475,000 PARTICIPANTS HAVING LESS THAN NOTHING.

Employ only investment advisers who have never donated to a political campaign (if you can find any) and get rid of all the double-dippers and you may have solved 1% of a $150 billion problem that will be a $250 billion problem in the years it will take your distracto-reforms to be implemented.

New Jersey Sheriff Race Turns Into Campaign Against “Double Dipping”

One candidate for a New Jersey sheriff position is promising to relinquish his state pension if he wins, and in the process is turning against the common practice of sheriff “double dipping” – that is, the practice of drawing a state pension while also being employed at another public-sector job.

The candidate, David Jones, is running under the campaign slogan “One Sheriff, One Paycheck”. More from New Jersey Spotlight:

17 of the state’s 21 county sheriffs double dip by collecting public pensions averaging $78,000 on top of their sheriff’s salaries, jacking up their average compensation to almost $204,000. That’s almost $29,000 more than Chris Christie earns as governor.

But now, David Jones, a recently retired state police major, is trying to turn his campaign for Mercer County sheriff into a referendum on double dipping by pledging to suspend his own pension if he is elected sheriff and to refuse to employ any undersheriffs who do not agree to do the same.

Running on the slogan “One Sheriff, One Paycheck,” Jones said his victory would not only save $300,000 a year in pension payments now going to Mercer County Sheriff Jack Kemler and two of his top deputies, but could inspire voters in other counties to take a stand on double dipping by refusing to vote for anyone who does not take a similar pledge.

Double-dipping is well known, but efforts to discontinue the practice haven’t gone anywhere. From NJ Spotlight:

Legislation sponsored by Sen. Jennifer Beck (R-Monmouth) and Assemblywoman Allison Littell McHose (R-Sussex) to require retired public employees who take public jobs paying more than $15,000 to forgo collecting their pensions until they leave public service has gone nowhere.

That’s because Christie and legislative leaders have been reluctant to put an end to a practice that benefits loyalists in both parties. They include Essex County Executive Joseph DiVincenzo, a Democrat who filed his retirement papers when elected to his existing job. He now collects a $68,861 pension for a job he currently holds while continuing to be paid his full $153,831 salary. Louis Goetting, a Republican, collects an $88,860 annual pension from his years in the Treasury Department on top of his $140,000 salary as Christie’s deputy chief of staff.

William Schluter, a long-time Republican lawmaker, said outlawing double-dipping could save the state tens of millions of dollars on an annual basis.

Local New York Lawmaker Calls For Review of “Double-Dipping” Policy

A local New York lawmaker is calling for changes in the way Westchester County handles so-called “double-dipping”, the term commonly used to describe a worker who draws both a salary and a public pension concurrently.

Reported by Politics on the Hudson:

In the wake of the arrest of an aide to Westchester County Executive Rob Astorino on a DWI charge, Democratic Legislator Ken Jenkins is renewing his call for legislation to require to Board of Legislators to approve pension waiver requests.

Hugh Fox Jr., the aide, who is also the chairman of the Westchester Conservative Party, had secured two two-year waivers from the state to allow him to collect both his pension from years as a Yonkers firefighter and his county salary. The county was seeking a third waiver for him when Fox was arrested Monday night after a five-car chain-reaction crash. He resigned his county job the next day.

In a press release, Jenkins said it was time to end “automatic approvals for the County Executive’s political cronies to double dip.”

The lawmaker, Ken Jenkins, says he doesn’t want to deny outright workers’ chance to earn a salary and draw a pension. But he says those waivers should undergo more scrutiny before approval. From Politics on the Hudson:

“There are probably some rare instances when a retiree would make a good hire for the County, and it would make sense financially for the waiver to be granted,” said Jenkins. “But for the sake of good, open and transparent government that keeps the interests of our taxpayers at the forefront of decision making, we must take these automatic, unilateral approvals out of the purview of only the Administration and let the Board of Legislators also deliberate on each waiver, case by case, and make a decision up or down.”

Jenkins had introduced the legislation last January, but is bringing it up again in light of the recent events.

Nevada’s public pensions are now public knowledge

The Nevada Public Employees Retirement System (NVPERS) has for years been notoriously tight-lipped about the benefits it provides its members. But no longer: the Nevada Supreme Court ruled in 2013 that public pension data are public records, and now those records are online for all to explore.

The Nevada Policy Research Institute launched its database of public pension data this week on the aptly named Transparent Nevada website.

Among other findings, the data brings to light the number of workers who are “double-dipping”; in other words, employees who earn two salaries by retiring from one job and going to work for another, all while receiving their full pension benefit payments from the first job.

Glenn Cook at the Las Vegas Review Journal has more:

Let’s start with a name that might surprise you: Clark County Sheriff Doug Gillespie. Bet you didn’t know that anyone who is elected sheriff has to formally retire from the police force before assuming office. The sheriff has a base salary north of $140,000. But in January, he also collected a gross pension benefit of $12,904, with a net payment of $10,874. If he receives the same check every month (PERS said January checks sometimes include credits and deductions), that’s an annual pension benefit of about $155,000, for total public-sector pay of nearly $300,000.

Here’s another one: Family Court Judge Robert Teuton. The longtime prosecutor and juvenile justice official retired from the county when was appointed to the bench in 2008. As a judge, he collects an annual salary of about $160,000. In January, he also collected a gross PERS benefit of $15,325, with a net payment of $10,099. Assuming that benefit is relatively consistent throughout the year, his total annual public-sector pay is north of $300,000.

There are plenty of other recognizable figures cashing two checks these days. Las Vegas City Councilman Stavros Anthony is a retired Las Vegas police detective. His salary as a councilman is north of $75,000. His January PERS benefit was $12,249 gross, $10,218 net. He’s probably raking in more than $200,000 per year at your expense.

Andy Matthews, president of the Nevada Policy Research Institute, said the database is already paying dividends.

“The PERS payouts now available on TransparentNevada show exactly why PERS bureaucrats worked so hard to keep this secret,” he told the Las Vegas Review Journal. “The information shows — in inflated retirement payout after inflated retirement payout — what Nevadans have long suspected: Public employee pensions are exorbitant and unsustainable.”