Tag: pension loophole

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

Manhattan

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.”

Read more about the law here.

 

Photo by Tim (Timothy) Pearce via Flickr CC License

Chattanooga City Council Votes to Close Pension Contribution Loophole…For Most

Chattanooga

Earlier this year, some Chattanooga city council members were surprised to learn that two of their colleagues, along with another city worker, were using a loophole to contribute to the city’s pension plan using pension checks they were already receiving from another plan they had from previous jobs.

If it sounds convoluted, that’s because it is. Regardless, the council voted Tuesday to ban the practice—for everyone but the two council members and the city worker. The Times Free-Press reports:

The Chattanooga City Council voted Tuesday to keep future retirees who are re-employed by the city from dipping into their current retirement while contributing to a new city pension.

But first council members gave an exemption to two of their colleagues and one other city employee.

The ordinance was drafted after the General Pension Board discovered Councilmen Moses Freeman and Yusuf Hakeem were drawing checks from their city pension, contributing to a new pension plan and making a salary that totaled close to $100,000. Another city employee in the Economic and Community Development Department, Countess Jenkins, was also drawing nearly $40,000 from her pension and paycheck.

After months of studying the discrepancy, the board voted that any future retirees re-employed by the city won’t be eligible to contribute to a new pension and draw their current pension.

But Hakeem, Freeman and Jenkins were allowed to keep drawing their pension and told to decide if they wanted to make the mandatory contributions of a new hired employee —2 percent of their salaries — toward a new pension plan. Or they could opt out of the plan and receive a refund for any contributions already paid.

The council voted yesterday 7-0 to pass the ban, along with the exemption for the three city workers. The council members who were exploiting the loophole did not participate in the vote.

One of the councilmen in question, Moses Freeman, had this to say about the vote:

“That was not the time to say you couldn’t [draw from your pension]. The way you do it is what they did now, it’s for anyone in the future,” Freeman said. “It’s fair and it’s appropriate. It’s moral. It’s legal and it’s ethical.”

 

Photo by Brent Moore