Bill targets wrong problemby County and City Employee staff on February 14, 2012
It can be called ballooning of pension benefits.
Here’s how it happens. A few years before some higher paid management employees retire, they assign themselves as much overtime as they can, boosting their annual incomes for those years above their normal compensation and thereby increasing the amount on which their pension payouts are based.
In other cases, employees will save up unused annual leave over the last few years before their retirement, receiving a cash-out payment for that leave when they retire and thereby boosting the amount on which their pension is based.
“The problem is that if the last five years of compensation is drastically different from the previous 25 years you have not paid in to receive that full benefit and your employer has not paid in for you to receive that benefit,” explains Council 2 Deputy Director Pat Thompson.
“The result is that other members will have to pay for your increased pension benefits.”
On the other hand, if you cannot count overtime toward your pension benefits it means that those employees who have regularly worked overtime over their years of service will receive lower pension benefits than they deserve, Thompson adds.
Now a bill before the State Legislature, Senate Bill 6543, would mean that pension benefits received from overtime would be excluded from your retirement.
Worse yet, the bill excludes any such penalty for management employees because they have their overtime hours rolled into their regular hours.
“Call up your legislators to tell them to vote against this bill,” Thompson says.
“The message is: Why are you penalizing the hourly employees while management employees will still be able to include their overtime in their pension benefits?”