US - Massachusetts is considering an increase to its state employee retirement age and a change in the way state pensions are calculated in a bid to save more than $7bn in costs.
The proposals, announced by Governor Deval Patrick, build on earlier pension reform legislation introduced to closed loopholes and eliminate opportunities for abuse in the public retirement system.
In addition to raising the retirement age for all state workers, the reforms also include proposals to scrap early retirement subsidies, reduce contributions to some employees, eliminate the possibility of double dipping and pro rate benefits based on a members' employment history to avoid windfalls.
Patrick said "Pension Reform III", as the latest proposals have been billed, will further overhaul the benefits plan to ensure its long-term sustainability and credibility. Coupled with Pension I and II, the latest reform package is expected to save taxpayers more than $5bn in pension costs over 30 years and $2bn in retiree health benefit costs for new employees.
"The changes Governor Patrick is proposing today will ensure the public employee pension system is fair, credible and fiscally sustainable," said Administration and Finance Secretary Jay Gonzalez. "Doing nothing is not an option. If we don't take action now, there will not be a pension system for retirees in the future."
Senate President Therese Murray added: "We have made a number of significant reforms to the pension system over the last two years, closing loopholes and eliminating special benefits, but we can do more to maintain the system and establish a more equitable public benefit for all employees.
"The reforms announced today, including a number that were endorsed by the Senate last year, are a step in the right direction and deserve attention from the Legislature. Reasonable adjustments to modernize the system are appropriate, and I will review the Governor's proposal closely with the Senate."
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