March 11, 2012

State considers freezing enrollment in public-worker pension system

By John Richardson
Staff Writer

(Continued from page 1)

Teachers and state employees who go to work in the private sector often find out later that they won't get the Social Security benefits they expected because the federal system withholds a portion of those benefits from anyone who also has a state pension. The same penalties apply to private-sector workers who go into the public sector during their careers.

"When you look at today's work force opportunities, that just seems like such an outdated model," Rosen said. "To me, portability (of retirement benefits) is critical. It helps to break down this barrier between public and private sectors."

Some lawmakers see other advantages in phasing out the pension system. Maine's state budget would no longer be as exposed to stock market crashes that reduce the funds' assets, said Sen. Roger Katz, R-Augusta, and an Appropriations Committee member.

"After every decline in the stock market, we end up with an unfunded liability problem," he said.

The Maine State Employees Association worked with other employee unions and the Public Employees Retirement System on the report submitted to lawmakers last week. The report outlines a possible new retirement system as requested by the Legislature, although its authors don't take a position on whether the move is a good idea.

The new system would require the state to pay 6.2 percent of salaries as its Social Security contribution, plus another 2 percent for its share of the supplemental retirement plan, according to the report. The supplemental plan would work something like a private retirement plan, but with a partial guarantee of future benefits.

Chris Quint, executive director of the MSEA, said there will be arguments on both sides.

On one hand, the Social Security penalties are a real problem for public retirees who spent part of their careers in the private sector, he said.

On the other, the 70-year-old pension system and its guaranteed benefits have historically helped public agencies hire and keep workers who could earn higher salaries if they worked in the private sector, he said.

"The current system is well-funded, it's well-run and it is a good benefit for state workers and teachers," he said. "They know what they're going to get when they leave."

States around the country are reassessing their retirement systems, and especially the cost of those systems, as they try to balance budgets in a struggling economy, said Sandy Matheson, executive director of the Public Employees Retirement System.

What Maine is considering is an exception, however.

"I'm not aware of any other state (with a separate pension plan) considering a move into Social Security," she said.

Matheson isn't taking a position on what Maine should do with the pension system, she said. She expects to present the report to lawmakers in person in the coming weeks.

MaineToday Media State House Writer John Richardson can be contacted at 620-7016 or at:


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