Press Release: 2024-03-27

IG Shapiro Calls for Greater Controls and Enforcement of Post-Retirement Earnings Caps for Public Retirees

 

FOR IMMEDIATE RELEASE:

3/26/2024

MEDIA CONTACT   FOR IG SHAPIRO CALLS FOR GREATER CONTROLS AND ENFORCEMENT OF POST-RETIREMENT EARNINGS CAPS FOR PUBLIC RETIREES

Carrie Kimball, Communications Officer

 Phone

Call Carrie Kimball, Communications Officer at 617-722-8894

 Online

Email Carrie Kimball, Communications Officer at carrie.c.kimball@mass.gov

BOSTON, MA — Inspector General Jeffrey S. Shapiro called for statutory changes to increase oversight and enforcement of the statutory cap on earnings for public retirees who return to public service, in a report issued today.

“The Commonwealth’s public retirement earnings cap is primarily enforced through a self-monitored honor system,” Shapiro said. “No single agency tracks post-retirement earnings of public retirees and enforcement is minimal at best. That is problematic for a multi-billion dollar enterprise.”

The report, Post-Retirement Earnings Limits for Massachusetts Public Employees: A Review of a Flawed System, examines the challenges in enforcing the state’s “return-to-work statute.” Section 91 of Chapter 32 of the Massachusetts General Laws (Section 91) limits how much a public retiree can earn in post-retirement employment for the Commonwealth or its subdivisions. The purpose of the earnings cap is to prevent retirees from working full-time for a Massachusetts state, quasi-public or municipal body while simultaneously receiving a Massachusetts public pension. 

“There is no question that retirees make critical contributions at all levels of government in the Commonwealth, and this report is not suggesting or recommending that the Commonwealth and its localities eliminate hiring public retirees,” Shapiro said. “It does suggest that controls are needed to ensure compliance with the limits set by Section 91. The ‘system’ that oversees the earnings limits is deeply flawed, in that there is no central agency or process to monitor compliance. Nor is there an easy way to calculate earnings limits, which are unique to each retiree.” 

A significant barrier to enforcement is the complexity of the formula by which a retiree calculates their earnings cap. Section 91 states that each retiree’s earnings cap is based on the “salary that is being paid” for their former position but is silent on how to determine that figure. As a result, each of the Commonwealth’s approximately 238,000 public retirees has a unique post-retirement salary cap based on a moving number. This makes oversight and enforcement of the cap next to impossible. 

The report outlines several recommendations including strengthening the Public Employee Retirement Administration Commission’s role in overseeing and enforcing the earnings cap (or creating a new entity with oversight and enforcement authority), simplifying the formula used to calculate the earnings cap, and creating more reporting requirements for public retirees and their employers.

The report concluded, “The lack of oversight and enforcement of the earnings cap essentially relegates the statutory requirement to a recommendation. That fact not only constitutes poor public and financial policy, but also leaves too much room for an inequitable and unfair application of the law. It also allows for the opportunity for fraud, waste and abuse.”