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Legislative Update: Pension spiking bill deferred by House, still moving in Senate

February 15, 2012

On Feb. 14, the House Committee on Labor & Public Employment deferred H.B. 2488, which attempts to prevent unexpected increases in pension benefits and in the unfunded actuarial accrued liability of the Employees’ Retirement System (ERS) by defining and limiting the amount of compensation included in the average final compensation calculation.

However, the Senate companion bill, S.B. 2750, was heard by Judiciary and Labor and passed, with amendments. It is referred to the Committee on Ways and Means, but not currently scheduled for hearing.

HGEA Executive Director Randy Perreira testified in strong opposition to both the House bill and the Senate bill, saying the proposed legislation took a very broad approach and was merely a symbolic attempt to deal with the unfunded liability caused from “spiking,” which accounts for  less than one percent of the total unfunded liability. What is needed, he said, is better management control of overtime by the employer.

In his written testimony, Perreira noted: "Our members provide critical services to the community and should be adequately compensated, both immediately in compensatory time off or overtime pay, and also in retirement benefit calculations that accurately reflect the employee’s work. We find it incongruous to force an individual to work overtime and not count the overtime hours toward their final retirement calculation."

In an effort to curb the unfunded liability, HGEA supports the provision that the specific employer who authorizes increased overtime also pay all additional costs.

Other public-sector unions, including UPW and HFFA (Firefighters), also opposed the House bill.

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