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Big pension paydays despite reforms

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An overwhelmed public pension system that lets workers boost their payout by changing job titles and other slights of hand was the subject of a hearing Wednesday on Beacon Hill held by a special commission examining pension reform.

The commission has its sights on the way that public employees are classified in one of four groups, with some groups receiving more favorable benefits that allow them to retire earlier with a higher pension.

"They get to retire early with a better benefit," said Phil Brown, an attorney who is appointed chairman of the special commission.

"How do you deal with that given what the state is up against, what the retirement system is up against and wanting to reform the system?" FOX Undercover reporter Mike Beaudet asked him.

"I think our goal is really to come up with a transparent and a fair way of classifying people," Brown replied.

The commission heard from a parade of public employees who complained that they were being classified less favorably than deserved, with the better groups intended to go for people in dangerous jobs like correction and police officers.

An earlier FOX Undercover investigation exposed one example of a loophole where employees switch jobs at the end of their careers but, because of a loophole in the pension law, get a pension as if they had worked their last job their entire career.

Even though pension reform now prevents new employees from doing that, it's still a legal loophole for anyone hired before April 2012.

FOX Undercover showed how Cheryl Nelson, an administrative assistant for the Department of Correction for nearly 30 years, cashed in on a correction officer's pension by switching to that job for just a few years.

When we caught up with her in 2010, she made no apologies.

"We're working a story about people who change jobs to sweeten their pensions and I'm wondering if that's why you became a correction officer?" Beaudet asked her.

"Yes it is," Nelson replied.

"Do you feel like you're taking advantage of the system?" Beaudet asked.

"Absolutely not. Been in the system for 32 years, and I was grossly underpaid for a big portion of that timeframe," Nelson replied.

"Some people would say what you're doing is gaming the system," Beaudet asked her. "You disagree with that?"

"Yes I do," she replied.

"Why is that?" Beaudet asked.

"I really don't care to comment any further on the issue," she said.

Nelson's $47,700 annual pension is calculated as though she worked her entire career as a correction officer in a group four public safety position. The state calculates retirement benefits based on the job someone holds for only the 12 months before retirement.

Under pension reform, new employees' pensions will be calculated on the number of years they hold each job.

The special commission that met today is planning on coming up with recommendations by April 15 and presenting them to the Legislature and governor. The Legislature could try to pass laws to apply pension reforms to existing state employees, but we're told that's unlikely.

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