A former state worker whose salary later spiked when she became a Boston city employee has won her pension court case after retirement agencies had tried to cut her monthly benefit.
Susan Hartnett — who was earning in the low $30,000s as a state worker before her salary jumped to around $100,000 as a city employee — had appealed the retirement system’s ruling to slash her monthly pension payment by nearly 20% due to the state’s “anti-spiking provision.”
That clause, which was enacted as part of broader reforms to the public pension system in the wake of the Great Recession, prevents a retiree from taking home a disproportionate pension payment based on a sudden “spike” in their annual salary near the end of their employment.
Hartnett’s case was recently in front of the Massachusetts Supreme Judicial Court, and the court ruled in her favor.
The case revolved around whether the years 1990 and 2002 are “two consecutive years” within the meaning of the anti-spiking provision.
The Contributory Retirement Appeal Board, Public Employee Retirement Administration Commission, and Boston Retirement System had argued that Hartnett, who worked for the state until 1990 and then rejoined public service 12 years later in 2002 at a salary that was more than double her 1990 salary, “is subject to the anti-spiking provision because her years of service in 1990 and 2002 are ‘(two) consecutive years,’ ” the Supreme Judicial Court wrote.
“Concluding that the anti-spiking provision is not triggered because the years 1990 and 2002 are not ‘(two) consecutive years’ under the anti-spiking provision, we affirm the Superior Court judge’s judgment in favor of Hartnett,” the Massachusetts high court ruled.
Hartnett’s salary in the 1980s had ranged between $33,360 and $34,068 while she was with Massachusetts Council on the Arts and Humanities.
Then Hartnett earned a master’s degree in public administration, and for the next decade she worked for a nonprofit organization.
When she returned to public work in 2002, her salary ranged between $94,000 and $103,771 while she was with the Boston Redevelopment Authority and then the Mayor’s Office of Arts, Tourism and Special Events. Her service with the city lasted for about three years and eight months.
When Hartnett retired, her monthly benefit was $2,651. But the retirement agencies later cut her monthly pension payment to $2,163 — almost a $500 drop.
“Although BRS (Boston Retirement System) initially calculated her pension amount without applying the anti-spiking provision, after an audit by PERAC (Public Employee Retirement Administration Commission), BRS informed Hartnett that the anti-spiking provision governed the amount she was due under the pension statute, reducing her monthly benefit amount by approximately $500,” the court wrote. “BRS also sought to recoup past overpayment.”
Retirement benefits for a member of the public pension system depend on the member’s annual compensation over a specified period of time, including the years of service immediately before the member’s retirement.
The anti-spiking provision requires a look-back period of five years of qualifying service immediately prior to retirement.
“If, between any ‘(two) consecutive years’ during that look-back period, the member’s salary more than doubles, the standard rules for calculating the member’s pension amount are replaced by those set forth in the anti-spiking provision,” the court wrote.
But ultimately, the Supreme Judicial Court ruled in favor of Hartnett on the grounds that the creditable years of 1990 and 2002 do not constitute two consecutive years within the meaning of the anti-spiking provision.
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