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Wednesday, January 23, 2008

Plan would bar linking bonuses to pensions

Rep. Sean Ramaley proposes ending the pension bump from bonuses. Currently a bonus (or other compensation, such as "unvouchered expenses") increases the salary used to calculate pensions for state employees - their annual pension is based on the average "salary" (including bonuses) for the last three years.

Since a big bonus in the last year(s) can lead a big pension boost (case in point) this is certainly a problem in the system. While Rep. Ramaley's proposal is a step in the right direction (and would be tied to the bonus ban bill), we need to move to a defined contribution system to fix our long-term state and local government pension problems

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