The Andover Contributory Retirement Board, the Andover Board of Selectmen and the Andover Finance Committee must argue forcefully and with moral conviction before the annual Town Meeting to raise the cost-of-living adjustment base for the town’s retirees from the current $12,000 to $14,000.
Currently in Andover, the public-sector retirement system applies the cost-of-living adjustment raise only to the first $12,000 of the pension benefit and is limited to 3 percent of the inflation rate. The cost-of-living adjustment is applied to the full amount of the Social Security benefit and the entire inflation rate.
Massachusetts public-sector employees currently pay more into the retirement system than the Social Security tax. Under Massachusetts law, public-sector employees appointed to their position after Jan. 1, 1984, pay 8 percent of their weekly pay plus 2 percent of any amount earned above $577 a week. Those appointed after July 1, 1996, pay 9 percent of their weekly pay, and the additional 2 percent. The majority of current public employees are paying 11 percent of their weekly pay for retirement purposes and that is exceedingly far greater than the 6 percent Social Security tax. In Andover, public employees are paying more than $3 million a year into the town’s retirement system
Generally, a private-sector employee’s retirement benefits package is greater than the public-sector employees’ retirement benefits. Municipalities in this commonwealth do not contribute into the Social Security program. Therefore, public employees in Massachusetts cannot collect Social Security benefits pursuant to the federal pension offset statute. Private-sector employees, however, can collect Social Security payments, employer-funded pension plans and employer-funded 401(k) savings accounts.
Most neighboring communities have increased their pension cost-of-living base: North Reading, Wilmington, Tewksbury, Dracut and Methuen are all at $14,000; North Andover is at $13,000.
Public-sector employees also are being treated inequitably and disparately in this commonwealth compared to other New England states. New Hampshire, Vermont, New York, Connecticut and Rhode Island all contribute into the Social Security system for their public employees. Public employees in those states can collect Social Security payments upon retirement at the proper age. Those states also have a tax-funded retirement system. In New Hampshire, public employees’ pensions are calculated utilizing salaries, paid details and overtime.