By Grant Welker
It has never been illegal -- nor the loophole a secret -- to be able to retire from a public job in Massachusetts and collect a pension while earning a paycheck over the state line in New Hampshire or in a temporary or part-time public position in Massachusetts.
But it has been lucrative, and has often raised the ire of public-money watchdogs.
Among notable cases in Greater Lowell in recent years is Mary Jennings, who retired as Groton-Dunstable superintendent of schools in 2005, earning a $116,000 annual pension, then took a superintendent's job in Amherst, N.H., earning another $131,000.
Tyngsboro's police chief until last year, William Mulligan, crossed state lines in the other direction, taking over in Tyngsboro after a 33-year career in Merrimack, N.H., from which he drew a pension.
Massachusetts legislators have created laws for how many hours pension-earners can work in-state and how much money they can take home in a year. Those laws were also recently tightened.
But pension-earners know what they're able to earn, and they set up work contracts accordingly, say those who track the industry.
Former Chelmsford Fire Chief John Parow will continue earning a $103,000 annual pension from Chelmsford while he earns $2,000 a week in his new job as interim chief in Ipswich.
Parow, who retired from Chelmsford in 2010, will be able to earn from both communities thanks to the timing of his new job and a pension law that bases maximum pay not on how much a retiree earns, but how much is paid to the current position-holder.
Someone who has been retired for more than a year, as Parow has, can earn up to a certain amount in a calendar year based on a state formula. He is able to earn an amount up to how much his former position pays now (Fire Chief Michael Curran makes $138,330), plus $15,000, minus his annual pension of $103,380.
A key point is that the law does not base his potential earnings on what the retiree earned while in the position. If that were the case, the $116,745 Parow made before retirement would mean his new salary in Ipswich would be illegal.
Retirees in Massachusetts public pension systems are able to work up to 960 hours in a calendar year -- about 18 hours per week -- though it's not clear how many hours Parow will work under his agreement with Ipswich.
The agreement states that he is to work four days a week on-site "with the understanding that the position is 24-hour per day/7 days per week," and that he will be available in the event of an emergency.
Pension laws are now also changing to limit how much a retiree can earn while still receiving a pension. The Public Employee Retirement Administration Commission said in November that those who retire on or after Jan. 1, 2014, will no longer have $15,000 added to their earnings limit.
Current pension laws mean Parow can earn up to $49,950 in a calendar year. If his six-month employment term in Ipswich was in one calendar year instead of two, it would be illegal because he'd make more than $4,000 over that threshold.
Reform not far-reaching enough?
Allowing retirees to continue earning pensions while collecting earnings in another public job is one pension-system loophole yet to be closed, said Iliya Atanasov, the senior fellow on finance for the Pioneer Institute.
"It seems to be a typical case of the many loopholes that still remain in the system despite several rounds of reform," Atanasov said.
According to an agreement letter with Ipswich, Parow should earn about $21,075 for about 10 weeks of work in 2013. He started the job in October. In 2014, he is slated to earn about $33,150 for 16 weeks of work.
A pension-law limit of 960 working hours per year is too high, Atanasov said, and is easily circumventable by increasing an employee's hourly rates.
Such loopholes are indicative of a pension system weighing heavily on communities as the employment perk has expanded from a source of income for a retiree's nonworking years into something that pays top earners into the six-digit range each year, he said.
"What has happened is that's mutated to providing as much income as possible, and that's simply not sustainable," Atanasov said.
Parow's $103,380 annual pension makes him the highest pension-earner among Chelmsford's roughly 500 retirees in the system.
Practice also has benefits
The pension law limiting hours worked per year is loose enough to nearly allow a school employee to work an entire school year, said Thomas Gibson, chairman of the Middlesex County Retirement Board.
But allowing pension-earners to work in public positions also has a benefit, he said.
"The hiring of an experienced and knowledgeable retiree on a temporary, fill-in basis allows the employer the opportunity to conduct a prudent and thoughtful search for qualified candidates for the position without incurring additional pension or health-insurance liabilities," he said.
Parow's agreement letter with Ipswich says he'll have a town vehicle to use for commuting and up to 18 days of leave. He will not be enrolled in Ipswich's health-insurance plan.
The six-month term may be extended through mutual interest, the agreement states. His duties will include advising the town manager and public-safety director in hiring a full-time permanent chief.
Parow did not return calls seeking comment this week.
Ipswich Town Manager Robin Crosbie said Parow was hired for six months because the town wanted him to help with several initiatives, including reviewing departmental policies.
"I'm trying to stabilize the department," she said shortly after Parow was hired.
Parow was hired, she said, because he has a broader perspective to give the department due to his experience.
"We're happy he's here," Crosbie said.
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