COLA Commission & Basic Life Insurance Increase Now Law
The approval of the FY25 State Budget this July delivered several longsought legislative victories for public retirees. Signed into law by Governor Maura Healey on July 29th, the budget established a Special COLA Commission, increased the state’s Basic Life Insurance benefit, fully funds the Commonwealth’s pension appropriation and the Group Insurance Commission, and creates a new pathway for accidental and ordinary disability retirees to return to public service.
As members know, both the COLA Commission and State Basic Life Insurance benefit increase are proposals initiated by Mass Retirees.
First pitched to Governor Maura Healey a year ago, the governor included language establishing the COLA Commission within in her FY25 Budget proposal filed in January. With the direct support of House Speaker Ron Mariano, Majority Leader Mike Moran, and Ways and Means Chairman Aaron Michelwitz, the measure was included within the House’s version of the budget passed in April and later agreed upon by the Senate leadership in conference committee.
The measure increasing the Basic Life Insurance Benefit to $10,000 for State retirees and employees was added to the House budget through a floor amendment spearheaded by Representative John Lawn, which carried significant bipartisan support.
Republican Leader Brad Jones was joined by Republican Reps Matt Muratore, and Todd Smola as primary cosponsors. Also joining Lawn, who serves as House Chair of the Joint Committee on Healthcare Finance, were fellow members of the House Leadership Marjorie Decker (Chair of the Committee on Public Health), as well as Vice Chair of the Joint Committee on Public Service Natalie Higgins.
Municipal retirees and retired teachers receive their life insurance benefits from the city, town or district from which they retired. These local entities set their own benefit levels, without any restrictions. For example, both Barnstable and Braintree have maintained a $10,000 Basic Life Insurance benefit for nearly a decade.
Basic Life Insurance benefits for state retirees and active employees are set within state law, which is established by the legislature. The new benefit level takes effect on July 1, 2025 due to the time required to implement the policy and adjust state retiree and employee withholdings.
“We are very grateful to Governor Healey, as well as the legislative leadership, for seeing fit to establish the Special COLA Commission and increase the state’s Basic Life Insurance benefit for the first time since 1985. Both measures are extremely important to public retirees, so to have them both addressed in this year’s budget is a major win,” says Association President Frank Valeri.
IMPORTANCE OF COLA COMMISSION
The COLA Commission, which Mass Retirees believes to be essential to charting a viable path forward to increase the State and Teacher retirees’ COLA base, as well as create a new enhanced or “senior” COLA for long term retirees, will contain 9-members – including a representative of Mass Retirees.
In accordance with the law, the Association has notified Governor Healey that it appoints President Frank Valeri to the Commission. Modelled after the successful 1996 COLA commission, the new commission will report its recommendations to the legislature by February 1, 2025.
In addition, the Commission will likely examine and may recommend new funding strategies that will also be available for implementation across the 102 local retirement systems.
This will help improve local COLA benefits in the same manner as benefits for State and Teacher retirees.
While the Commission will not begin its work until early fall, the hope and goal are to enact the Commission’s recommendations within the FY26 State Budget next spring, so meeting the February reporting date will be important.
POST RETIREMENT WORK TASK FORCE CREATED
In addition to the COLA Commission, the budget also established a Task Force on Post Retirement Work. Included within the Senate’s version of the budget after the adoption of an amendment filed by Senate Republican Leader Bruce Tarr, the Task Force was formed in response to a report by the state’s Inspector General which alleged abuse and lack of oversight of public retirees who return to parttime public sector jobs following their retirement.
“While we have long had complaints that the current rules governing post-retirement work are complicated, we do not believe there to be widespread abuse of the system. That said, with more and more retirees being sought after to fill important public service jobs, perhaps it is time to modernize and update the system,” comments CEO Shawn Duhamel. “Mass Retirees has a seat on the Task Force, to which we have appointed our Association’s Treasurer Joe Connarton. As the former executive director of PERAC, Joe is uniquely qualified for this task and will be a true asset to the Task Force.”
One area where the Association believes reform is needed is in helping retirees to ascertain the amount of money they are allowed to earn in a post-retirement public sector job here in Massachusetts. It’s noteworthy that at the end of the Formal Session, legislation was enacted that allows a retiree, who is calculating their allowable earnings upon resuming public employment, to use either the salary from their last position (the old law) or the salary that was used to calculate their retirement allowance (the new expanded law) whichever is greater.
We should also note that these post-retirement work rules only apply to public sector jobs, working for the state or local government here in MA. There are no restrictions when it comes to federal jobs, jobs within other states, and private sector employment.
Retirees holding a public sector job are limited in the hours they can work and in the money earned within a calendar year. The hourly limit is 1,200 hours. The earnings limit is the difference between what your former job currently pays and your current pension. You then add $15,000 to that amount, which gives you the allowable amount.
Like the COLA Commission, the work of the Task Force will likely get underway this fall. However, the Task Force has a reporting date of June 1, 2025. We will provide full updates on the work of both the Commission and the Task Force as information becomes available.