Govt and School Employees Can Boost Work History, Pension Payouts in 21 States

Wednesday, 28 Dec 2011 11:50 AM

By Paul Scicchitano

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State, municipal and school employees in nearly half the country have been taking advantage of an obscure federal law that allows them to add up to five years of additional work history toward their retirement plan — or qualify for a bigger pension.

The perk of buying “air time” allows school or government workers in 21 states to retire earlier, or become eligible to retire and collect a lifetime pension, according to a USA Today analysis, which also found that workers who already qualify for retirement can increase their pensions by up to 25 percent.

"They give away the store here," Dan Pellissier told USA Today. He  paid $75,000 to add five years of non-existent work history as a former adviser to then Gov. Arnold Schwarzenegger, and now serves as president of California Pension Reform.

Pellissier, whose group seeks to cut state retirement costs, told USA Today that the $61,536-a-year California pension he will be eligible to collect in 2015 will be almost $13,000 higher than it would have been had he not bought the air time — an additional value of $320,000 should he live to be 80.

The paper reports that federal law limits such additional work history purchases to government pension plans, though some states have banned or restricted the practice. These states include New Hampshire, Kentucky and Texas. California is also considering a ban.

New Hampshire state Rep. Kenneth Hawkins told USA Today that the use of air time contributed to a $3.7 billion shortfall in funding. “It allowed a lot of people to game the system," he said.



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