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Legislature Decreases Penalties for Retirees Penalized Under LePage Administration

Andy O’Brien
14 Sep, 2023
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A group of teachers and state employees who were dealt severe pension cuts over a decade ago will finally receive substantial increases in their monthly pension benefits thanks to the recent supplemental budget passed by the Maine Legislature and signed by Governor Janet Mills.

“This will provide some needed relief to several state retirees who were significantly harmed by the 2011 pensions cuts,” said MSEA Political Director Jeff McCabe. “We went into this past session with a plan to get as many members before legislators as much as possible. MSEA’s key issues that got funded in the budget are because members engaged legislators and showed up.”

In 2011, the LePage administration and a Republican-controlled Legislature made deep cuts to state employee health care and pensions in order to give a tax cut for the rich. Included in the cuts was the repeal of a provision that provided retiree health care coverage to workers who retired with 25 years or more of service no matter when they retired.

Under the 2011 law, retirees would receive no paid health insurance coverage until they reached the normal retirement age of either 60, 62 or 65, depending on the plan. The only chance teachers and state employees had to keep their retiree health coverage when taking early retirement was if they retired in brief windows between 2011 and 2012.

As a result, about 115 workers with 25 years of service or more retired early out of fear of losing their health care coverage and took penalties of between 6 and 90 percent depending on their plans and when they retired. Otherwise, their eligibility for fully paid health insurance would not kick in until they reached normal retirement age. MainePERS pensions are typically the main source of income for retired teachers and state employees because they are ineligible for Social Security.

MSEA member Steve Keaten had worked as a senior health financial analyst for nearly 28 years when he took early retirement in 2011 because he was worried about being laid off and left uninsured. As a result, he took a 42 percent cut to his pension, resulting in a loss of about $120,000 in pension benefits over the past twelve years.

Keaten has worked very hard to elect pro-labor candidates and in the last three legislative sessions he led the effort to support legislation that would provide relief to the 115 teachers and state retirees like him who were forced to retire early in order to be eligible for full retiree health care benefits. Keaten and MSEA staff created a database of those impacted retirees and set to work trying to locate their contact information and calling them one by one.

“It took a while to find people to testify because MEPERS doesn’t give out personal information. They would tell you who they were and what their penalty was but they wouldn’t give you their address or phone number to contact them,” said Keaten. “We had to dig around, go to websites and try to track down people. It was pretty tough.”

But Keaten and his colleagues were able to assemble an effective bipartisan group of union retirees to lobby legislators and testify in Augusta.The first version of the bill died after the Legislature went home in 2020 during the pandemic and in 2022 it passed but was never funded.

Louanne Pinkham of Wiscasset, a 30-year state employee who took a 60 percent penalty for taking early retirement due to the health care cuts, was among the MSEA members who lobbied for the bill at the State House. At one point, she cornered Appropriations Committee member and fellow Republican Rep. Sawin Millett (R-Waterford) in the hallway about LD 1499, the latest iteration of the bill.

“I showed him my light bill for $500 from CMP on my phone and said ‘look at that. How do you think I’m going to pay that on a pension of $719.37 a month and a widow benefit of $360?’” recalled Pinkham, who voted for LePage twice. “Before he walked off, he came back and shook my hand and I thought I’d got to him. And you know something? He was the only Republican in that committee who voted for the bill and he was the only damn Republican who voted for that supplemental budget.”

The third time was a charm and LD 1499 was funded in the supplemental budget. From now on, Keaten and other retirees like him who took early retirement in 2011 and 2012 will only received a 2.25 percent penalty rather than 6 percent penalty per year. For Keaten, that translates to an extra $900 a month.

“It would never have passed while LePage was still in there because it happened under his administration,” said Keaten. “It wasn’t until Janet Mills became Governor that we started introducing the bill because we knew it would never happen under Paul LePage.”