Pension is Very Much Up in the Air

November 10, 2011
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While the employment status of former Chelsea Housing Authority (CHA) Director Michael McLaughlin is very clear – he stepped down immediately last week – the fate of his pension is still very much up in the air.

And despite the fantastic nature of his last few weeks in office, it appears there still might be a possibility that his record-breaking pension could be upheld.

State and local pension boards this week are poring over salary and contract documents, while at the same time state Inspector General Greg Sullivan released a condemning letter last Thursday on the matter – categorically denying any notion that McLaughlin is entitled to the larger pension.

Based on McLaughlin’s “real” salary – as reported in the Boston Globe – of $360,383 per year, he would qualify to have the largest pension in the state by a long shot upon retirement. It would reportedly be more than $250,000 per year and would even eclipse the controversial pension given to former Senate President William Bulger.

The question comes in that no one is sure just how much McLaughlin paid into the system. While he reported in CHA budget documents sent to the state that he made $160,415 in 2011, other reports now have him making more than $360,383. While none of that higher salary was reported in the state budget documents, it is possible that McLaughlin still paid his fair share of that larger salary into the pension fund, which – believe it or not – could qualify him for the larger pension figure.

If he only paid into the system for his lower, reported salary of $160,415 then he probably would not qualify for the larger pension figure.

Right now, that is the conundrum that everyone from Chelsea to Beacon Hill is trying to unravel.

Chelsea Retirement Board Administrator David Pickering told the Record that McLaughlin still hasn’t put in his papers for retirement yet, but those papers are expected within a week’s time.

The state retirement system – called PERAC – said this week that they are looking at the situation closely and have become well-versed on the situation.

“We have communicated to the Chelsea Retirement Board asking for several years of documents from the Board and instructed them not to approve a pension benefit until such time as [PERAC] has had time to review all relevant documents – including Michael McLaughlin’s contract,” said Joseph Connarton, executive director of PERAC.

He said the bottom line is they want to find out what rate that McLaughlin paid into the retirement system while employed at CHA.

“We’d like to take a look at the pay rates regarding his retirement contributions and whether they were made on the higher amount,” he said. “We understand from the Inspector General’s letter [McLaughlin] listed a salary of $160,000, but your colleagues in the media are reporting a salary of $360,00. We wanted to determine what documents are in play to determine if the pension benefit is to be calculated in the higher amount.”

Sullivan’s letter, though, seems to take a very clear path towards reducing McLaughlin’s pension figure substantially.

“The employment agreement must be established in accordance with [state] guidelines for employment contracts,” read the letter. “There is no authority in this Guidance that would support a salary amount of $360,383. Nor is there information to date in the records that we have reviewed indicating that [the state] approved an employment agreement for Mr. McLaughlin totaling $360,383. As such, the Chelsea Housing Authority is out of compliance with these provisions and the amount of $360,383 cannot support a basis for Mr. McLaughlin’s pension calculation.”

Sullivan’s letter indicated that his office’s preliminary investigation showed that McLaughlin should not be awarded a pension based on anything other than the salary reported to the state – a salary of $160,415.

As it looks right now, there seems to be a much stronger approach by Sullivan than by PERAC.

At the City level, City Manager Jay Ash said that he hoped the state could offer the local Retirement Board some options concerning McLaughlin’s controversial pension.

“I’m not privy to the filing, but I encourage and expect the Chelsea Retirement Board to examine all the facts of this case very carefully,” he said. “We all have a very negative reaction as to what we have heard.  I hope investigators and State retirement officials can shed some light on the various options, if any, our local board may have at its disposal or with the cooperation of the State.”

Right now, Retirement Board Chair Joe Siewko – the former Fire Chief – said they are waiting to see what happens, specifically if it can be determined whether or not McLaughlin broke any laws.

“We’ll follow the rules and state law,” he said. “Right now, there is a question about whether or not he broke any laws. No one can say that yet. If there are any improprieties that would mean a reduction in the pension or a forfeiture, there are laws that guide that, but something will have to be given to the Board saying he has broken laws before any of that can happen. Everything is up in the air right now.”

Siewko said that the Retirement Board is scheduled to meet on Nov. 16th and they might address the issue at that meeting. However, if things are still up in the air, they will continue the matter until the December meeting.


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