The Plymouth retirement board is scheduled to vote Friday morning on whether to suspend a former town finance director’s annual pension over allegations he broke so-called “double-dipping” rules, a charge his lawyer denies.
The case pits Michael Daley against the retirement board on which he once served. It highlights a practice critics say skirts the law limiting how much a retired public worker can earn from government sources while tapping a taxpayer-funded pension. The case is being closely watched in pension circles, amid greater scrutiny of abuses in the retirement system.
The key issue: Can retired employees get around the law by forming a corporation that performs work for municipalities?
Daley applied for his retirement benefits in November 2006, at age 55, having worked for the town earlier in his career for 10 years and five months. He was making just under $70,000 the year he left, which entitles him to a monthly pension check of $808.77.
But Daley also runs an accounting and administration firm in Buzzards Bay called Financial Advisory Associates Inc., which brings in about $600,000 a year and provides services predominantly to municipalities, school districts, and retirement boards around the Commonwealth.
Plymouth is going after $324,000 in what it calls ‘excess earnings.’
The Plymouth Retirement Board raised a red flag on his pay in 2010 and started requesting documents to determine whether Daley was making “excess earnings” — the technical term for earning too much to also receive his pension.
The two sides have been embroiled in a fight over the documents ever since.
Daley argues that he did not break the rules and should not have to release papers because he runs a consulting firm with four employees and does not work as an employee or an independent contractor for a municipality.
Daley’s lawyer, Nicholas Poser, said Plymouth is harassing his client. He said that a 2009 change in the law to apply earnings limits to consultants came into play after Daley had retired.
“Mike Daley isn’t covered by any of that because he’s a pre-2009 retiree,’’ Poser said.
The state’s pension oversight board is siding with Daley and his lawyer. In a letter to Poser in March 2010, the Public Employee Retirement Administration Commission said the law does not apply to Daley because he consults for a number of public entities, not just one.
But that rationale isn’t flying with the Plymouth Retirement Board’s chairman, Thomas M. Kelley. The board is going after $324,000 in excess earnings it estimates Daley has made since retiring, a figure first reported by the website Wicked Local. The state commission says the most Plymouth could recoup is the $9,705 annual pension.
Kelley, a retired policeman and vocal critic of some state pension policies, has helped to file legislation to call out retirees who set up companies through which they earn government consulting fees and may try to hide them. He wants to more explicitly require retirees to tell pension boards about their earnings and hours worked for government entities.
“This legislation would close the loophole,’’ Kelley said. “It would put these people on the radar screen and make them more accountable.”
In a statement, Senate President Therese Murray, whose district includes Plymouth, said: “We are always on the lookout for any additional improvements we can make to our pension system and we take any potential abuse of the system very seriously.
“Over the past few years, the Legislature has undertaken a number of significant reforms that have closed loopholes, eliminated special benefits and established a fairer and more equitable public benefit.”
Under current law, a retiree from a public job can take a new job with a municipality or government entity. But he or she must work less than 960 hours a year and generally earn an amount less than the final year’s pay, minus the annual pension benefit.
Daley, for instance, can earn $59,604, plus an adjustment of $15,000, for a total of $74,604, according to the state board.
Daley is still fighting Plymouth’s demand for documents and appealing a ruling by the Division of Administrative Law Appeals compelling him to turn over the records. Neither he nor his lawyer are expected to attend the Friday meeting when the Plymouth Retirement Board decides whether to strip him of his pension, Poser said.
Beth Healy can be reached at firstname.lastname@example.org.