Comptroller finds widespread pension abuse with municipal, school professionals

TRENTON – The state Comptroller has found what it called widespread “improper participation” in the state pension system by attorneys and other professionals working as independent contractors.

The report released today showed that an “overwhelming majority” of 58 towns or school districts that were reviewed failed to comply with a 2007 law that mandated they determine whether such workers were “bona fide’’ employers or contractors.

As a result, the Comptroller referred 202 cases to the state Division of Pension and Benefits for review and removal.

Among other things, under the 2007 law, such workers are ineligible for pension participation if they were obtained through a contracting process.

The breakdown of the 202 cases includes 176 attorneys, 21 engineers, four health care professionals and one auditor.

Those 202 had accrued pension “credits” that could result in the state paying them a total of approximately $1.9 million a year in pension benefits, according to the Comptroller’s office, although it added the pension credits of six of those individuals already have been voluntarily removed by local governments.

“Despite the requirements of state law and the guidance issued by state agencies, local governments across the state have not done nearly enough to ensure that only eligible employees receive pension benefits,’’ Comptroller Matthew Boxer said in a release.

Boxer said some towns just simply failed to perform the analysis, some towns reported they believed certain workers were being “grandfathered” under the 2007 law,  some local governments failed to properly consider an employee’s separate work, and in some cases towns actually kept an attorney in the pension system based on legal advice from the very same attorney.

“Government officials should not be relying on pension eligibility advice from the very attorney whose eligibility is at issue,” Boxer said.

In some cases, workers had more than one questionable enrollment. One attorney had two part-time posts, according to the Comptroller: a $191,000-a-year position as a borough attorney and a $50,000-a-year job as counsel for a school board.

That same attorney told the Comptroller’s office he devotes 50 percent of his work time to his private practice, Boxer’s office reported.

The report recommended that the Division of Pensions and Benefits devise a checklist for governments to use to certify participants’ eligibility.

The entire issue of pension abuse resonates in a state that just last year enacted comprehensive pension and health benefits overhauls regarding public workers.

“We need to work aggressively to ensure that pension credits are received only by those government employees who have earned them,” Boxer said.

Comptroller finds widespread pension abuse with municipal, school professionals