Pension reform in San Jose results in raft of disability claims

By BenefitsPro


By Andy Stonehouse

As California's pension battles become more and more politically heated, civic leaders are claiming that public safety employees in San Jose are using legal loopholes to cash in on benefits before jumping ship.

According to Bloomberg, firefighters and police officers in the city - whose union recently sued the city after voters approved measures restricting future pension benefits - have been citing injuries and filing disability retirement claims in increasing numbers.

Critics say they're using the disability claims to collect pensions that are partially exempt from state and federal taxes, and then find new jobs; the newest claimants can legally retire in their 30s and 40s and still receive benefits. Retired fire and police employees have also been using the rules to alter their existing pensions and receive the tax benefit.

"People are trying to get their applications considered under the old system, which is very, very loose," San Jose Mayor Chuck Reed told Bloomberg. "Anybody who wants it can make the application and it's almost always granted."

Earlier this summer, local voters supported Reed and his city council's proposal to curtail the future scope of public retirement benefits, as they're eating up more than half of the city's annual budget. New rules also call for a revamp of the governing board for the city's retirement plan

Auditors note that San Jose already has a considerably larger percentage of retired employees receiving service-related disability benefits than other major cities, including Los Angeles and San Francisco.

Those who can qualify for the plan - and administrators note that most are legitimate claims - receive a tax break on 50 percent of their last salary. More than 140 disability retirement applications were pending at the last meeting of the Police & Fire Department Retirement Plan, most being conversions of existing pensions for tax benefits.

San Jose's mayor claims the higher rate of applications is directly connected to easier qualification standards - applicants need a doctor's review, versus being reviewed by a staff of disability experts, as is the case in other cities.

There's also been a 94 percent approval rate in claims made to the police and fire retirement board, with a much smaller percentage approved by a retirement board representing other employees.

Bloomberg cites the case of a former San Jose police officer who received a disability related retirement at age 41 in 2001 after 15 years of service, citing neck and back injuries. The office moved on to another public safety job where he now earns more than $130,000 per year, as well as more than $54,000 in annual disability retirement benefits from San Jose.

The claims have full legitimacy if you consider the strenuous and dangerous work carried out by most firefighters and police officers, explained Harvey Leiderman, a San Francisco-based lawyer, fiduciary for the Police and Fire Department Retirement Plan.

"You may still be able to ride a motorcycle, but if you can no longer chase down a suspect and climb up and over a chain-link fence, you are disabled as far as your department is concerned, and they are not going to want you back," he told Bloomberg.

Originally published on BenefitsPro.com