Plan would have given extra benefits Retirement board transferred 39 workers to Housing Authority for their last day of work.
The Essex Regional Retirement Board transferred dozens of public employees to the Manchester Housing Authority for their last day of work in a bold attempt to qualify them for both a government pension and Social Security benefits.
Some 39 public workers who belonged to the Essex retirement system rushed to try to take advantage of the lucrative loophole in Social Security law between December 2002 and early 2004, when Congress closed it, according to court documents obtained by The Salem News.
After the employees each agreed to pay hundreds of dollars in administrative costs, the Essex Regional Retirement Board handed them one-day jobs at the Manchester Housing Authority, where they worked their final few hours before retirement.
Both the employees and the Essex retirement board believed the so-called "last-day transfer" would deliver a valuable payout to the retirees — control of both a guaranteed pension and full Social Security survivors' benefits. That's because an exception under federal law allowed public employees to collect both benefits if they worked a government job that pays Social Security "on the last day of employment."
Normally, the employees would have seen their Social Security survivors' benefits reduced by up to two-thirds.
In the end, however, the retirees lost out.
The state retirement board refused to grant the one-day employees the exemption they needed to collect the Social Security benefits.
Even then, the Essex board did not give up. It hired a legal team to sue the state retirement board, arguing it did not have the authority to deny their request.
In March 2009 — more than six years after the transfers started — a Superior Court judge sided with the state, writing that the extra benefits would amount to a "windfall for employees that have never contributed to Social Security."