Pension Forfeiture

My state, Connecticut, has just added itself to the at least 14 states that provide for public official pension forfeiture. Like some of the other states, its new law covers municipal officials.

Pension forfeiture is the capital punishment of government ethics.  It makes legislators look like they care about ethics, and it makes people feel that justice has been done. And with all these "good" emotions sparking supportive editorials, few think about the arguments pro and con, or the alternatives, which include fines and restitution (some of which could be taken out of future pension payments). Pension forfeiture is more about retribution than it is about ethics, law enforcement, or accountability.

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I saw people's desire for retribution focus on this issue in my own town last year when three high-level officials were arrested for embezzlement and conspiracy to embezzle (adding to this feeling is how many officials immediately retire when they are arrested; in my town, the three officials have delayed hearings on their case for over a year, while receiving their pensions).

Pension forfeiture does have one major advantage over capital punishment:  it would seem to be a more likely deterrence. It may not make officials accountable, as is often argued, but it might make them think a third time before they embezzle or accept bribes.

The principal rationale behind pension forfeiture is that pensions are rewards for faithful service, and that a breach of public trust negates the public official's entitlement to the pension.  But is a pension a reward or is it something that is contracted for (in fact, one of the principal attractions of public service)? And what about spouses and dependents? Have they also breached the public trust?

Connecticut's new statute is one of the more reasonable ones. It applies only to serious crimes that breach the public trust, it does not apply to whistleblowers, it does not allow the reduction of income needed to support spouses or children, it applies only prospectively (since deterrence is the principal goal), and it gives courts the freedom to reduce or revoke pensions, including reducing the pension for restitution, fines, and the cost of imprisonment (nothing is mandated). The court also determines if a collective bargaining agreement would be breached by revocation (but reduction would still be permitted).

Rhode Island and New York appear to allow pension forfeiture for, respectively, certain misdemeanors and "administrative misconduct," both of which could include ethics violations.

Tennessee's relatively new law requires legislators, each time they are elected, to waive their pension rights if they are ever convicted of a felony related to malfeasance in office.  A waiver is a good idea for all public officials.

The leading article on this issue still seems to be James Jacobs et al's 1997 "Pension Forfeiture:  A Problematic Sanction for Public Corruption" (American Criminal Law Review, Fall 1997). Jacobs et al present an argument against pension forfeiture statutes, but prefers statutes like those in New Jersey and, now, in Connecticut.

Robert Wechsler
Director of Research-Retired, City Ethics