Pension a bounty shared

But the working relationship between Bassett and O’Leary was especially fruitful for themselves: They quietly voted to approve or signed off on each other’s deals to collect hundreds of thousands of dollars in promised pension benefits, according to a Globe review of hundreds of pages of documents obtained under the state public records law.

O’Leary, for example, was given credit for working summers as a playground instructor in Salem while she was a teen - time that allowed her to boost her pension into a more lucrative category. Bassett, meanwhile, was awarded an annuity that would have boosted his retirement income by as much as $63,000 a year. It was rescinded two weeks ago after Globe que ries.

Bassett signed off on O’Leary’s enhanced pension, and seven years later, O’Leary voted to approve Bassett’s annuity.

For critics of the Massachusetts public pension system, it is precisely these kinds of mutually beneficial actions among public officials that represent some of the worst abuses - abuses that led the Legislature to pass a major pension bill that was signed into law by Governor Deval Patrick this month.

“It’s scandalous,’’ said Robert Markel, town manager of Ipswich, one of 48 towns and other government entities that make up the Essex Regional Retirement System, when told about the benefits. “I don’t see how anyone in the retirement system can any longer have any confidence in the retirement board’s management of the system.’’

Bassett and O’Leary declined to be interviewed, but Lilli D. Gilligan, chief operating officer of the regional retirement system, said Bassett and O’Leary have abided by all applicable laws at all times.

“They cut no special deals,’’ Gilligan said.

O’Leary served three terms as Essex County treasurer, then decided in 1996 not to seek reelection. Bassett, a former state representative from Lynn and a Beacon Hill lobbyist, won election to replace her.

One of his first acts as treasurer was to sign off on an unusual pension deal for O’Leary - an arrangement that had to be approved by the Essex pension board that Bassett chaired. It allowed her to take an early, enhanced pension reserved for elected officials who lose an election or political appointees ousted in a change in leadership.

But O’Leary departed her elective office voluntarily and thus appeared not to qualify for such a pension. Still, at the time, there was precedent for it. By the time of O’Leary’s retirement, the State Retirement Board had approved early, enhanced pensions for six retiring legislators - in apparent contradiction to the spirit of the law.

Gilligan, when asked, said there are no documents in the Essex pension board files providing a legal rationale or basis for boosting O’Leary’s pension. She said the state agency that oversees the state’s 106 retirement boards made no objection to it.

O’Leary also took advantage of a legal interpretation that gave her a full year of credit for one week of service in January 1997, commonly referred to as the “One-day rule.’’ That loophole was eliminated in the new pension law.

She was credited, too, with a full year of service for working as a summer playground instructor in the early 1960s, when she made $1.60 an hour, and for coaching the Salem High School softball team in the 1970s.

Altogether, O’Leary, who served 18 years as Essex County treasurer, was credited with 20 years of service when she retired at age 54 - the minimum amount she needed to receive her early, enhanced pension known as a Section 10. That kind of pension awards retirees with 33 percent of their salary - typically a far higher calculation than the normal pension benefit.

O’Leary’s enhanced pension provides her about $23,500 a year, according to Essex pension board records. That is about $5,500 more a year, compared to what she would have begun collecting at that time with only 18 years of credit and with no special treatment under the law intended to boost the pensions of elected officials turned out of office by voters.

If she lives into her 80s, O’Leary will collect more than $150,000 in additional payments by virtue of having been credited with 20 years of service.

In 1997, O’Leary was voted onto the Essex pension board by the county commissioners. And in that role, she voted to approve an enhanced retirement benefit for Bassett.

In 1999, the Legislature abolished Essex County government but passed a state law that gave Bassett the job heading the Essex Regional Retirement System until 2002. In 2003, the Essex board voted to keep him on. The job was essentially the same as under the county government, but with one important distinction: Now, he was a public employee rather than an elected official.

That change in status threatened to cost Bassett the $41,000 annual pension he had begun receiving at age 47 when he lost his job as head of a state agency in 1995. Under state law, elected officials can keep their pensions from a previous public position, but nonelected officials cannot.

The dilemma for Bassett was resolved with the enactment of a law exclusively for him. In 2002, Thomas M. Finneran, then House speaker, slipped a one-paragraph amendment into the 556-page state budget exempting Bassett from the law.

But the maneuver created a new problem. State pension law prohibits someone already receiving one pension from working toward a second pension in another public job. To circumvent that law, the Essex Regional Pension System board, with O’Leary’s assent, voted in 2004 to fund a special annuity for Bassett.

Documents indicated that the pension board set up an annuity designed to assure that Bassett would receive 80 percent of his highest salary in retirement. He makes $130,000 a year, meaning his retirement package would total $104,000. The board subtracted his $41,000 state pension, meaning his annuity payments would have added $63,000, according to a Globe review.

Bassett, in a written statement to the board, referred to the board-approved plan as having provided a $40,000 annuity, in an apparent discrepancy. But on June 4, after the Globe requested records on Bassett’s retirement benefits, the Essex pension board voted to rescind his annuity.

Bassett released a statement on June 12, saying: “Given the market conditions and the economic realities at the present time facing towns and cities, I consider it appropriate to . . . rescind this benefit.’’

The pension board minutes from the June 4 meeting show that members considered the annuity to have been “set up, discussed, and voted upon appropriately.’’ The board went on to laud Bassett’s public service as a strong administrator and advocate for retirees.

Sean Murphy can be reached at smurphy@globe.com.