Pension Calculus Draws New Scrutiny

A California dustup over large pension payments is shining a spotlight on the practice of spiking -- increasing a salary just before retirement and boosting the lifelong payout.

Pete Nowicki had been making $186,000 shortly before he retired in January as chief for a fire department shared by the municipalities of Orinda and Moraga in Northern California. Three days before Mr. Nowicki announced he was hanging up his hat, department trustees agreed to increase his salary largely by enabling him to sell unused vacation days and holidays. That helped boost his annual pension to $241,000.

The boost was legal, and Mr. Nowicki said he is receiving a permissible pension. "People point to me as a poster child for pension spiking, but I did not negotiate these rules," he said.

The fire district's board agrees. "Chief Nowicki abided by existing rules and guidelines for optimizing his retirement pay," said Frank Sperling, the board's vice president. "I don't fault him. The system itself is broken. We need to change the system."Full Story