MassPensions: Three Highest Growth Rates in Unfunded Pension Liability

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It’s no secret that Massachusetts’s public pension systems are following a dangerous path. At both the state and local levels, officials have allowed unfunded pension liabilities to grow at unsustainable rates. According to a recent Pioneer study, unfunded liabilities of the state’s three retirement systems grew by 196% between 2003 and 2017

Most of the state’s 106 pension systems are not projected to be fully funded for another 10 to 20 years and taxpayers are ultimately on the hook for these questionably managed funds. Pensioners would be right to question if their benefits may someday be reduced. Ultimately, Massachusetts’s unfunded pension liabilities could hinder the state’s long-term economic growth, should investors believe that the only viable fix is a tax hike. With recent trends in bond markets and the Empire State Manufacturing Index suggesting that a recession may be on the horizon, policy makers should proceed with caution. Even if a recession is not imminent, any economic downturn may deliver a devastating blow to these funds. In short, Massachusetts politicians need to act.

Pioneer Institute has provided the public with a tool that can help inform the discourse on this increasingly alarming issue. The site contains data on the past and current performance of the state’s pension systems, which may indicate future trends. With, users can see that unfunded liabilities of many systems have been increasing at concerning rates. This is true even for some highly rated systems. 

Given the Boston Globe’s recent report on the troubled MBTA Retirement Fund, one might expect this system to make the list. However, in the past several years, the unfunded liability of a few other systems have increased at significantly higher rates than that of the MBTARF.

Here are the three pension systems with the highest unfunded liability growth rates:

  1. Adams (100.6%):

In 2012, Adams’s pension system had an unfunded liability of $6.8 million. Six years later, it more than doubled to $13.64 million, growing by 100.6%. 

  1. Marblehead (84.6%):

Between 2012 and 2018, Marblehead’s unfunded liability increased from $28.4 million to $52.4 million, rising by 84.6%.

  1. Winchester (84.5%):

Closely behind Marblehead is Winchester, which had an unfunded liability that grew by 84.5% between 2011 and 2017. Over these six years, its unfunded liability rose by $13.6 million, from $16.1 million to $29.7 million.


Unique Situations:

Between 2011 and 2017, the Minuteman Regional School District (MRSD) saw its unfunded liability grow by 288.5%. In 2011, the district had a surplus of $457,607, but six years later it had a deficit of $1,777,946. However, it is important to note that this system had a high funded ratio of 88.3% in 2017, and relatively small changes in its unfunded liability resulted in a large percentage change over time.

Additionally, the Massachusetts Housing Finance Agency’s unfunded liability increased by 74.1% between 2011 and 2017. In 2011, its unfunded liability was $23.2 million, yet in just six years it swelled to $40.4 million. However, the agency’s funded ratio in 2017 was 76.8%, only 0.6 percentage points lower than in 2011.


As shown by these two pension systems, it is important to view unfunded liability growth rates within the context of funded ratios. Large increases in unfunded liabilities do not necessarily indicate significant decreases in funded ratios, which are a key performance measurement. However, large increases in unfunded liabilities often coincide with significant decreases in funded ratios. 

In addition, it is also important to look at these growth rates in the context of the state given that some of these systems, such as the MRSD, cover smaller employee payrolls and therefore only contribute a small amount to Massachusetts’s overall unfunded liability. This is not to say that MRSD’s 288.5% growth rate is not problematic; it is. But a 288.5% growth rate in MRSD’s unfunded liability is not as harmful to the state as a potential 288.5% growth rate in a larger system, such as the MBTA Retirement Fund. 

Nonetheless, the bottom line is that the public must demand action to curb these growth rates. Local budgetary constraints should not mean poor retirement plan funding. Turning a blind eye to Massachusetts’s pension crisis will not solve it; inaction will only increase the burden for future generations.

Note: Rankings based on growth rates between either 2011 and 2017, or 2012 and 2018 depending on availability of data.

Cole Kroninger is a Roger Perry Transparency Intern at Pioneer Institute. He is a rising senior at Hamilton College where he studies Economics.