Pensions

Public employee pensions contribute to national savings, representing 21 percent of retirement assets according to the Urban Institute. These pensions help public workers plan and live out retirement, especially the 97 percent of Massachusetts government employees who do not earn Social Security benefits through their current job.

This study illustrates why issuing pension obligation bonds (POBs) to refinance $360 million of the MBTA Retirement Fund’s (MBTARF’s) $1.3 billion unfunded pension liability would only compound the T’s already serious financial risks.

Despite several reform bills targeted at the Commonwealth of Massachusetts’s public pension system in recent years, the unfunded actuarial accrued liability (UAAL) has continued to rise and is drawing closer to a crisis level.

This report finds that Massachusetts' 102 local systems (84 municipal, 12 regional and 6 “special” such as MHFA and Massport) have average per-member administrative costs that are at least triple those of the Massachusetts State Employees’ Retirement System (MSERS), with many that are far higher.

This report documents significant deficiencies in the actuarial valuations produced by the Massachusetts Bay Transportation Authority Retirement Fund (MBTARF) since 1990. Analysis of about a quarter-century of data suggests that the MBTARF's actuarial reports may have deviated considerably from the true cost of pension benefits. As of yearend 2015, the fund had an estimated unfunded liability of about $944 million.

The commonwealth should set a five-year deadline for 102 public pension systems to transfer their assets to the Pension Reserves Investment Management (PRIM) Board, the management authority for the Massachusetts State Employee Retirement System (MSERS) and the Massachusetts Teachers Retirement System (MTRS).

This report examines the MBTA Retirement Fund's unfunded liability and compares MBTA and state employee and employer retirement contributions. It recommends that the MBTA assess the feasibility of moving its employees out of the Social Security system and transfer investment management responsibility for its pension fund to the commonwealth’s Pension Reserves Investment Management board as initial steps toward terminating the MBTA Retirement Fund (MBTARF).

This report illustrates that had MBTA Retirement Fund (MBTARF) assets been placed in the Massachusetts state pension fund at the end of 2000, their value would have been an estimated $902 million greater by 2014 and T pensions would have been about fully funded.

Pioneer Institute is releasing an update to MassPensions.com with new data from the Public Employee Retirement Administration Commission about the status of the 105 Massachusetts public pension systems at the beginning of 2014. Retirement boards have continued on their path of lowering assumed rates of return (ARRs) towards more reasonable levels. However, funding progress for most systems remained stilted, as 22 local boards extended their funding deadlines by up to eight years.

For quite a few years now, public pension liabilities have been a growing concern for policymakers and public finance professionals. The methods used to value the liabilities are fundamentally important both for designing plan policies and for plan administration. They are an essential tool for budgeting because they help account for the costs of public services and create appropriate funding schedules for plan contributions to ensure the fiscal soundness of both the plan and its provider.