Who’s Responsible for the MBTA Retirement Fund
It cannot have been a particularly merry Christmas for Stephen Crawford, spokesman for the MBTA Retirement Fund.
In the run-up to the holidays, a series of Boston Globe articles recounted a potentially fraudulent $25 million loss at the pension fund, blatant conflicts of interest and repeated failures to follow standard accounting practices – not to mention an ever-expanding investigation by the state attorney general, Martha Coakley.
Seemingly unbowed by the controversy, Crawford told the Globe: “The pension fund is fully capable of meeting its obligations to its retirees and beneficiaries. The trust is solely responsible for meeting that responsibility – not the commonwealth.’’
[quote align=”right” color=”#999999″]Whether Mr. Crawford intentionally misrepresented the facts, fell victim to years of disinformation about past T pension “reforms” or simply lost his nerve is moot. The MBTA’s pension plan is in dire condition and the time for half-measures and quasi-reforms has passed.[/quote]
Strictly speaking, we don’t know if the first part of his statement is true. The MBTA Retirement Fund has not made public any recent “actuarial valuation” – the report that gauges how far assets go towards meeting benefit obligations. In fact, the fund has never published such a document.
According to the MBTA’s own financial statements, its main pension plan was only 68.1 percent funded as of yearend 2011, with an unfunded liability of $726 million.
Even after factoring in the T’s subsequent contributions and investment returns for the last couple of years (only recently disclosed by the fund), it is inconceivable that the gap could have disappeared. The fund still falls short – by hundreds of millions of dollars.
Which brings us to the second part of Mr. Crawford’s statement, about taxpayers not bearing responsibility for the liability.
Under the current pension agreement, contributions to the pension fund are tied to changes in the fund’s overall value. If the value fails to increase at the expected rate, employees and the MBTA – read “taxpayers” – must contribute more to make up the difference. The contract makes no distinction between contribution increases necessitated by investment losses, embezzlement or a spate of “unexpected” promotions for employees approaching retirement that dramatically increase their pensions (better known as “spiking”).
The secretiveness of the fund and the complicated funding structure have allowed interested parties to disseminate and perpetuate the myth that taxpayers are protected from whatever goes on in the enigmatic world that is the MBTA Retirement Fund.
This brazen mythology also implies that somehow the state does not have a responsibility to safeguard MBTA employees’ retirement benefits against incompetent and fraudulent fund managers.
Whether Mr. Crawford intentionally misrepresented the facts, fell victim to years of disinformation about past T pension “reforms” or simply lost his nerve is moot. The MBTA’s pension plan is in dire condition and the time for half-measures and quasi-reforms has passed.
The day has come for the commonwealth’s elected leaders to step up. Some may choose to use truisms and empty promises to shield a murky status quo. Let’s hope that others will insist on getting the dealings of the MBTA Retirement Fund out in the open.