Massachusetts pensions

A New Era of Pension Transparency In Boston? Not So Fast.

Last week, the Massachusetts Bay Transportation Authority (MBTA) agreed to disclose its member’s pension benefits and to beef up its previously inadequate annual financial reports.

The retirement fund, called the “T” Fund, is among the most tight-lipped in the country because it is not required to follow public records laws.

But a Boston Herald editorial warns us not to cheer for this measure quite yet. The newspaper calls the agreement a “half-measure” that could easily be reversed. From the Boston Herald:

A deal struck between the MBTA and a union representing 3,000 of its workers to disclose more information about employee pensions is a disappointing half-measure. A mere contractual agreement, it could easily be revised in the future. To ensure public access to this vital financial information the disclosure agreement needs the force of law.

Data on T pensions has long been shrouded in secrecy. The MBTA retirement fund was originally formed as a “private” trust, and state courts have upheld that status. That means neither MBTA fare-payers nor state taxpayers have the legal right to data on the pensions that they subsidize.

Amid public pressure over the fund’s secret operations — the board’s investment decisions are private, too, and its meetings aren’t open to the public — Beacon Hill last year passed a law intended to subject the T’s pension fund to state public records and open meeting laws.

But opponents of the new requirement resisted the effort, and actually succeeded in convincing the state’s supervisor of public records that the fund still wasn’t required to open its books.

So much energy wasted, all to keep the public from examining data that should be available for anyone who’s ever swiped a Charlie Card to examine.

The deal struck last week requires the union to turn over data on employee pensions to the T monthly, and the T will then post it on the state’s Open Checkbook website. We are supposed to greet this development with cheers.

But we’d be curious to know what T management had to give up during negotiations to secure the agreement. And we’d note once again that a provision like this negotiated into a labor contract could easily be negotiated out in the future.

The “T” fund is still refusing to disclose documents related to investment losses associated with certain hedge funds.

Photo by Truthout.org via Flickr CC License

A Step Toward Pension Transparency in Boston

As part of recent contract negotiations, the Massachusetts Bay Transportation Authority (MBTA) has agreed to disclose more of its pension data to the public.

The MBTA retirement fund is among the most tight-lipped public pension funds in the country, due to laws that exempt it from following public records laws.

The MBTA will now release its members’ monthly pension benefits to the public. It will also improve its annual financial reports to include more information.

Reported by the Boston Globe:

Under the contract, the Boston Carmen’s Union adopted language to require the $1.6 billion T retirement fund to disclose members’ pension benefits to the MBTA at least monthly. The MBTA in turn will post them on the state website that discloses all public employee pensions, Open Checkbook.

In addition, the union agreed that fund trustees will improve the annual report to meet the standards of the Government Finance Officers Association.

The fund’s annual report for years has left out essential elements, prompting warnings from auditors. The fund also failed to disclose a $25 million loss on a hedge fund investment in 2012, until the matter was reported by the Globe last year. Currently, the loss is posted on the pension fund’s website.

The union, which also won a 10 percent pay increase over the next four years, approved the pension and work agreements last weekend. The Massachusetts Department of Transportation affirmed the $94 million accord Wednesday.

The T pension fund, partially supported by taxpayers, is organized as a trust and not required to follow public records laws. That position was upheld by the state Supreme Judicial Court in 1993.

Transparency advocates didn’t get everything they wanted, however. The fund is still refusing to disclose documents related to investment losses associated with certain hedge funds.

Photo by Truthout.org via Flickr CC License

Retirees Blast Mass. City Retirement Board For “Criminal” Cutbacks

Retirees, labor group leaders and even a city councilman are upset at the Leominster, Massachusetts Retirement Board after the Board voted to eliminate a cost-of-living increase in pension payments for the fifth straight year. Reported by the Sentinel and Enterprise:

“We think it’s unconscionable that our local retirees haven’t received a (cost-of-living increase) which they need,” Shawn Duhamel, the legislative liaison for the Retired State, County and Municipal Employees Association of Massachusetts, said Wednesday. “They are largely reliant on their pension as their sole income, so not having a cost-of-living increase for five years really hurts retirees, and we think it’s unnecessary.”

Out of 105 retirement systems in the state, Leominster is the only community to deny a cost of living increase in recent years, according to the association’s monthly newsletter. Somerville is the only other community to miss a cost of living increase dating to 1998.

Mayor Dean Mazzarella defended the retirement board’s decision not to increase benefits while it works to reinvest and fully fund its post employment financial requirements.

Critics have lashed out, in part, because the COLA denial comes in the wake of the Board’s above-average investment returns and the recent decision to lower its assumed rate of return.

The Board’s investments returned 21 percent in 2013, and the assumed rate of return was lowered from 6.5 percent to 5.5 percent. From the Sentinel and Enterprise:

If the retirement board maintained projects of 6.5 percent rate of return based on 2013 earnings the city’s post employment benefits obligation would be fully funded, Duhamel said.

Leominster should be proud of its long success, which is outperforming almost all others in the state, but instead of sharing the wealth with retirees is taking a different approach, Duhamel said.

The retirement board’s projection of lower returns puts a bigger burden on taxpayers to fund the program, Duhamel said.

The board’s rate of return on investments should justify a cost-of-living increase, said at-large City Councilor Bob Salvatelli.

“With that kind of impressive return we’re making off this thing, and not giving retirees a 3 percent raise, is criminal,” Salvatelli said. “It’s not even funny; it’s criminal.”

According to city estimates, giving retirees a 3 percent cost-of-living increase would cost the city $145,000 up front and would cost $900,000 over the life of the retirees who received it.