Mass Public Pension Systems Stable & Secure

Mass Public Pension Systems Stable & Secure

Well Prepared to Weather Storm

APRIL 24, 2020: Learning from the 2008 Financial Collapse and Great Recession that followed, Massachusetts’ 104 public pension systems are financially stable and secure. Not a single system in the Commonwealth is in financial hardship or stands in danger of not being able to meet pension obligations to retirees.

These facts stand in stark contrast to the comments made this week by US Senate Majority Leader Mitch McConnell. Appearing on a conservative radio program, McConnell quipped that he did not support federal aid to states financially harmed by the coronavirus crisis. In doing so, he also insinuated that states’ fiscal woes stem from problems with public pension systems. McConnell went on to say that states should look to file for bankruptcy, instead of seeking help from the federal government.

Over the past 24 hours, we have heard from many members who were taken aback and startled by McConnell’s comments, leading them to question the stability of the Massachusetts’ public pension plans.

“I will say, unequivocally, that all of our public pension systems here in Massachusetts are stable and secure. The comments made by Senator McConnell were general in nature and not directed at Massachusetts,” said Mass Retirees President Frank Valeri, who also serves as an elected member of the State Retirement Board. “While our state has certainly taken a severe economic hit due to the coronavirus crisis, our pension systems are secure. This includes our public pension systems that have learned their lessons well from past crises including most recently the 2008 recession.

“As we reported in the May Voice and within several breaking news updates, our pension systems are designed with the worst-case scenario in mind. The asset allocation strategy is centered around not only gaining investment returns, but also with risk mitigation in mind. A great amount of effort has gone into diversifying the funds in order to weather a down market. These preparations are now paying off, as we see the system is doing what it was designed to do.

“I also want to point out that, despite the disruption caused by the coronavirus crisis, retirees received their March pension payments on time. It will be no different in April, May or any future month. Not only is our system secure, but our retirement system staff continue to do an excellent job to serve our members – despite the need to work safely from home in most cases.”

“After hearing from a number of members this morning, I personally spoke with State Treasurer Deb Goldberg. In addition to chairing the state’s PRIT Fund, Deb is also the President of the National Association of State Treasurers (NAST),” adds Mass Retirees CEO Shawn Duhamel, who is also an appointed member of the Town of Plymouth Retirement Board.

“It’s safe to say that the Treasurer was as taken aback by the Majority Leader’s comments as anyone else. His comments do not apply to Massachusetts. Not in terms of the stability of our public retirement systems or the overall health of our state and local governments. The Treasurer reminded me that, while these are certainly challenging times, the steps we have taken in recent years at the state and local levels of government have resulted in Massachusetts being in better fiscal shape than other parts of the country. This includes a well-funded state rainy day fund, as well as strong stabilization accounts at the municipal level.

“The Town of Plymouth Retirement Board held a virtual meeting this morning. Our board is monitoring developments very closely and is in constant communication with our investment managers.

“Through March, the state’s PRIT Fund was down roughly 10%. They’ve’ve since gained some of those losses back. In Plymouth, we’re seeing very similar results. By way of reference, in the fall of 2008 PRIT lost nearly 30% of its value over a matter of weeks. Many local funds did ever worse. We are all in stronger shape now than we were back then.”

Members should also note that Mass Retirees Executive Vice President Paul Shanley is an elected member of the PRIM Board, working hand-in-hand with Treasurer Goldberg overseeing the professional management of the PRIT Fund.

“As this situation evolves, we will continue to keep members informed and updated on any developments impacting your retirement. Our members need not worry about the health of our pension systems. They are stable and secure. Our pensions are safe.”