Weekly Update January 14, 2022: A major focus of our Association is to make improvements to the annual retiree Cost of Living Adjustment or COLA. In fact, the COLA is the focus of today’s (Friday) Tele-Town Hall Meeting.
Today’s meeting begins at 1:00 PM EST. You can participate by calling toll-free 833-491-0336 at the time of the meeting OR by receiving the automated connection call from me when the meeting begins. If you receive the automated call, all you need to do is answer the phone and stay on the line. You will be automatically connected to the meeting. We have also printed the toll-free number on the 2022 Mass Retirees Membership Card, which is sent to each member once you renew your membership.
If you have read the past three editions of our newsletter, The Voice, you may have picked up on a theme. We strongly believe that the strong ongoing success of our public pension systems can and should be shared with the beneficiaries – namely you!
While it will be a few weeks before the final investment returns for 2021 are fully calculated, we are fairly certain that last year will prove to have been another historic year for pension asset gains. In fact, investment gains for much of the past decade have been a tremendous success.
Within each of the past three newsletter editions, we have provided detailed documentation of this ongoing success. We have also extensively reported on the annual COLA and COLA base. This most recent edition focused on legislation now pending on Beacon Hill to increase the base for retired State employees and Teachers, while also granting a COLA in 2022 based on the 5.9% CPI – the same metric used by Social Security – instead of the traditional 3% COLA reliably paid each year since 1998.
Legislation is also pending that would grant authority to the 102 local retirement boards to grant a 5.9% COLA in 2022. Our hope is to pass a special law to authorize local boards to act prior to the start of the new fiscal year on July 1.
The November Voice spelled out the steps required at the local to increase the COLA base for municipal and other local retirees. We strongly encourage members to work with your local retirement boards in advocating for improvements to the COLA base in 2022. Each retirement board has 2 members elected by the retirees & active employees of that retirement system. These individuals are your direct representatives and advocates on the board.
At the start of today’s meeting, we plan to offer some background on the history of the COLA here in Massachusetts, including the reasons why the increase is limited to a base amount and not the full pension benefit.
The short answer is that this is how our system was designed many decades ago. In fact, the origins of our current public pension law date back to the aftermath of World War II in 1946. Until the early 1970s, COLAs were ONLY paid to those retirees with pensions below $2,000. Changing the law to allow all retirees to receive a COLA was one of the early successes of Mass Retirees.
Another early victory was ensuring that every COLA was permanent and not treated as a one-time bonus payment like is the case in other states. Every COLA paid in Massachusetts becomes a permanent part of a retiree or survivor’s pension, meaning that it continues to be paid each year and is cumulative.
In the mid-1980s Massachusetts established pension funding schedules and ended the pay-as-you-go system that had placed our public retirement systems on shaky financial footing due to large unfunded liabilities that had grown over the decades. In doing so the goal was set to pay down the unfunded liabilities over a 40-year period (similar to a mortgage), while also making incremental benefit improvements.
Due to the work that has been done over the past four decades, combined with the sound financial management of PRIM and our retirement boards, we are now in a position where further progress can be made on benefit improvements for retirees.
Our Association will continue to work closely with legislative leaders and local retirement boards to implement COLA improvements this year. Now is the time to act.
We will notify members of activity on Beacon Hill as it occurs. Meanwhile, I encourage retirees who are members of local retirement systems to contact your local elected board members and ask how you might assist them with local advocacy. Together we can make sure that the success of our pension investments is shared with system members.