Annually, the state’s public pension oversight agency, PERAC (Public Employee Retirement Administration Commission), publishes an Investment Report that summarizes the investment returns for the preceding year and annualized past returns of all 104 retirement systems and the state’s PRIT Fund (Pension Reserves Investment Trust Fund). Recently PERAC issued its 2024 Report that not only shows the individual retirement system results, but also calculates the state-wide composite of all systems, including the gains of the PRIT Fund.
“As always, PERAC’s latest report provides an excellent summary of the most recent investment returns for 2024, along with historical data showing the investment growth within all our retirement systems,” notes Mass Retirees President Frank Valeri. “And, we’re pleased to see that this year’s report again contains substantial investment gains for Mass. retirement systems.” Ed Note: Valeri also serves as an elected member of the State Retirement Board and can be counted among the many Association officers and members who serve on retirement boards across the Commonwealth.
Details from PERAC’s 2024 Report are summarized beginning on Page 10. We must point out that two categories – Assumed Rate of Return and COLA Base – were not included in the PERAC Report. We believe that these categories are of particular interest to our members and have inserted them in our summary.
POSITIVE NEWS
Valeri continues, “Most importantly, PERAC’s report contains positive news, showing that the long-term (40-Year) investment return of each retirement system exceeds their individually assumed rate of investment return. Moreover, the composite for all systems over the past 40 years, is just over 9%.”
For the 104 retirement systems, their 2024 investment gains have exceeded their assumed rate of return, except for one. Norwood, whose system is well-funded at over 75%, fell just 0.14% short of its assumed return but its 40-Year Return is almost 2% higher.
This positive news helps to drive the Association’s ongoing calls that state and local governments share the system’s “excess” gains with retirees and survivors. As we’re reporting on page 8, most local and regional governments have been answering our call and improving their COLA benefits with a higher base.
“But much more needs to be done,” cautions Valeri. “I’m hopeful that the Special COLA Commission, on which I am currently serving (see related article on page 7 will provide some new approaches toward achieving improved COLA bases and developing a new benefit for longterm retirees.”
FORTY-ONE SYSTEMS OVER 80% FUNDED
Focusing on the Funded Ratio for the retirement systems, there is also positive news. Forty-one systems – nearly 40% – have a funded ratio higher than 80%. It’s noteworthy that the funded ratios for these systems do not include 2024 gains and in some cases, 2023 investment returns.
“With PERAC’s Annual Report, we’re able to better gauge the overall stability and health of our 104 retirement systems and PRIT,” according to Association CEO Shawn Duhamel. “While the data offers signs that most systems are trending in a positive direction, we remain concerned that with full funding state and local governments will not maintain their commitment to continue funding their retirement system.
Once full funding is achieved, state and local governments can’t be allowed to discontinue their obligation to the pension fund, potentially undermining any future efforts to better pensions including COLAs. For these reasons we introduced H2835 that mandates a minimum appropriation by state and local governments for their respective pension system upon reaching full funding.”