Most Communities Invest Their Funds
In our last Voice, we reported on the Commonwealth’s OPEB (Other Post Employment Benefits) fund, known as the State Retiree Benefits Trust (SRBT) Fund, that also invests the OPEB funds for several local governments including 53 cities and towns. While some have invested with the SRBT Fund, most municipalities and other public entities manage and invest their OPEB funds.
It’s noteworthy that communities were creating trusts for future retiree healthcare costs even before GASB finalized its OPEB Rule 45 in 2004 (see September Voice). Among them were the towns of Arlington, Bedford, Brookline, Hingham, Lexington, Needham, Quincy, Waltham, Wellesley and Winchester.
Back then, each of these communities successfully enacted special legislation that authorized them to establish OPEB trusts for future healthcare costs. “That changed in 2008 when Mass Retirees succeeded in enacting its initiative (Chapter 479) that allowed for local OPEB trusts without the need for special legislation,” according to Legislative Chairman Tom Bonarrigo.
“Another significant change occurred 3 years later when in 2011 communities were allowed to have their OPEB funds invested by the SRBT. However, state law still didn’t allow communities to have their own retirement board manage and invest OPEB funds.
“That change didn’t occur until some 7 years later when in 2018 the state law was changed to allow OPEB funds to be invested by retirement boards. But, in the meantime a community had to resort to special legislation in order to utilize the services of its retirement board, and that’s precisely what the Town of Plymouth did.”
Plymouth: Revisiting 5 Years Later
Members may recall that in our September 2021 Voice, we reported that in 2013 Plymouth had successfully enacted a special law, Chapter 113, that had the town’s retirement board in charge of its OPEB Trust. “When it comes to its pension fund and health insurance program, our town is committed to maintaining local control,” according to Plymouth Retirement Board Chairman Tom Kelley, retired police officer and a longstanding Association member.
“We manage and invest our pension funds and don’t participate in the state PRIT (Pension Reserves Investment Trust) Fund. And to that end, we take pride in the fact that since the inception of pension funding here, the return on investments has exceeded our assumed rate of investment return by almost 2%, with a 10.91% return in 2025.
“So, when we created our OPEB Trust back in 2013, we didn’t adopt the state local option (Chapter 479) since it didn’t allow local retirement boards to invest our OPEB funds. We successfully enacted Chapter 113, that has our retirement board in charge of the town’s OPEB Trust.” In our 2021 Voice report, the Plymouth Retirement Board was managing almost $9 Million in the OPEB Trust. And, as Kelley noted then, “The Board has the same money manager for OPEB that we have for our pension funds. And we’re pleased to report that RhumbLine has performed exceptionally well, producing excellent returns for us on both (pension & OPEB) accounts.”
Now, let’s revisit Plymouth five years later and take an updated look at its OPEB fund. According to Kelley, “Our OPEB fund has more than doubled since 2021, with a current value exceeding $22 Million.
“And, we expect that once our retirement system reaches fully funded status, we’ll be able to do even more.”
How Is My City or Town Doing?
When it comes to OPEB, we expect that members may be wondering: How’s my city or town doing? Here’s one reliable resource for an answer to that question.
State law (Chapter 32B, Section 20A) requires that when a governmental unit (city, town or other political subdivision) obtains an actuarial valuation report containing statements of the liabilities of the unit for healthcare and other post-employment benefits (OPEB) for its retired employees and their dependents, it must submit a copy to the Public Employee Retirement Administration Commission (PERAC). A summary of the reports has been released by PERAC, about every 5 years.
This past May, PERAC released its latest summary of the reports from the Commonwealth, cities and towns that is available on its website at www.mass.gov/perac. If you want to see how your city, town or the Commonwealth are doing, we suggest you visit the site.