PENSION BILL IMPACTS RETIREMENT SYSTEMS

Legislation Contains Governance Reforms

NOVEMBER 7, 2011:  Pension reform legislation, now before a House & Senate Conference Committee, not only contains significant changes to retirement benefits for future employees, but also to the administration and governance of the Commonwealth’s 105 retirement systems.

A significant portion of both S2018 and H3790 address various functions of retirement system administration. The language, which is nearly identical in both the Senate and House versions, pertains to retirement board composition, board member education, procurement and general regulator oversight.

These provisions come, in large part, from legislation filed by the Public Employee Retirement Administration Commission (PERAC). PERAC’s bill was borne out of a 2005 study commission that called for changes to the governance structure and regulatory oversight of the Massachusetts’ pubic retirement systems. After negotiating a compromise bill with the Massachusetts Association of Contributory Retirement Systems (MACRS), which is the advocacy organization for the state’s public retirement boards, PERAC has spent the past several years working towards the bill’s passage.

With the Patrick Administration and Legislature putting so much emphasis on the passage of a final sweep pension reform bill in 2011, observers suspected that the governance sections would be contained within the final bill.

“PERAC has been advocating for changes in the governance procedures within our public retirement systems for the past six years. Anytime new regulatory processes are proposed, it is bound to be controversial, but I believe PERAC has done a good job of working with MARCS on the specifics contained within the bill,” said Association President Ralph White, who also serves as the MACRS legislative chairman and is an elected member of the State Retirement Board.

An amendment, sponsored by House Republican Leader Brad Jones (R-North Reading) treats the annual financial disclosure, required of retirement board members under the bill, as a public record. PERAC’s own governance reform proposal, like that passed by the Senate and originally filed in the House, exempts the annual disclosure statements from public view.

“The House Republican Leader successfully argued that these statements, like those filed by elected and appointed government officials, should be a public record,” explained Association Legislative Liaison Shawn Duhamel, who is also an appointed member of the Town of Plymouth Retirement Board and elected MACRS Executive Board Member. “While the focus of the Legislature is on transparency in government position, I can see how others are concerned about individual privacy rights. MACRS has asked that the Conference Committee restore the original language as proposed by PERAC.”

Click here for a copy of H3790, as passed by the House on November 2, 2011.

To read how the proposed Pension Reform legislation impacts today's retirees, including enhanced COLA benefits for state & teacher retirees, click here.

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