MA City in a Rift with State over Pension Takeover

June 30, 2008 ( - The Massachusetts city of Methuen could soon face a court order if it does not liquidate its pension fund assets into cash to hand over to the state retirement system.

Legislation approved last summer calls for pension funds that trailed the state fund’s average rate of return over the previous 10 years by at least 2 percentage points and that are also less than 65% funded to hand over assets to the state Pension Reserves Management Board (See MA Legislature Approves Measure to GIve State Control of Ailing Local Pensions ). Methuen ‘s 10-year rate of return was about 8%, while the state’s return was just over 10%, and Methuen’s funded ratio is 55%, the Eagle-Tribune reports .

The city said it tried to transfer its pension assets to the state last year, but the state would not take them. The rift is over how the assets are transferred; the state says it will gladly take the assets when they are all converted to cash, but Methuen said not selling the assets would be preferable in the down market.

The state Public Employee Retirement Administration Commission, which oversees the Methuen Retirement Board, will vote next month on whether to obtain the court order if an agreement has not been reached before then, the news report said. The Commission’s executive director says the city has already lost out on $2.1 million in earnings it would have gained had the funds been transferred last year.