The 107 funds, some of which invest collectively for several cities and towns, are said to have underperformed the state fund and are less than 80% funded. In order to be affected by the move, the local funds will have to have underperformed the state program by 2.25% over the last five years.
According to the news report, the investment performance of the state fund, meanwhile, is estimated to be among the top 2% of funds in the country over the last three years. The state fund’s annualized returns were 7.04% between 2001 and 2005.
Treasurer Timothy Cahill, who manages $46.7 billion in retirement funds for the state’s Public Reserves Investment Trust for teachers, state employee retirement funds, and about 28 county, municipal, and other retirement systems, is backing Patrick’s proposal, saying it will “save local communities significant money” in the long run, according to the Globe.
Middlesex Retirement System voted in November 2006 to give the management of nearly all of its $700 million in assets to state control to reduce investment costs (See MA Retirement System Turns Over Asset Control to State ).
The move was also promptedby an inspector general’s report released last year that revealed that the Middlesex pension officials rigged construction bids to favor certain contractors with ties to board members (See Massachusetts May Remove Pension Fund Board ). The bids were for the construction of the system’s new headquarters.