This means that 19 funds so far will be forced to hand over their funds to the state Pension Reserves Management Board, which runs a massive fund for state employees and retirees. The disputed measure won a 139 to 14 vote in the House, the Senate approved it on a voice vote, and it is expected to be signed by Governor Deval Patrick.
After much debate over the measure, the bill was amended to include a way for a fund to appeal the seizure of its assets to a four-member panel that would include a representative of a municipal employee union. In order to win an appeal, at least three of the four members would need to vote in favor.
The bill calls for pensions funds that trailed the state fund’s average rate of return over the previous 10 years by at least 2 percentage points to hand over assets to the state Pension Reserves Management Board. The local systems also must be less than 65% fully-funded to qualify for takeover, according to the Republican.
Under the bill, if a pension system’s rate of return was reduced by “extenuating circumstances,” the system could be exempted from a takeover.
A recent report filed by the Rhode Island Auditor General’s Office suggests a similar approach of handing over ailing municipality plans – some of which are as little as 8% funded – to the state. The reportby the auditor’s office showed that 21 of the 37 pension plans directed by municipalities are considered at risk (See RI Auditor General Issues Municipal Plans Funding Warning ).
Another bill passed Thursday by Massachusetts lawmakers would give cities and towns the ability to join the Group Insurance Commission, the state health insurance system for employees and retirees.