Commonwealth of Massachusetts | Public Employee Retirement Administration Commission
Five Middlesex Avenue, Third Floor, Somerville, MA 02145
Ph 617 666 4446 | Fax 617 628 4002 | TTY 617 591 8917 | www.mass.gov/perac
Domenic J. F. Russo, Chairman | A. Joseph DeNucci, Vice Chairman
Paul V. Doane | Kenneth J. Donnelly | James M. Machado | Donald R. Marquis
Joseph E. Connarton, Executive Director
M E M O R A N D U M
TO: PERAC Commissioners
FROM: Joseph E. Connarton, Executive Director
RE: Governor's Proposal (Attachment)
DATE: March 8, 2007
Governor’s Proposal – Based on 2001-2005 Returns
The Governor has made a proposal that reads as follows as part of his
Municipal Partnership Act:
“Section 5. Section 22 of chapter 32 of the General Laws, as so appearing, is
hereby amended by inserting after line 14 the following paragraph:
Notwithstanding any general or special law to the contrary, each system that,
in any year after 2006 has a funded ratio less than 80 per cent, and has a rate
of return over the past 5 years, as determined by the commission, that is at
least 2.25 per cent less than the PRIT Fund rate of return over the same period
shall transfer all of its assets to the PRIT Fund for investment. A system that
would otherwise be required to transfer its assets under this section may
appeal to the commission and receive an exemption from this transfer
requirement if the rate of return for that system has exceeded the PRIT Fund
rate of return for the previous 2 years or if the rate of return was affected by
other extenuating circumstances. The commission shall adopt regulations governing
this appeal process.”
The following table denotes those retirement systems that, pursuant to the
Governor’s proposal, would be required to transfer assets to PRIT if the
legislation were in place based on a 2001 – 2005 annualized return
comparison and most recent actuarial valuation.
|
Prim 7.04- |
Funded |
As Of |
WEBSTER |
4.79 |
45.0% |
1/1/2006 |
PLYTH COUNTY |
4.67 |
60.8% |
1/1/2006 |
MASS TURNPIK |
4.66 |
78.1% |
1/1/2006 |
CHELSEA - PRIT |
4.65 |
43.9% |
1/1/2005 |
CHICOPEE |
4.64 |
56.7% |
1/1/2006 |
ESSEX COUNTY |
4.62 |
69.6% |
1/1/2006 |
NEWTON |
4.61 |
66.2% |
1/1/2006 |
WALTHAM |
4.60 |
51.1% |
1/1/2006 |
SALEM |
4.47 |
50.8% |
1/1/2006 |
GREENFIELD |
4.46 |
68.4% |
1/1/2005 |
MIDSEX – PRIT* |
4.37 |
47.9% |
1/1/2006 |
HAMPDEN |
4.37 |
60.4% |
1/1/2006 |
PEABODY |
4.26 |
58.0% |
1/1/2006 |
EVERET – PRIT* |
4.22 |
33.6% |
1/1/2006 |
NORTH ADAMS |
4.19 |
67.1% |
1/1/2005 |
AMESBURY |
4.13 |
56.3% |
1/1/2006 |
BARNSTABLE |
4.12 |
60.8% |
1/1/2006 |
ARLINGTON |
4.03 |
69.1% |
1/1/2006 |
NOMPTN |
4.03 |
62.3% |
1/1/2005 |
DUKES |
4.00 |
63.8% |
1/1/2005 |
HAMPSHIRE |
3.89 |
58.8% |
1/1/2006 |
METHUEN |
3.87 |
61.2% |
1/1/2004 |
MALDEN |
3.79 |
71.3% |
1/1/2006 |
WESTFIELD |
3.78 |
72.1% |
1/1/2005 |
LOWELL – PRIT* |
3.75 |
58.5% |
1/1/2006 |
PITTSFIELD |
3.72 |
51.5% |
1/1/2006 |
DANVERS |
3.57 |
73.4% |
1/1/2005 |
ATHOL |
3.54 |
49.4% |
1/1/2005 |
FITCHBURG |
3.35 |
52.2% |
1/1/2006 |
SPRING – PRIT* |
3.23 |
42.6% |
1/1/2005 |
LAWRENCE |
3.19 |
43.7% |
1/1/2004 |
WORC REG. |
3.15 |
63.5% |
1/1/2004 |
FALL RIVER |
3.06 |
57.1% |
1/1/2006 |
NATICK |
2.26 |
66.6% |
1/1/2006 |
ANDOVER |
1.74 |
78.1% |
1/1/2004 |
Returns – 2001 – 2005 Annualized Rate of Return
Funded Ratio – Most recent valuation as noted
PRIT – system assets already invested in PRIT
PRIT* - system assets are invested in PRIT with the exception of real estate
and alternative investments that could not be transferred to PRIT
There are 104 “local” retirement systems – using the 80% funded ratio and 5
year return from 2001 – 2005, 2.25% (-225 bp) or more below that of PRIT
comparison results in 35 failing to meet the standard. There are 7 of these
systems that are already in PRIT (most within the last 5 years). 28 additional
systems would transfer investment responsibility to PRIT under this standard.