Go to Chapter 137 of the Acts of 2026 to view the full chapter
SECTION 22.
Section 1 of chapter 32 of the General Laws, as most recently amended by section 21 of chapter 73 of the acts of 2025, is hereby further amended by inserting after the definition of “Constitutional officers” the following definition:-
“Cost of Living Reserve Fund”, a fund established in subdivision (6B) of section 22 to provide for the reservation of money for future cost of living liabilities of the retirement system; provided, however, that there shall be 1 fund for the state employees’ and teachers’ retirement systems and 1 fund each for any retirement system that opts in pursuant to said subdivision (6B) of said section 22.
SECTION 23.
Said section 1 of said chapter 32, as so amended, is hereby further amended by inserting after the definition of “Employer” the following definition:-
“Excess investment income”, the amount in any calendar year where all gains from invested funds of a retirement system results in earnings in excess of the investment return assumption set in the system’s most recent actuarial valuation. Such amount, in excess of said investment return assumption, shall be based on the market rate of return during a calendar year on the balance of total assets of the system at the close of business on December 31 of the prior calendar year, less the amount required to be derived by the investment return assumption set in said valuation. Not later than 90 days after the end of said calendar year, the relevant actuary of a system shall certify the total excess investment income of the system.
SECTION 24.
Section 22 of said chapter 32, as appearing in the 2024 Official Edition, is hereby amended by striking out, in line 6, the word “seven”.
SECTION 25.
Said section 22 of said chapter 32, as so appearing, is hereby further amended by striking out, in lines 9 and 10, the words “and the Commonwealth’s Pension Liability Fund” and inserting in place thereof the following words:- the Commonwealth’s Pension Liability Fund and the Cost of Living Reserve Fund.
SECTION 26.
Paragraph (a) of subdivision (6) of said section 22 of said chapter 32, as so appearing, is hereby amended by adding the following clause:-
(vi) In any calendar year, prior to making the transfers required by clause (iii), an amount equal to 7.5 per cent of the excess investment income shall be transferred to the Cost of Living Reserve Fund for the state employees’ and teachers’ retirement systems. For a system other than the state employees’ and teachers’ retirement systems that has accepted subdivision (6B), an amount equal to 7.5 per cent of the excess investment income shall be transferred to said system’s Cost of Living Reserve Fund; provided, however, that no further transfers shall be made pursuant to this clause to a system other than the state employees’ and teachers’ retirement systems after completion of the transfer required by paragraph (d) of subdivision (6B).
SECTION 27.
Said section 22 of said chapter 32, as so appearing, is hereby further amended by inserting after subdivision (6A) the following subdivision:-
(6B)(a) There shall be: (i) a Cost of Living Reserve Fund for the state employees’ and teachers’ retirement system; and (ii) a Cost of Living Reserve Fund for each retirement system other than the state employees’ and teachers’ retirement systems that accepts this subdivision pursuant to paragraph (b). The Cost of Living Reserve Funds shall be credited all amounts set aside pursuant to clause (vi) of paragraph (a) of subdivision (6) for the purpose of establishing a reserve to meet future cost of living liabilities as provided in paragraph (h) of section 102 or paragraphs (k), (l) or (m) of section 103, and increases to the maximum base amount as provided in paragraph (i) of said section 102. Assets held in the Cost of Living Reserve Funds shall be invested with all other assets of the system, but shall not be included in a system’s assets for purposes of actuarial valuations until transferred to provide for increased liabilities as contained in said paragraphs (h) and (i) of said section 102 and said paragraphs (k), (l) and (m) of said section 103.
(b) This subdivision shall take effect for systems, other than the state employees’ and teachers’ retirement systems, upon its acceptance by a majority vote of the board of such system, subject to approval of the legislative body. For the purposes of this subdivision, “legislative body” shall mean: (i) in the case of a city, the city council in accordance with its charter; (ii) in the case of a town, the town meeting; (iii) in the case of a district, the district members; and (iv) in the case of an authority, the governing body. In the case of a county or regional retirement system, this subdivision shall take effect upon its acceptance by the county or regional retirement board advisory council at a meeting called for that purpose by the county or regional retirement board. Acceptance of this subdivision shall be deemed to have occurred upon the filing of the certification of such vote with the commission. A decision to accept this subdivision shall not be revoked.
(c) This subdivision shall take effect automatically for the state employees’ and teachers’ retirement systems.
(d) Until the transfer required by this paragraph has occurred, the actuary shall annually determine and certify the actuarial present value of the total increase in the liabilities of a system attributable to the additional benefits provided in paragraph (h) of section 102 or paragraphs (k), (l) or (m) of section 103. Upon certification that the balance of a system’s Cost of Living Reserve Fund is not less than the amount so determined: (i) an amount equal to the amount certified for the state employees’ and teachers’ retirement systems shall be transferred from the Cost of Living Reserve Fund to the applicable Pension Reserve Fund established under subdivision (6A); and (ii) the entire balance of the Cost of Living Reserve Fund of any system other than the state employees’ and teachers’ retirement systems shall be transferred to the Pension Reserve Fund of that system. The transfer required by this paragraph shall occur only once with respect to each Cost of Living Reserve Fund.