The T’s pension problem

There’s nothing Beacon Hill can do to rein in the huge pensions now being collected by recent retirees of the MBTA; those payouts were set in motion years ago, when union negotiators generally called the shots. But the state can and should address the fact that the T’s pension fund is underperforming and costing taxpayers too much. Transferring management to the state would give taxpayers some needed relief.

Gov. Charlie Baker last month proposed transferring management of the $1.5 billion T pension fund to the larger state retirement system, with hopes of generating stronger earnings and saving money for taxpayers who subsidize T pensions. And yesterday the Herald reported on the growing burden of those payouts.

More than half the T’s 50 biggest pensions are now collected by workers who retired just last year, according to the Herald analysis, including 12 of the top 20. For the first time two T retirees are making more than $90,000 in retirement, including a former bus driver. Given the MBTA’s historic generosity in negotiating compensation, taxpayers can expect much more of that in the years to come.

And yet when it comes to performance the T’s retirement system, whose board is notoriously secretive and uncooperative, is getting lapped by the larger state system. Baker’s team has said the T fund’s asset balance dropped 7 percent between 2005 and 2014, a time when the state fund increased by 32 percent.

That is a serious problem for taxpayers and for an agency that struggles to balance its budget. This year the state will contribute $84 million to help fund T pensions, up from $37 million a decade ago.

Earlier this week we cited a Pioneer Institute recommendation that the state transfer management of all 102 municipal, regional and agency retirement funds to the state. The data justifying such a move keeps piling up.