Nothing to see here
MBTA management yesterday offered another dire warning about the ailing health of the T pension fund — as well as the agency’s ability to hold up its end of the financial bargain. The T’s largest union once again disputed management’s claims, but denial doesn’t change the math.
In a presentation to the state Department of Transportation board, MBTA acting general manager Brian Shortsleeve said the T’s contribution to the pension fund in the next fiscal year will total $94 million — $9 million more than the current year, and $20 million more than fiscal 2016.
Shortsleeve also explained that — absent reforms — the T’s annual contribution to the pension fund in support of retirees could devour more than onethird of the agency’s payroll budget by 2035. The agency projects a more than $1 billion pension fund shortfall by that year.
The Carmen’s Union has insisted management’s math is off — and, well, even if it’s it is management’s fault that the balance between current workers and retirees who are owed benefits is out of whack.
Right, because it couldn’t
be the insanely generous retirement perks that the union fought for over the years, including the one that allowed workers to cash out in their 40s with a full pension provided they had put in the minimum 23 years. Or the fact that, unlike regular state employees, T workers contribute to and collect Social Security on top of their pensions.
The union also insists the T’s projections are useless because the estimated rate of investment return is too conservative, accusing management of “sowing fear, while ignoring the truth.”
But the estimate of $230 million in required agency contributions by 2035 — or 36 percent of the entire payroll budget — assumes a rate of return of nearly 8 percent. Optimistic, given the pension fund’s recent performance.
Whether it’s a 4 percent return or 8 percent it’s clear the privately-run pension fund would benefit from a merger with the state pension fund — and that modest reforms to pension benefits should be on the table. Otherwise the fund may eventually need a bailout — and taxpayers and MBTA passengers should not be the ones to fund it.