MBTA panel pondering handoff of pensions
State eyes lagging fund
Under pressure to hand its investments over to state control, the long-secretive MBTA pension fund says it’s in the midst of an internal review on whether to make the shift, leaving critics to wonder how soon — or even whether — they’ll make the “right decision.”
The state budget Gov. Charlie Baker signed last month allows — but does not mandate — the state’s Pension Reserves Investment Management board to take over oversight of the MBTA Retirement Fund’s investments, leaving it to the fund’s board to decide.
“The best thing they can do for their retirees, for their members, is to make sure their money is protected in the state fund,” said Iliya Atanasov, a pension specialist and former senior fellow at the Pioneer Institute. “This won’t happen quickly but I really hope they make the right decision.”
State Rep. William Straus, who chairs the Legislature’s Transportation Committee, said despite the fund’s history of fighting efforts to open its books, he’s “optimistic” it will seriously consider the move.
“My view is this is a brandnew tool that’s been made available to them, and I think it’s a good option,” he said.
Once blasted by Baker as being in “freefall,” the privately run pension fund has come under fire by the administration and the T, which has pushed it to adopt a series of reforms. The pension fund — which is slated to get $94 million in taxpayer money this fiscal year — had a rate of return of 6.88 percent in calendar year 2016, falling below its 7.5 percent benchmark, according to its latest financial report.
The fund’s six-member board, half of which is appointed by Baker, has formed a group to “study the matter,” according to spokesman Steve Crawford, who said the board “is doing its due diligence.”
It includes all of the board members, as well as the fund’s interim executive director, John P. Barry, and Segal Marco, an investment consultant. Fund officials didn’t offer a timeline for the review, but Steve Grossman, the former state treasurer who now sits on the fund’s board, said it’s studying how PRIM has specifically performed in private equity, hedge fund and real estate investments.
“Nobody is dragging their feet. Everyone recognizes that PRIM has had a fine record,” said Grossman, who as treasurer chaired the PRIM board for four years. “But you still have to go through the process . ... I don’t want to see it delayed.”
The board’s other members either declined comment or did not respond to Herald requests yesterday.
In a statement, PRIM has said it would be “pleased, if asked to do so, to provide MBTA retirees with the same top-tier investment management services” it provides others.