No. 57 Pension News PERACApril 2021 A Publication of the Public Employee Retirement Administration Commission

A Year Like No Other

By John W. Parsons, Esq. Executive Director

s we look back at the unique year that was 2020, it’s difficult to view

this unparalleled period with any objectivity or critical eye. As in- IMAGE ADOBE STOCK Adividuals, we battled through the significant personal challenges that presented themselves; at home, work, amongst family and friends, and in the community. As employers, we struggled to self-serving, I sincerely believe that address the competing challenges the performance of all those who of protecting the health of our col- make our pension system work rose leagues and meeting the demands to the occasion in 2020, and remark- placed on our agencies on behalf of ably, we were able to not only meet the members who rely on us. Col- the demands on our agencies, but to lectively, we watched with great move forward in several significant sadness at the pandemic’s effect on ways. systems moved forward in important, families and businesses, while at the Apart from meeting the daily permanent ways. From the beginning See our website for additional educational same time constantly adjusting to the demands of counseling, buybacks, of the pandemic, the disability process opportunities and registration information. new normal at work and throughout payroll, retirement and disability was upended, and we were forced to our society. At the risk of sounding applications, ’ pension adapt to the world (continued page 6)

Inside this issue CommonwealthNew Investment ValuationReturn Assumptions...... 52 50thJoint Edition Committee of Pension on Public News Service...... 5

2019-2020PERAC Disability Legislative Unit StaffingFilings...... 53 EmergingNew & Noteworthy Issues Forum...... 57

CommissionerLegislative Update Sullivan...... Appointment...... 54 PERAC2nd Quarter Administrators Education Training Schedule...... 58 1 PERAC Pension News New Investment Return Assumptions

By John Boorack PERAC Actuary

ver the past fifteen years, investment return assumptions used by actuaries have generally decreased, Oreflecting the economic environment and future expectations. The two charts below illustrate this trend. Figure 1 shows investment return Beginning with our 2013 actuarial Commonwealth actuarial valuation. assumptions used by Massachusetts valuations of local systems, we have Figure 2 illustrates investment re- public plans in 2003, 2012, 2016, and generally recommended a decrease in turn assumptions of large public plans currently. Note that all but 3 systems the investment return assumption each based on an analysis by The National used an assumption of 8.0% or above year. For our 2020 actuarial valuations, Association of State Retirement Ad- in 2003. This represents a stark we generally recommended an ministrators (NASRA). The NASRA sur- contrast to the current chart, as 100% assumption between 6.90% and 7.15%, vey includes data for 130 plans. Most of systems are using an assumption partially depending on the assumption of the plans are state or state teacher under 8.0% in 2021. used in the prior actuarial valuation. plans and the remainder are generally For local retirement systems, For our 2021 actuarial valuations, we large city plans. The national assump- PERAC often used an investment will generally be recommending an tions are consistent with the Massa- return assumption of 8.0% (assuming assumption between 6.75% and 7.15%. chusetts assumptions. The average in- a reasonable asset allocation) in our For comparison, we will be using vestment return assumption is 7.18% in actuarial valuations from 1997 to 2012. an assumption of 7.0% in the 2021 the 2021 NASRA study.

Investment Return Assumptions Over Time

2003 30 20 52 3 8.5% Figure 1. 8.10%-8.25%

2012 24 66 15 8.0% Massachusetts 7.5% - 7.90% 2016 6 16 74 8 Public Plans <7.50%

2021 25 79

Source: Retirement system valuation reports 0 20 40 60 80 100 120

8.10% - 8.50% Figure 2. October 2014 4 44 62 8 8 8.00% 1 National State, 7.3% - 7.90% Teacher, and City February 2018 11 59 25 33 7.05% - 7.25% Plans 3 7% or less February 2021 43 24 60

0 30 60 90 120 150

Source: NASRA Public Fund Survey of 130 Large Plans, February 2021 and Prior

2 PERAC Pension News Disability Unit Staffing Update

By Caroline Carcia Deputy Executive Director

ongratulations are in order for Patrice Looby after her promotion to Manager of Medical Services for the PERAC Disability Unit. Patrice has been working at PERAC since March of 2006, as a C DUNKER N. PHOTO: Nurse Case Manager. She recently took on additional responsibility after the passing of Kate Hogan last year, and was officially promoted this month. As a Nurse Case Manager, she was previously responsible for the medical review of members in the Comprehensive Medical Evaluation and Restoration to Service process as well as educational training for retirement boards. She will now oversee the entire unit. Patrice has previous experience in case management Patrice Looby, R.N. and in acute care, rehabilitation, and home care. She graduated from Boston Manager of Medical Services College with a Bachelor of Science degree in Nursing.

New Case Managers in Disability Unit

The PERAC Disability Unit PHOTO: N. DUNKER N. PHOTO: PHOTO: N. DUNKER N. PHOTO: This unit plays a key role in PERAC’s oversight of public retirement system administration. The Unit oversees disability retirement processing, incuding disability retirement applications, comprehensive medical evaluations, and restoration to service evaluations. Mariyam Gadatias, R.N. Eileen Tobin, R.N. Nurse Case Manager Nurse Case Manager In 2020, the Unit processed: 33 511 Medical Panel Requests PERAC recently hired two Nurse Eileen Tobin started on 33 1,181 In-House CME Reviews 33 527 Disability Approvals Case Managers to assist with the case March 15, 2021. She is a Registered 33 11 Death Approvals load in the Disability Unit. Nurse who worked at Tufts Health Other Members of the Unit: Mariyam Gadatias started at Plan as a Quality Nurse Reviewer prior Erin Groesser PERAC on April 5, 2021. She is a to coming to PERAC. She also worked Administrative Assistant Registered Nurse who worked at at Beth Israel Hospital. Regina Manning MIT Medical as a staff nurse. Prior to Case Manager I MIT, she also worked at Winchester Hospital and at Lahey Hospital.

PERAC Pension News 3 PERAC Legislative Update

By Bill Keefe An Act Providing Statement Assistant Deputy Director of Financial Interests Flexibility PERAC’s other new bill is H. 17, ERAC has filed eight bills An Act Providing Statement of IMAGE ADOBE STOCK in the House of Represen- Financial Interests Flexibility. Similar tatives, two new and six re- P to Chapter 439 of the Acts of 2018, filed, in its 2021-22 legislative pack- which provided for a hardship waiver age. petition related to board member An Act to Protect Gender Pay Equity education compliance, this bill would An Act to Protect Gender Pay allow for a hardship waiver petition Equity (H. 16) is one of the new bills related to timely filing of the SFI. service. Additionally, it would and would amend M.G.L. c. 32, §5(2)(f) Refiled Bills create a one-year, one-time, to add an exemption from anti- All six of PERAC’s refiled bills grace period for veterans who spiking for salary actions related to were reported favorably by the Public missed their initial opportunity to the Massachusetts Equal Pay Act. Service Committee last session: buy back their military service. The Equal Pay Act, M.G.L. c. 32, QQ H. 10 - An Act Relative to QQ H. 12 - An Act Relative to the §105A, prohibits an employer from Pension Forfeiture. The product Recovery of Overearnings. paying someone less than they pay of the Special Commission on This bill would allow retirement an employee of a different gender Pension Forfeiture arising after boards to pursue recoupment of who does comparable work. The law the Bettencourt decision, this bill overearnings up to the amount of states the remedy to address gender would remove misdemeanors the retirement allowance paid. pay inequity is to raise the pay of an from crimes that trigger pension QQ H. 13 - An Act Relative to Wages. affected person, rather than cut the forfeiture. It also creates tiers of Sick and vacation leave taken pay of another. forfeiture ranging from one-third in conjunction with workers’ The MWRA Retirement Board to two-thirds forfeiture to full compensation would be made PERAC aware of employees forfeiture. included as wages and part of an who received salary adjustments QQ H. 11 - An Act Relative to Veterans’ employee’s regular compensation based on the Equal Pay Act who Buyback. This bill would extend for retirement purposes. would run afoul of the anti-spiking from 180 days to within one year QQ H. 14 - An Act Relative to provisions upon retirement. following vesting the time which Modifications of Retirement Adding an Equal Pay Act veterans working in public service Allowances. This bill would alter exemption to the anti-spiking statute have to purchase up to four years PERAC’s statutory directive to would ensure the equity and spirit of of military time as creditable modify allowances of members the Equal Pay Act are fully realized. (continued page 5)

4 PERAC Pension News Joint Committee on Public Service Chairs Appointed

By Bill Keefe Assistant Deputy Director

Senator Michael Brady of Brockton and Representative Ken Gordon of Bedford have been appointed Chairs of the Public Service Committee for photo: Office of Senator Michael Brady of Senator photo: Office the 2021-22 legislative session. Ken Gordon Representative of photo: Office Senator Brady is serving his fourth Senator Michael Brady Representative Ken Gordon term in the Senate after serving three Senate Chair House Chair Public Service Committee Public Service Committee terms in the House of Representatives. He previously served on both the “We are fortunate to have people Brockton School Committee and City like Senator Brady and Representative Joint Committee on Council. He was the Senate Chair Gordon leading the Public Service Public Service of Public Service for some of the Committee this session,” Parsons said. Members last session and we look forward to “They both are dedicated to the needs working with him again. of members and the overall health of Senate Representative Gordon is in his the pension system. We very much Michael D. Brady, Chair fifth term in the House. An attorney, look forward to working together with Barry R. Finegold, Vice Chair he served on both the Bedford Zoning them.” Nick Collins Board of Appeals and Cultural Council The Vice Chairs of the committee Diana DiZoglio before the State House. are Senator Barry Finegold of Andover Ryan C. Fattman PERAC Executive Director John and Representative of Parsons and other PERAC staff recently Leominster. House met with both Chairs to discuss Kenneth I. Gordon, Chair retirement and pension issues. Natalie M. Higgins, Vice Chair Bruce J. Ayers Legislative Update (continued from page 4) David Paul Linsky Kate Lipper-Garabedian with overearnings to make it more with other groups in permitting effective and efficient. the use of employer incident Paul W. Mark QQ H. 15 - An Act Relative to records to satisfy the injury Frank A. Moran Accidental Disability and Group 1 report requirement when filing Erika Uyterhoeven Emotional Distress. This bill would for disability based on emotional Michael P. Kushmerek bring Group 1 employees in line injury. Timothy R. Whelan David F. DeCoste

PERAC Pension News 5 A Year Like No Other (continued from page 1) of telehealth to keep this process working. With PERAC, boards, new employers, members and the medical community working together, we were able to overcome the many logistical and statutory complications at play and establish a telehealth review process that allowed members’ applications to be processed. I would be remiss if I did not cred- Administrator Roundtable webinar screenshot (from top): Lisa Maloney, Chief Administrative Officer, Middlesex County it PERAC’s former Disability Director, Retirement System; Sheila LaBarbera, Executive Director, Berkshire County Retirement System; John Parsons, PERAC Executive Director; Kate Hogan, for the primary role she Timothy Smyth, Executive Officer, Boston Retirement System; and Natacha Dunker, PERAC Communications Director played in establishing this system, all while battling illness that ultimately took her much too soon. Telehealth Another significant addition to However, through innovation and a becoming a permanent element of PROSPER, developed in the Fall of 2020 commitment to the benefits of virtu- the disability process is a small re- and recently rolled out, is the electronic al presentations, PERAC and MACRS membrance of Kate’s many contribu- filing of board members’ Statements of combined to provide 36 courses and tions during her 20 years of service to Financial Interest (SFIs). Moving from 2,046 course completions in the past PERAC and the pension community at an all-paper process to an electronic year. Thank you to all the presenters large. filing will save board members signifi- and staff who worked to make these In 2020, the next initiative in the cant time going forward and improve presentations successful and enlight- development of the PROSPER system, recordkeeping. ening, and to attendees for their con- electronic filing of retirement calcu- Thank you to everyone involved in tinued commitment to becoming lations, was rolled out. Following a the successful implementation of these better informed board members and trial application with retirement board important new PROSPER features, in- improving our pension systems. staff who volunteered to test this new cluding PERAC’s IT, Actuarial, and Com- Let us all hope that the enduring feature, and staff training, boards are pliance Units, our development vendor, trial of the pandemic will fade away and now able to file all types of retirement CGI, the volunteer retirement staff, and we will return to the traditional business calculations electronically, saving all board members and staff for taking of operating a successful and strong time and eliminating paper records. part in the training that was needed. performing pension system. It is our hope and goal to significant- Finally, 2020 fundamentally af- ly reduce the turnaround time in the fected our ability to provide in-person processing of these applications. training and continuing education.

6 PERAC Pension News ADAMS AMESBURY ANDOVER ARLINGTON ATTLEBORO BARNSTABLE COUNTY BELMONT BERKSHIRE COUNTY BEVERLY BLUE HILLS BOSTON BRAINTREE BRISTOL COUNTY BROCKTON BROOKLINE CAMBRIDGE CHELSEA CHICOPEE CLINTON CONCORD DANVERS DEDHAM DUKES COUNTY EASTHAMPTON ESSEX EVERETT FAIRHAVENFALL RIVER FALMOUTH FITCHBURG FRAMINGHAM FRANKLIN REGIONAL GARDNER GLOUCESTER GREATER LAWRENCE GREENFIELD HAMPDEN COUNTY HAMPSHIRE COUNTY HAVERHILL HINGHAM HOLYOKE HULL LAWRENCE LEOMINSTER LOWELL LYNN MALDEN MARBLEHEAD MARLBOROUGH MASS HOUSING MASSPORT MASS TEACHERS MWRA MAYNARD MEDFORD MELROSE METHUEN MIDDLESEX COUNTY MILFORD MILTON MINUTEMAN MONTAGUE NATICK NEEDHAM NEW BEDFORD NEWBURYPORT NEWTON NORFOLK COUNTY NORTH ADAMS NORTH ATTLEBORO NORTHAMPTON NORTHBRIDGE NORWOOD PEABODY PITTSFIELD PLYMOUTH PLYMOUTH COUNTY QUINCY READING REVERE SALEM SAUGUS SHREWSBURY SOMERVILLE SOUTHBRIDGE SPRINGFIELD STATE STONEHAM SWAMPSCOTT TAUNTON WAKEFIELD WALTHAM nWATERTOWNew WEBSTER& WELLESLEYnot WEST upSPRINGFIELDeworthy WESTFIELD WEYMOUTHdates WINCHESTER WINTHROP WOBURN WORCESTER REGIONAL WORCESTER

Did you know? Memos released last quarter: Retirement Board members now have the 840 CMR 10:10(3) & 10:15(1)(c)–Annual Review of capability to submit their Statement of Financial #01: Medical Testing Fee Interest form online through PROSPER. Medical testing fee reimbursements. 2021 Limits under Chapter 46 of the Acts of 2002 Application developers held three webinars to give #02: Compensation limits for retirement calculations. board members an overview of how to use this 2021 Limits under Section 23 of Chapter 131 of the Acts new feature, and the webinar recording is also #03: of 2010 available on our website. Regular compensation limit. COLA Notice To date, 305 members have already submitted their #04: Annual notice to boards of SSA COLA. SFI through PROSPER! Forms are due May 1, 2021. #05: PROSPER SFI Online Submission Announcement of new PROSPER Feature. #06: 2021 Interest Rate Set at 0.1% COLA Annual notice to boards of regular interest rate. #07: Buyback and Make-up Repayment Worksheets Both the Governor’s and House 2021 Worksheets for buyback calculations. FY22 budgets included a 3% cost of living #08: Required Minimum Distribution: Now Age 72 For This adjustment (COLA) for the State and Teachers’ Year’s Notifications Retirement Systems. The Senate budget will be Includes sample letter. Actuarial Data released in May. The COLA becomes official #09: Annual request to boards for actuarial data. when the budget bill is formally signed into law #10: Forfeiture of Retirement Allowance for Dereliction of by the governor. Duty by Members List of individuals ineligible for membership. After the COLA becomes law, #11: Benefit Calculation Submissions Via PROSPER PERAC will be issuing its annual memo with Paper calculation submissions no longer acceptable. #12: Tobacco Company List the amounts for the cost of living increase for #13: 2020 Annual Statement of Earned Income Filing (91A) the supplemental dependent allowance. New deadline of May 17th announced. Upcoming Meetings May 12, 11:00 a.m. June 9, 11:00 a.m. July 14, 11:00 a.m. August 11, 11:00 a.m. Commission Meeting Commission Meeting Commission Meeting Commission Meeting Until further notice, meetings are held virtually and are open to the public. See our website for more information.

PERAC Pension News 7 2021 Education Schedule PERAC April second quarter 2021

Credits board members Date: Location: Topic: must earn Preparing for the 18 May 4 Webinar Pandemic’s Impact on per term Your Pension Plan FINRA Annual May 18-20 Virtual Conference 3 Conference Minimum June 3 Webinar Conflict of Interest per term year June 7 - 8 Virtual Conference Spring MACRS 9 Maximum Liability in Certain per term year June 17 Webinar Situations/Dual Membership

See our website for additional educational opportunities and registration information.

Public Employee Retirement Administration Commission | 5 Middlesex Avenue, Somerville, MA 02145 Phone 617 666 4446 | Fax 617 628 4002 | Web www.mass.gov/perac

Philip Y. Brown, Esq. Kathleen M. Fallon James M. Machado Chairman Practice Area Director Sergeant Public Consulting Group Fall River Police Department Jennifer F. Sullivan John W. Parsons, Esq. The Honorable Investment Professional Executive Director Suzanne M. Bump Kate Fitzpatrick Richard MacKinnon, Jr. Governor’s Appointee Auditor of the Commonwealth Town Manager President Natacha Dunker Vice Chairman Needham Professional Firefighters of Massachusetts Editor

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