One of three MBTA retirees last year was under 55, putting another strain on pension fund

Nearly one-third of the employees who retired from the MBTA last year were under the age of 55, and dozens were still in their 40s, adding to the flow of younger retirees state lawmakers had hoped to stem years ago.

The Legislature passed a law in 2009 intended to dial back a lavish public sector perk at the Massachusetts Bay Transportation Authority, but because it only applied to new hires, many employees retiring now still fall under the old rules — and potentially collect pensions for longer than they actually worked at the T.

In all, nearly 200 employees retired from the transit agency in 2018, according to a list released by the MBTA Retirement Fund in response to a Globe request.

I retired from one public sector job to enter into another career field. My pension fund is actuarially sound, for several reasons. 30% of my compensation was for the pension. We have a pension board composed of both active and retired members, and are extremely careful about investments. We have managed to fend off attempts to raid the pension fund for other purposes. One of those attempts was when a couple of members of the city council tried to force us to use half the pension reserve for "low interest home loans to people who do not have access to home loans through traditional channels." Basically, we were supposed to give low interest loans to people with crappy credit scores.

Our fund does not give cost of living allowances in years when doing so would reduce us below 105% of our "fully funded" position.

Sorry for the long post, but most pension funds that are in trouble did one of three things:

1. Promised too extravagant a pension.
2. Got raided, either by politicians or insiders.
3. Underfunded the pension or made bad investments over an extended period.

Anytime you see a pension fund with a projected rate of return for fully funding at over 3%, someone's playing fast and loose with the numbers. I've seen pensions project a rate of return as high as 10%. When you see this, the people doing the projections are doing so to reduce the amount of fund contributions necessary to keep the fund solvent. Underfunding pensions or raiding them are two common tactics by city politicians, because it reduces short term financial stress, and they know someone else will be in office when the bomb goes off.

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