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

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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