Pensions & Investments' April 17 article "To join, or not to join, is debate for some local funds" was interesting and certainly succeeded in triggering more debate. James Comtois, the author, described present-day events fairly and outlined reasonably the pros and cons of a number of approaches evolving throughout the private and public pension plans in states as varied as Wisconsin, Rhode Island and Massachusetts.
The article quoted a local Massachusetts retirement board chair who characterized PERAC, a regulatory commission, as an advocate for an "all-in" consolidation of investment portfolios. As a regulatory oversight agency, we disagree with that evaluation and believe local control and accountability is vital to the success of the Massachusetts contributory retirement systems.
The Massachusetts Legislature in 2007 assigned to PERAC the critical responsibility of identifying underperforming local pension funds and, when appropriate, facilitating the transfer of those assets to the Massachusetts PRIT Fund. The Massachusetts retirement system comprises 104 independent contributory retirement systems. Each system is administered by a five-member board who serve as fiduciaries, with one exception, that being the Massachusetts Teachers' Retirement System, which has seven members. Each board has a choice of managing all of its assets or turning some or all of its assets over to the PRIT Fund. To help bring about an informed decision, PERAC provides local retirement board members with continuing fiduciary education programs and publicly reports the performance results and the comparative investment expenses of each of the 104 Massachusetts retirement systems. This process allows the fiduciaries of 104 systems to know what other prudent experts are doing in like circumstances. The free flow of comparative data is done to make local control stronger.
Thomas J. O'Donnell is compliance officer for the Public Employee Retirement Administration Commission in Somerville, Mass.
