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EDITORIAL

A good start to fixing the off-the-rails MBTA pension system

Now T officials need to make sure a favorable arbitrator’s decision sticks.

MBTA management and its most powerful union, the Boston Carmen’s Union Local 589, have been at odds for years over state efforts to put the T pension system — which is separate from the pension system for all other state workers — on a more sustainable financial footing.David L. Ryan/Globe Staff

In the real world, workers in their mid-60s are either contemplating retirement or thinking about adding a few years to their working lives before trying to perfect their pickleball game.

But the wonderful world of MBTA pensions has never been anything like the “real world.” It has been a world of generous contract agreements that allowed some employees to retire with comfortable pensions while still in their peak earning years and start career number two or even three.

Today, transit union officials are once again fighting — this time both in court and at the bargaining table — to maintain a system that allows workers to retire at the ripe old age of 55. This time, however, T managers have more than just common sense on their side: They also have a recent arbitrator’s decision that would for the first time reduce the pensions of MBTA employees who want to retire before the age of 65.

Yes, just like the rest of us who help pick up the tab for those generous pensions every time we swipe our CharlieCards.

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The dirty little secret of the MBTA’s $1.66 billion retirement system is that the number of retirees consistently outpaces the number of T workers who pay into it. The slack is picked up by the MBTA and its riders — a figure that in recent years has topped more than $100 million annually. And every agency dollar that goes toward the pension fund is one that isn’t going toward other essentials like track maintenance.

The unfunded pension liability — the amount needed to cover the benefits of future retirees but not currently in the fund’s reserves — was in the neighborhood of $1.3 billion at the end of last year.

MBTA management and its most powerful union, the Boston Carmen’s Union Local 589, have been at odds for years over state efforts to put the T pension system — which is separate from the pension system for all other state workers — on a more sustainable financial footing.

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It took a legislative reform bill in 2012 to do away with the old “23 and out” retirement system that allowed workers to collect generous pensions and health care benefits after 23 years of service — no matter their age. So, yes, it was possible to be a 40-something retiree. Some T workers are still grandfathered under that rule.

Those hired after 2012 could retire with a full pension at age 55 after 25 years of service. Of some 200 retirees in 2018, 60 were under the age of 55.

The T and the Carmen’s Union have been attempting to negotiate a new pension agreement since 2018, and when those talks were declared at an impasse in 2020, the issue went to an independent arbitrator.

Last month the arbitrator issued a decision that could at long last normalize the T’s pension system by lifting the age at which a retiree could collect an “unreduced” pension to 65. Those who opt to retire earlier would have 6 percent deducted from their benefit for every year under the age of 65.

The T has already agreed to hold harmless any worker who has 18 years of service in the system or was at least age 60 on the date the decision was issued. The decision also capped at $150,000 the amount of annual wages that would be used to calculate a pension, which is based on the last three years of earnings. A previous agreement capped the figure at $200,000.

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In a letter to MBTA employees, T General Manager Steve Poftak wrote that while the outcome might appear “rushed,” that “the crisis the ruling addresses was decades in the making.”

The decision also provides retirees with a 3 percent pension boost, retroactive to June 30, 2018.

That sweetener and Poftak’s pledge to continue negotiating to “refine the agreement” didn’t stop the union from filing a lawsuit “to help ensure those talks continue,” Jim Evers, president of the local, told his members, adding “and that the prior arbitrator’s recommendations are not applied and are negotiated.”

And that’s where Poftak will have to hold the line. With federal transit officials looking for real improvements in the system’s operations, including the hiring of more workers, it is critical that the T’s retirement system is sustainable into the future. It’s also critical not to continue to incentivize early retirements that would further hamper the system.

The arbitrator’s decision gives the MBTA an opportunity to right the pension ship and to stop the madness that has forced T riders and taxpayers to help fund a pension system far more generous than they will ever know.


Editorials represent the views of the Boston Globe Editorial Board. Follow us on Twitter at @GlobeOpinion.