The Boston City Council presented a united front at a meeting last week, calling for the city to increase retired municipal employees’ pensions. The symbolic vote came a week after a cost of living increase was rejected by the Boston Retirement Board and won’t have an effect on retirees’ pension checks.
All 12 city councilors present at Wednesday’s council meeting opted to pass a resolution to raise the annual cost of living adjustment, or COLA, for most pensioners by $90 to $540. Councilors said this increase would make a meaningful difference for retirees who are already struggling with inflation and the city’s skyrocketing cost of living.
The council’s show of unity aligns it with retirees and their unions, who have been advocating for the raise for years. But it puts the council at odds with Mayor Michelle Wu, whose administration advised the Retirement Board to reject the increase.
Councilor Ben Weber, who cosponsored the resolution along with Councilors Henry Santana and Ed Flynn, said municipal retirees in the Boston Retirement System paid into the system for years and are now dependent on their pensions’ fixed income.
“We owe it to the people who made our city work, to advocate for them so they can receive the benefits they deserve and that they’re entitled to,” Weber said.
For retired municipal employees in Boston, the annual cost of living adjustment to their pensions is dependent on a set figure known as the COLA base. State law caps annual cost of living adjustments for pensioners at up to 3 percent of that number, which in Boston, is currently $15,000. This summer, the Boston Retirement Board approved a cost of living adjustment of $450, which is 3 percent of $15,000, for fiscal year 2025.
That base figure was most recently increased from $14,000 to $15,000 in 2021 under then-acting mayor Kim Janey, said Janey Frank, a retired Boston Public Schools teacher, who’s a leader of the Boston Teachers Union retired teachers chapter.
Retired city employees have only had three COLA base increases since 2010, and those increases have only amounted to a $90 total boost, from $360 to $450, in each retiree’s annual cost of living adjustment payment in the past 12 years.
That’s far from adequate to keep up with inflation, and it’s forcing retirees to make painful choices, Frank said.
“We have members who choose between paying for a medication and taking it as it’s supposed to be taken, to transportation issues, to food issues,” she said.
The resolution calls for the city and the Boston Retirement Board to raise the COLA base from $15,000 to $18,000, which would amount to a $90 per year increase in the annual cost of living adjustment for pensioners. But a little over a week earlier, the Retirement Board voted 3 to 2 against such an increase, after receiving letters from both Ashley Groffenberger, the city’s CFO, and the Boston Municipal Research Bureau.
Both opposed the increase, given that the city budgeted $422.5 million for pensions in fiscal year 2025.
While about one-third of that cost goes to providing pension checks to retirees, about two-thirds of the pension budget goes to reducing what’s known as the unfunded pension liability, according to Groffenberger.
The unfunded pension liability is the difference between the current value of the pension system and the value of all the retirement benefits the city owes retirees, plus what the city will need to pay out in the future to current employees paying into the system.
Boston currently owes the pension system $1.26 billion, according to a letter the Boston Municipal Research Bureau sent to the Retirement Board this month. State law requires all local pension systems to bring that number to zero by 2040.
Boston plans to do so much sooner, by 2028.
Wu’s administration says that will also free up the hundreds of millions of dollars the city is currently budgeting every year in those “catch-up” payments to go toward other city needs and help the city keep its AAA bond rating.
Raising the COLA base from $15,000 to $18,000 would add approximately $90 million to what the city owes the pension fund, Groffenberger wrote in a letter to the Retirement Board in August.
“It’s all about ensuring strong, prudent fiscal management and really making sure that we’re setting ourselves up so that we can provide that guarantee of benefits that have been promised to people,” Groffenberger told the Globe.
But Frank and other retirees, as well as several representatives of municipal unions, argued the city is neglecting current pensioners who are suffering.
“We’re valuable members of this community, and we should be treated as such,” said Frank.
Frank also said the “catch-up” payments are the result of the city’s financial mismanagement decades ago. She said retirees who paid into the system their entire careers should not have to suffer as a result of the city righting its own financial ship.
She argued the city could pay for the COLA base increase by simply taking a less aggressive approach to bringing the unfunded pension liability to zero, and do so closer to the state’s 2040 deadline, rather than 2028.
At the meeting last week, the board also voted to extend its own deadline from 2027 to 2028, due to significant losses the pension system’s investments took in 2022.
Several retirees also pointed to Wu’s appearance in a candidate forum when she was running for mayor in 2021, in which she said she would support increasing the COLA base from $15,000 to $18,000. Now, they said, she has reversed course.
“We need to be a priority,” said Frank. “Your priorities and your values align, and we’re clearly not a priority. So we’re very disappointed in the mayor’s values.”
A city spokesperson defended the administration’s position on the issue, saying giving retirees a bigger cost of living adjustment at this time “would not be fiscally prudent.”
“We look forward to working with the City Council and other stakeholders to ensure we take a responsible and sustainable approach to COLA that allows the City to support our retirees now and in the future,” said a city spokesperson in a statement.
Niki Griswold can be reached at niki.griswold@globe.com. Follow her @nikigriswold.