Representatives of the Boston Carmen’s Union met with a group of state lawmakers and staff Wednesday to defend the financial health of the MBTA pension fund and refute management’s warnings that the system is in crisis.
The union, which represents the majority of Boston-area transit workers, presented an 11-page rebuttal to T management’s predictions that the retirement system on its current course will need an additional $1 billion over the next 18 years.
In particular, the union challenged management’s worst-case scenario of a 4 percent investment return for the coming two decades. Over the 10 years ended in 2015, the $1.5 billion T pension plan had an annualized 5.8 percent return, compared with 5.9 percent for the larger state employee retirement system.
If the state and other pension plans were to assume a 4 percent return, “all plans would be in ‘crisis,’ ” according to the Carmen’s Union report.
Recent returns have been modest: Including 2016, the T pension had a 3.9 percent annualized return for the last three years, according to management, compared with 5.3 percent for the state fund.
Brian Shortsleeve, the T’s acting general manager, is pressing the pension fund to make changes so taxpayers and riders don’t have to absorb the system’s rising liabilities. Even if the T pension were to achieve 7 percent investment gains over the coming years — its stated target is 7.75 percent — it would still see a $636 million shortfall, said Shortsleeve, who is stepping down this month.
The T’s contribution to the pension is rising to 20 percent of payroll next year, from 18 percent currently, for a $9 million increase. This year, the T contributed $87 million to the fund.Beth Healy can be reached at email@example.com. Follow her on Twitter @HealyBeth.