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Struggling MBTA pension fund took a $151 million hit in 2018

New Orange Line cars stood on the production floor at the Chinese manufacturer CRRC’s factory in Springfield in December.
New Orange Line cars stood on the production floor at the Chinese manufacturer CRRC’s factory in Springfield in December. (Lane Turner/Globe Staff/File 2018)

The MBTA pension fund’s financial outlook tumbled even further in 2018, when the troubled $1.5 billion system took in less than half of the $275 million it ultimately paid out or lost on investments, according to data released Monday.

The MBTA Retirement Fund, long under pressure to turn over its investments to the state, lost $50.1 million in the financial markets last year, its first negative return in eight years, according to information the privately run fund provided to the transit authority.

“If we can’t solve for this, it eventually deteriorates the amount of service we can put out to the public,” said Joseph Aiello, the T’s board chairman.

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The loss, plus another $224.4 million paid out to retirees and beneficiaries, meant that $151 million flowed out of the fund, above what it actually brought in during 2018. The fund reported getting $123 million in combined contributions from employees and the T last year.

The losses, which T officials detailed Monday at a Fiscal & Management Control Board meeting, further stoked alarm among board members over what the T has described as the retirement system’s worsening financial picture.

“As a fiduciary for the MBTA, the contents of this presentation are concerning to me because in the near future, this liability has the potential to undo the progress that the board and our management team have made over the past four years toward fiscal sustainability,” said Paul Brandley, the MBTA’s chief financial officer.

The system’s unfunded liability jumped to nearly $1.4 billion by year’s end — a roughly 12 percent increase from the year before and a 75 percent hike from a decade ago. And the T is expecting its rider- and taxpayer-funded share of costs to account for 24 percent of its payroll next fiscal year, the fourth increase in as many years.

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Fund officials, in previously disclosing a negative 2.9 percent return on investments, have said the system, like others, was not immune to a volatile market. The state’s $69 billion fund — which includes state employees and teachers, along with local retirement systems — reported a negative-1.8 gross return in 2018, including a $4.5 billion hit in the fourth quarter alone.

James O’Brien, president of the Boston Carmen’s Union Local 589, also accused the T of “cherry-picking numbers” to describe the state of the fund.

“Pension funds across the country took a huge hit,” said O’Brien, who also sits on the fund’s board. “It was a down year.”

But the figures quickly added to the already intense scrutiny of the MBTA Retirement Fund. The transit authority and its largest union for months have been quietly renegotiating the agreement governing what the T contributes to the system, the Globe has reported.

Over the last decade, the amount the T has funneled into the fund has ballooned, from $30 million in fiscal year 2007 to $103 million this year. MBTA officials warned in November that those costs could grow to $137 million within three years, depending on how the fund performs.

Aiello, the board chairman, asked “all the parties that are at the table” to find ways to put the fund on a better footing.


Adam Vaccaro of the Globe staff contributed to this report. Matt Stout can be reached at matt.stout@globe.com.