Consolidating the administration of the state's 105 public employee retirement systems would save nearly $25 million annually in employment costs and stipends that could be used to pay off unfunded pension liability, according to a new study.
The Pioneer Institute, a Boston think tank, estimates that consolidation could save up to $22.5 million in annual labor costs and another $2.3 million in retirement board member stipends. Each local retirement system is overseen by a board, each of whose five members receives a $4,500 annual stipend, plus travel and other expenses.
"We have so many retirement systems it's very hard to know whether they're doing the right thing," said Iliya Atanasov, Pioneer's senior fellow on finance and one of the study's authors. "If we consolidated that system, we would be able to have substantial savings and have much more transparency about what is going on with pension assets because it would be clear where the responsibility lies and what's happening with those dollars."
Atanasov and co- author Casey Miles found that the median local board had 524 beneficiaries for every board member, but one of the least staffed boards — Middlesex County — was almost four times as efficient. Only the state employees' system had a lower staffing level, with 2,597 beneficiaries per employee compared with Middlesex's 1,968. The largest local system, Boston, has 2 1⁄2 times as many beneficiaries as the Middlesex system but employs almost six times as many staff.
Daniel J. Greene, executive officer of the Boston Retirement Board, could not be reached for comment.
Jon Carlisle, a spokesman for state Treasurer Steven Grossman, who oversees the state retirement board, said the treasury strongly supports cost-saving initiatives but cannot compel independent retirement boards to merge into the state system.
"Instead, the Pension Reserves Investment Management Board, the investment arm of the state retirement system, has encouraged local boards to invest their holdings with it and has attracted those investments through strong performance and outstanding customer service," Carlisle said. "The management fees that an independent board can save through this arrangement are substantial."
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