The Massachusetts Bay Transportation Authority Retirement Fund reportedly requires $3 billon in additional funding, $1 billion of which will likely have to come from taxpayer contributions, to avoid becoming insolvent by 2035.
Brian Shortsleeve, chief administrator and acting general manager of the Massachusetts Bay Transportation Authority (MBTA), told The Boston Globe that benefits paid to retirees have exceeded money coming in from the transit authority, worker contributions, and investments over the past 10 years.
Exacerbating the problem is the fact that the $1.5 billion fund has 6,685 retirees, but only 5,786 employee members paying into the fund.
“The T will not have the internal resources to fund this,” Shortsleeve said, adding that “we certainly would not expect our riders to fund a bailout of this size.”
The pension system is a private trust, but relies on the “T” subway system, and taxpayers, for 73% of its contributions. The T’s annual contribution to the pension fund has increased by $50 million over the past 10 years, rising to $87 million in 2017 from $37 million in 2007, according to The Globe. The contribution is expected to continue to rise by another $73 million over the next 10 years, hitting an estimated contribution of $160 million by fiscal year 2027, and rising to $230 million by 2035, according to a report cited by The Globe.
Some potential actions that could be taken to help shore up funding include altering pension benefits, asking the state legislature for fare hikes, or cash infusions.
According to The Globe, the pension fund currently has enough money to meet 58% of its long-term obligations to retirees. In 2007, prior to the financial crisis of 2008, the MBTA fund had $1.9 billion in assets and was 92% funded.
Without a boost in contributions, the funded level is likely to fall below 50% within five years, according to the report, which was prepared with the help of outside actuaries and a financial consultant.
By Michael Katz