EagleTribune.com, North Andover, MA

Pension

July 30, 2007

A tale of two pension funds

Geographically, Haverhill and Lawrence are neighbors, but they are worlds apart when it comes to the performance of their retirement funds.

Haverhill's $165.4 million fund has consistently outperformed all or most of the state's 106 separate pension funds. Lawrence's $124.5 million fund is consistently near the bottom.

In the last five years, Haverhill's return on investments has averaged 10.19 percent a year, compared to Lawrence's 7.4 percent.

The difference is significant because the more the fund earns, the less local taxpayers have to pay for pensions promised to public employees. Lawrence's weak investments cost millions.

A study last year by the Pioneer Institute found that local taxpayers will have to cover $3 billion in lost revenues because of poorly performing pension funds like Lawrence's.

The average local retirement system holds $150 million, according to the Pioneer Institute, so a 1 percent difference in the return on investment is worth $1.5 million.

Haverhill officials sing the praises of the Haverhill Retirement Board, the five-member group that manages the high-performing fund for 2,200 current and retired employees.

That hasn't always been the case. Four years ago, the board was embroiled in scandal when it was revealed its chairman, Vaughn Guertin, had traveled the world and the United States on business for the board, including 304 days when he was also being paid as a Fire Department captain.

Guertin, who left the board and moved two years ago, today is given much of the credit for the pension fund's success.

"Investing comes down to making good decisions and having diversity, and obviously (Guertin) excelled in those areas," said Mayor James Fiorentini, who as a city councilor in 2002 led the charge against Guertin's globe-trotting | Vietnam, Switzerland, Australia and Northern Ireland were among his stops.

The scandal led the board to rewrite its travel rules to curb expenses, improve oversight and ban trips paid for by money managers who did business with the board.

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