EagleTribune.com, North Andover, MA


July 30, 2007

Cahill: Loopholes undermine sound system

Massachusetts Treasurer Timothy Cahill is chairman of the Pension Reserves Investment Management Board, which oversees investments for the $50 billion retirement fund. In an interview with Eagle-Tribune Publishing Co., Cahill talked about pressing issues facing public pensions.

Q: The Supreme Judicial Court ruled in November that William Bulger, the former president of the state Senate and the University of Massachusetts, can count his housing allowance and annuity as compensation, swelling his annual pension payment. What effect will that ruling have on the state pension system?

A: It will have a direct effect on the college presidents. There are about one dozen college presidents in the process of filing to get their housing allowance (counted toward their pension) ...

It is encouraging other people to add in their extras and call it compensation, such as the two (former) representatives that have put in for their travel and office allowance.

So it could have far-reaching impacts and serious financial impacts to all of the state pension funds if this ruling the Supreme Judicial Court made gets applied very broadly.

Q: The state pension system is widely criticized for inequities. Do you think it is fair?

A: The problem often is with the loopholes that get built into the system, where people try and take advantage. Or where other (local) retirement boards don't interpret the law very strictly. Instead they interpret it very broadly.

Ultimately, it is a fair system as long as people don't try and take advantage.

Q: So how do those exceptions affect the pension fund?

A: We've had a great four-year-run of building up our pension system. We've doubled the size of assets, practically. We are closer to fully funding than we've ever been. We're on the right path as long as the loopholes don't get bigger and bigger and bigger, and the benefits can't exceed the assets.

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