T pension fund chief steps down amid scrutiny of finances
By State House News Service | June 6, 2016, 14:54 EDT
BOSTON – Michael Mulhern, the head of the MBTA Retirement Fund, is resigning after 10 years in that post, asserting that the fund has been subjected to “ill-informed” criticism.
In a letter dated Monday to James Evers, the chairman of the Massachusetts Bay Transportation Authority Retirement Fund board, Mulhern, a former general manager of the T, said the timing was right for him to move on. He cited a report from outside consultants confirming the accuracy of the fund’s financial statements and that the fund has published its Comprehensive Annual Financial Report for 2014.
Fund critics have complained that its operations should be more transparent, since the MBTA receives public funding, even though it is set up as a private trust. A law signed Friday by Gov. Charlie Baker included a section stating that documents “made or received” by the fund’s board for the payment or administration of MBTA pensions are considered public records.
In the latest financial snapshot posted on its website, the fund lists 5,798 active members and 6,309 retired members, and paying out annual pension benefits of more than $182 million.
In his letter, Mulhern said the fund had “endured unprecedented internal scrutiny and ill-informed public criticism.” He also promoted transparency initiatives executed by the fund and made in connection with a 2014 collective bargaining agreement.
“This increased transparency has been accomplished while carefully balancing the private fiduciary rights of our beneficiaries,” Mulhern wrote. He said fund officials had addressed “cyber risk issues.”
The fund’s investment returns outperformed “the majority of our peers” over the past 10 years, Mulhern said.
In an April 2016 fund status report, its 10-year rate of return was listed at 6.53 percent and its 2014 return at 5.51 percent. The fund’s assumed rate of return is 8 percent, and missing that rate can mean greater contributions are needed to keep it solvent. The fund’s net liability was listed at $859.7 million and its funded ratio was 64.88 percent, or well below the 80 percent level generally considered to be “fully funded” by analysts.
Mulhern plans to leave the agency Aug. 5, and wrote that he would be available to assist the board and its staff with the transition. In addition to James O’Brien, Craig Hughes and Betsy Tayler, the board includes former state Treasurer Steven Grossman and current state Revenue Commissioner Michael Heffernan.
Mulhern said he plans to pursue other opportunities in the transportation industry.
Written by Michael P. Norton