board powers

Section 15 establishes forfeiture of retirement benefits for members who misappropriate public funds or are convicted of crimes related to their office. Following a board hearing, a member found to have misappropriated funds forfeits retirement allowances and accumulated deductions up to the amount misappropriated. Final criminal convictions—including for bribery, extortion, or general workplace misconduct—can result in total forfeiture of pension rights, with a possible return of accumulated deductions (without interest) depending on the offense. The section also prohibits retirement allowances based on intentionally concealed or misreported compensation.

Section 16 establishes the procedures for involuntary retirement initiated by a department head, including the member's right to a hearing before the retirement board. Members meeting minimum age and service thresholds (generally age 55 with 15 years, or 20 years of service regardless of age) may petition the district court to review adverse board decisions. All other aggrieved members may appeal to the Contributory Retirement Appeal Board, which assigns matters to the Division of Administrative Law Appeals for hearing, with final and binding decisions subject to limited further review.

Section 18 requires members and employees to file written statements and certified records when requested by the retirement board, and establishes an escalating enforcement mechanism—including suspension without compensation—for unreasonable delays. It imposes criminal penalties for knowingly making false statements or falsifying system records with intent to defraud, and requires actuarial correction of any benefit errors resulting from such wrongful acts.

Section 20 is the comprehensive governance provision establishing the structure, composition, and duties of retirement boards for each type of retirement system under Chapter 32, including state employees, teachers, counties, cities and towns, and various special authorities (MBTA police, MassDOT, Massport, MWRA, and others). It specifies board membership, election procedures, compensation, legal counsel, reporting obligations, continuing education requirements, and general administrative powers such as taking evidence, subpoenaing witnesses, and correcting errors in member records. Board members must complete 18 hours of training per term, and failure to do so bars them from serving beyond the conclusion of that term.

Section 20A, available to any city, town, or other entity that accepts it by vote, provides indemnification to retirement board members for legal expenses and damages arising from civil actions related to official duties. Indemnification follows the same standards as those for public employees under Chapter 258, but is explicitly denied where the board member's conduct constituted a breach of fiduciary duty, willful dishonesty, or intentional violation of law.

Section 20B provides indemnification for members, employees, and investment committee members of the state retirement board, teachers' retirement board, and pension reserves investment management board in civil actions arising from official duties. Indemnification for both defense expenses and damages follows the Chapter 258 public employee standard, but is explicitly excluded where the conduct involved a breach of fiduciary duty, willful dishonesty, or intentional violation of law.

Section 20C requires every retirement board member to file annual statements of financial interest with the Public Employee Retirement Administration Commission (PERAC), disclosing business associations, investments, debts, gifts, honoraria, and other financial relationships — particularly any involving persons with a direct interest in matters before the board. Filing is required within 30 days of joining a board, annually by May 1, and by May 1 of the year after leaving the board. Failure to file or correct a deficient statement within 30 days of written notice results in removal from the board, and the removed member is barred from future service on any retirement board under Chapter 32.

Section 21 establishes the Public Employee Retirement Administration Commission (PERAC) as the primary supervisory authority over all Massachusetts public retirement systems, with powers to prescribe accounting methods, conduct field examinations every three years, review and remand disability and termination retirement decisions within 30 days, assess expenses against covered systems, and maintain a comprehensive public employee retirement and disability data system. The section also governs actuarial valuation requirements — conducted biennially under the entry age normal method — experience investigations every six years, and requires PERAC to develop rehabilitation programs for disabled employees in cooperation with other state agencies.

Section 21A authorizes PERAC to maintain a consolidated list of vendors debarred or suspended from contracting with any retirement board under Chapter 32. Debarment may be imposed for criminal convictions related to public contracting, antitrust violations, Chapter 268A ethics violations, or substantial evidence of fraud, performance failures, or undisclosed compensation. Suspensions are temporary, capped at 12 months unless related criminal proceedings are pending, and require advance written notice except in emergencies. Full debarment proceedings require a hearing opportunity and a written decision with findings; affiliates of a debarred or suspended vendor may be included in the exclusion.

Section 22 is the primary financing and fund structure provision for Massachusetts public retirement systems, establishing seven distinct funds within each system: the Annuity Savings Fund (member contributions), Annuity Reserve Fund (retirement annuities), Pension Fund (employer pension payments), Special Fund for Military Service Credit, Expense Fund (administration), Pension Reserve Fund (unfunded liability reserves), and the Commonwealth's Pension Liability Fund. Member contribution rates vary from 5% to 12% of regular compensation depending on entry date and employee group, with employees entering on or after July 1, 1996 contributing 9%. The section also governs the Pension Reserves Investment Trust (PRIT) Fund administered by the PRIM board, under-performing system transfer requirements, employer pickup of employee contributions, and detailed appropriation procedures for all system types.

Section 22E requires the PERAC actuary to conduct a review and financial impact analysis of proposed statutory changes to the commonwealth's pension liability — including early retirement incentives, COLA adjustments, membership expansions, or other amendments to Chapter 32 — when requested by any joint standing committee or a ways and means committee. The actuary must report within 90 days of the request, consulting with other relevant state agencies.

Section 23 governs investment and custodial management of retirement system funds. It establishes the Pension Reserves Investment Management (PRIM) Board as a nine-member unpaid board chaired by the State Treasurer, with full fiduciary authority over the PRIT Fund. The section codifies the prudent investor standard for all fiduciaries, bars investments in tobacco companies deriving more than 15% of revenues from tobacco sales, requires investment managers and consultants to be selected through PERAC-acknowledged processes, addresses investment restrictions tied to South Africa and Northern Ireland, and sets minority investment manager goals of not less than 20%. Local system funds are held by the respective governmental treasurer-custodian and must be invested through an investment manager.

Section 23B establishes a mandatory competitive sealed proposals process that every retirement board must follow when procuring investment, actuarial, legal, and accounting services. Key requirements include public notice posted for at least two weeks, written evaluation criteria, confidentiality of proposals until evaluations are complete, and mandatory contractual fiduciary and disclosure terms for investment service providers. Investment service contracts may not exceed seven years (including renewals). Board members must certify under penalty of perjury that procurements are free from collusion, and persons who cause contracts to be awarded in violation of the section forfeit up to $2,000 per violation plus double damages.

Section 40 sets governance requirements for private pension associations formed under Section 39. By-laws must be approved by PERAC and must specify how the association is conducted and how funds are invested and disbursed. An association is formally established when its by-laws are approved by both the employer and a two-thirds vote of employees and by PERAC. The association must file an annual report with PERAC by March 1 covering membership and financial transactions from the prior year. PERAC may audit the association's books, and failure to comply with reporting requirements is punishable by a fine of up to $500.

Section 90D1/2 allows any city, town, county, regional, district, or authority retirement system to increase the retirement allowance (up to $15,000) for members retired with at least 25 years of creditable service on any type of retirement, by majority vote of the retirement board subject to approval by the local legislative body.

Section 90J allows retirement systems that accept this section (by board majority vote with legislative body approval) to pay from the expense fund the annual physical and mental examination costs for members serving beyond age 70.

Section 91B establishes a wage reporting system through which PERAC annually shares retiree data with the Department of Revenue, which then cross-checks earnings reports filed under section 91A to identify non-compliant disability retirees, with findings reported back to the relevant retirement board for action.

Section 91C grants PERAC access to criminal record offender information and requires it to compare that data against the list of disability retirees at least annually; if the comparison suggests action should be taken under sections 6 or 7, PERAC must notify the appropriate retirement board.

Section 103 establishes an optional COLA mechanism for local (non-state) retirement systems: upon acceptance by board vote with legislative body approval, a system may grant annual COLAs (up to 3% if they opt into subsection i) on a base amount starting at $12,000, funded from investment income, subject to the system's funding schedule, with procedures for opting out of a COLA in any given year.