Presented by PERAC

Presented by PERACSeptember 28, 2021

2 | RETIREMENT ON-RAMP (9/28/2021)

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JOHN PARSONS, ESQ — Executive Director KEN HILL, ESQ — Assistant Deputy DirectorPATRICE LOOBY, RN — Mgr. Medical Services

CARYN SHEA, CPA — Director of Audits SANDRA KING — Fraud Prevention Manager

JUDITH CORRIGAN, ESQ — General Counsel TOM O’DONNELL — Compliance DirectorJOHN GALVIN — Compliance Analyst

PATRICK CHARLES, ESQ — Sr. Assoc. General CounselBILL KEEFE — Assistant Deputy Director JOHN BOORACK — Actuary

MODERATORNATACHA DUNKER — Communications Director

*Presentation pages 2 through 10 included instructions for using our webinar tool and are not included in this handout.

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RETIREMENT ON-RAMP (9/28/2021) | 3

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INTRODUCTION/OVERVIEWPRESENTER: JOHN PARSONS, ESQ

Who Is PERAC?

§ The Public Employee Retirement Administration Commission (“PERAC”) “shall have general responsibility for the efficient administration of the public employee retirement system, under Chapter 32.”

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Who Is PERAC? (Continued)

§ Promulgate rules/regulations relative to administrative procedures, financial operations, records and reports of the retirement boards

§ Approve rules and regulations of the retirement boards

§ Perform audits at least once every 3 years

§ Determining the charges of retirement systems to participating Units§ Oversee disability pension process, review disability pension decisions

§ Oversee the earnings, medical evaluation, and return to work process for disabled retirees§ Review and approve investment procurement decisions

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Role and Makeup of Retirement Boards

§ Established under Chapter 32 as “any contributory retirement system established for the employees of any governmental unit”

§ State, regional, county, municipal, and district boards — 104 in total

§ Boards are public entities with responsibilities independent of the municipality or agency they are established on behalf of

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Members of A Retirement Board

§ Retirement boards:o 5 members (Teachers’ (MTRS) has 7 members)

§ Systems for cities and towns:o First member — Ex-officio member (“the city auditor or town accountant or other

officer having similar powers”)

o Second member — appointed by the board of selectmen, mayor or city manager depending on form of government

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Elected Members (“3rd and 4th members”)

§ Third and Fourth members —o “shall be elected by the members in or retired from service of such system from

among their number…..”

o For a term not to exceed 3 years

§ Fifth member —o “shall not be an employee, a retiree, or official of the governmental unit and

shall be chosen by the other four for a term of three years”

o If the fifth member is not chosen within thirty days of the expiration of the term, the town/city government shall make the appointment.

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Responsibilities of Retirement Board Member

§ Upon beginning your term:o Establish PROSPER account with PERACo File Statement of Financial Interest within 30 days

o File a 268A Compliance Pledge

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Responsibilities of Retirement Board Member (Continued)

§ Ongoing responsibilities during each 3 year term:o Annual filing of SFI by May 1st

o Board Member Education: During each full term board members shall complete 18 hours of training, not less than 3 per year nor more than 9.

o Online and live classes by PERAC and MACRS, conferences, agency (AG,OIG, SEC) and industry groups (NCPERS,NCTR)

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BOARD MEMBER REVIEW OF FINANCIAL ACTIVITYPRESENTER: CARYN SHEA, CPA

840 CMR 1.01 Board Members' Duty

A board member shall discharge all of his/her duties solely in the interest of members and their beneficiaries, and

(1) For the exclusive purpose of:(a) providing benefits to members and their beneficiaries; and(b) defraying reasonable expenses of administering the system.

(2) With the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims.


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Fiduciary Duty

§ Requires board members to stay objective, unselfish, responsible, honest, trustworthy, and efficient.

§ A board member has a duty, created by their role, to act primarily for another’s benefit.

§ Safeguard the systems assets

§ Fiscal due diligence

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Due Diligence

§ The care that a reasonable person exercises to avoid harm to other persons or their property.

§ Doing your homework. Gathering the necessary facts to make a wise and informed decision.

§ A process or effort to collect and analyze information before making a decision or conducting a transaction.

§ Reasonable level of research, analysis, risk evaluation and care needed to successfully make a business decision.

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Monitoring the Financial Activity

§ Invested Assetso Investment Reports

› Consultant helps Board monitor Investments

o Monthly PRIT Statements

o Annual Meeting with Managers

§ Non-Invested Assetso Bank Reconciliations

› Should compare reconciled bank balance with amount on Trial Balance

§ Non-Invested Assets, Cont’d.o Budget to Actual Expense Comparison

o Monthly Warrants

§ All Assetso Review of Monthly Accounting

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Monthly Financial Packets

§ Trial Balance – year to date

§ Cash Receipts

§ Cash Disbursements

§ Adjusting Journal Entries

§ Cash Reconciliations including Bank Statements

§ Budget to Actual Expense Comparison – at least quarterly

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A Few Things You Should Look For

§ Is the accounting done timely?o Are you getting the August accounting in November?

§ Do the amounts on the Trial Balance look reasonable?o Is there a balance in an account that looks too high or too low?

§ Are there old checks or unexplained variances in the cash reconciliation? o Were there outstanding checks with dates over six months old?

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Annual Statement

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§ Board’s Financial Informationo Contained in 5 separate statements

§ Schedule A - Detail of Accounts Receivables & Payables

§ Membership Information

§ Schedules 1 – 7 o Supports the amounts reported

in financial information

§ Supplemental Scheduleo List of members with money in

the Annuity Savings Fund (ASF)o Total of Supplemental Schedule

should agree with ASF balance


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Annual Statement (Continued)

§ Due May 1st each year

§ Approved by a Board Vote

§ Signed by each Board Member

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Monthly Accounting

§ When to expect January Accountingo A month or two after the Annual Statement is filed

§ Should expect the monthly accounting regularly thereaftero Could be two months behind but shouldn’t be more

› Reviewing June accounting at the August meeting or July accounting if bank and investment statements are received early in the month

§ May be a lag between the November and December accounting due to the year end activity

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PERAC’s Audit Unit§ Reach us by email or by phone, (617) 666-4446*

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The Audit Unit Extensions/Email AddressesCaryn Shea, CPA, Director of Audits Ext. 929 [email protected]

Scott Henderson, Deputy Chief Auditor [email protected]

Elaine M. Pursley, CPA, Auditor II [email protected]

Ernie Calavritinos, Auditor I [email protected]

Karen Casper, Auditor I [email protected]

Michelle Lastra, Auditor I [email protected]

Alice Munafo, Auditor I [email protected]

George Nsia, Auditor I [email protected]

Carol Poladian, CPA, Auditor I [email protected]

Richard P. Wrona, CPA, Auditor I [email protected]

Junior Yanga, Auditor I [email protected]*Note: most auditors are out in the field and do not have extensions.

MEMOS AS OFFICIAL GUIDANCE/OTHER LEGAL MATTERSPRESENTER: JUDITH CORRIGAN, ESQ

Chapter 7, Section 50(f)

PERAC must provide “training and technical assistance to retirement boards.”

§ This includes:o Answering questions by phone or email.

o Providing written technical advisories upon request. › Known internally at PERAC as “opinion letters” › We produce about 200 of these individual determinations per year.

o Trainings (like this one)o Memoranda

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PERAC Memoranda

§ May be found on PROSPER, on our website, and at the State House Library

§ Binding on retirement boards.

§ Grimes v. Malden Retirement Board & PERAC, CR-15-5 (CRAB) November 18, 2016. o It would be wholly impractical to require PERAC to interpret and administer the retirement law solely

by issuing individual rulings regarding individual retirement board determinations.

o If a retirement board disagrees with the interpretation of the retirement law adopted in a PERAC memorandum as applied to a particular case, it may request a ruling from PERAC, which would be appealable by an aggrieved party under G.L. c. 32, § 16(4).

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Regulations

§ Chapter 7, Section 50(a): PERAC promulgates rules and regulations governing administrative procedures, financial operations, records and reports of the retirement boards.

§ PERAC regulations are approved by the Massachusetts Legislature and are located at 840 Code of Massachusetts Regulations (840 CMR 1.00 et seq.) The regulations are divided in sections by category and may be found on our website at https://www.mass.gov/lists/perac-regulations

§ Chapter 7, Section 50(b) and Chapter 32, Section 21(4): PERAC approves the rules and regulations of individual retirement boards, as to conformity with law and regulations.

§ The supplementary rules and regulations of each retirement board may also be found on PERAC’s website, in each individual retirement board’s section.

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Local Options

§ Local retirement boards, except the State and Teachers' Retirement Boards, may vote on the applicability of certain retirement laws for their retirement systems.

§ A list of some local options is available at https://www.mass.gov/service-details/retirement-systems-local-options

§ An interesting example of a local option is the “ten year option” for ordinary disability retirement found at G.L. c. 32, Section 6(1).

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Disability Approval Process

§ Chapter 32, Sections 21(1)(d) and 21(4).

§ PERAC reviews disability applications, death applications, and termination retirement allowance applications granted by the retirement boards.

§ This particular task is handled by the Legal Unit, so if questions arise you may hear from one of us.

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PERAC’s Legal Unit

§ Reach us by email or by phone

§ PERAC’s main number is (617) 666-4446

The Legal Unit Extensions/Email AddressesJudith Corrigan, General Counsel Ext. 904 [email protected]

Patrick Charles, Senior Associate General Counsel Ext. 914 [email protected]

Katie Brady, Associate General Counsel Ext. 971 [email protected]

Felicia McGinniss, Associate General Counsel Ext. 909 [email protected]

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OPEN MEETING AND PUBLIC RECORDS LAW BASICS/ETHICSPRESENTER: PATRICK CHARLES, ESQ

Open Meeting Law

§ G.L. c. 30A, §§ 18-25 is the Open Meeting Law (“OML”) which is applicable to retirement boards.

§ Retirement boards are governmental bodies which fall under G.L. c. 30A, §§ 18-25.

§ Board meetings are public which implicates G.L. c. 30A, §§ 18-25.

§ The public has right to attend meetings and access records in the board’s possession.

§ Within 2 weeks of election or appointment or of taking the oath of office you must complete a Certificate of Receipt of the Open Meeting Law Materials. This certification must be kept by the public body and must be updated after each new term begins.

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Board Meeting

§ Notice of a board meeting must be filed and posted at least 48 hours before the meeting.

§ Notice must be printed in easily readable type which must include date, time, location and list of topics for the meeting (Agenda).

§ Filing a posting is usually the responsibility of the chairperson of the meeting.

§ An agenda must be created prior to the meeting and posted. The agenda should contain a list of topics to be discussed. All Board members should have an opportunity to suggest items to be included in the agenda in advance of the meeting.

§ Agenda should note if an executive session is expected.

§ Meetings can be recorded by the public, a member of the public should notify the Chair in advance of recording.

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When Can You Call An Executive Session?

§ To discuss the reputation, character, physical condition, or mental health rather than professional competency of an individual; e.g. disability retirement.

§ To consider discipline or dismissal of a board employee.

§ Member, disability applicant or board employee to be given 48 hours notice of proceeding in executive session, but he or she can waive that right and have the proceeding in open session.

§ To discuss strategy for collective bargaining or litigation in certain circumstances.

§ To discuss deployment of security personnel or devices.

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When Can You Call An Executive Session? (Continued)

§ To investigate changes of criminal misconduct or to discuss the finding of criminal charges.

§ To discuss the purchase, exchange, lease, or value of real property if the discussions would have a detrimental effect on the retirement board or any person, firm or corporation.

§ To comply with any general or special law or federal grant-in-aid requirement.

§ To interview or consider applicants for employment by a preliminary screening committee.

§ To meet or confer with a mediator in certain circumstances. 39


Convening an Executive Session

§ A retirement board must convene an open meeting for which notice has been given.

§ A majority of the board members must vote by roll call to go into executive session.

§ The chairperson must state the purpose of the executive session and the statutory provisions under which it has been called.

§ Before entering the executive session, the chairperson must state whether the board will re-convene after the executive session. Can adjourn directly from Executive session if you announce that intention during the open session.

§ All votes in executive session must be done by roll call.

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COVID-19 Changes to Open Meeting Requirements

§ Chapter 20 of the Acts of 2021: An Act Relative to Extending Certain Covid-19 Measures Adopted During the State of Emergencyo Extends certain Open Meeting Law changes until April 1, 2022

› Public Bodies can meet remotely as long as adequate, live alternative means of public participation are provided. This means live teleconference or video conference.

› Remote participation is permitted for all members of the public body without the need for a physical quorum to be present at the meeting location.

› Public Body can meet in person at a location closed to the public as long as the live alternative means for public access is provided.

› Remember that it is a violation of the Open Meeting Law for a quorum of the public body to discuss board matters without a proper meeting scheduled. This includes conference calls or email chains involving a quorum of the board.

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Open Meeting Law Guidance from MA Attorney General

§ Prior Open Meeting Law determinations

§ Complaints

§ Open Meeting Law Guide

§ COVID-19 related changes to the Open Meeting Law

§ Training schedule

§ All of these items are covered in detail on the Attorney General’s website:o https://www.mass.gov/the-open-meeting-law

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Public Records

§ Every government record in Massachusetts is presumed to be public unless it may be withheld under a specifically stated exemption.

§ This includes your emails regarding Board related matters. It is best for Board members to have an email address specifically for Board business and not use their personal emails.

§ Phone messages and text messages can also be public records if they relate to Board business.

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Secretary of State

§ The Secretary of State website has an excellent Public Records guideo Link: https://www.sec.state.ma.us/pre/prepdf/guide.pdf

§ Records Retention Schedule can be found online which details how long each record must be kept as well as how to dispose of records.o Link: https://www.sec.state.ma.us/pre/preidx.htm

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OPEN MEETING AND PUBLIC RECORDS LAW BASICS/ETHICSPRESENTER: BILL KEEFE

Ethics No No’s

As a board member, you are bound by the state’s Conflict of Interest Law, MGL Ch. 268A, which covers a wide range of ethical behavior.

§ Prohibits:o Bribeso Acceptance of gifts over $50o Self Dealingo Nepotismo Using public resources for private gaino Using your position to gain privileges o The APPEARANCE of a conflict

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Ethics – Take a whiff

§ In short, if it doesn’t pass the smell test … think twice

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Ethics – Solutions and Resources

§ In some instances, the law allows for disclosure of a situation in advance to remove the appearance of a conflict

§ Recusing yourself from deliberations or votes on matters in which you may have a conflict can avoid violations

§ If you have questions, ask! The Ethics Commission gives free, anonymous advice.

§ www.mass.gov/ethics

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Ethics – Statutory Requirements

§ With PERACo Complete in PROSPER, within 30 days of the start of a term, a Chapter 268A

Compliance Pledgeo Complete in PROSPER, within 30 days of the start of a term and annually thereafter,

an Eligibility Certification certifying that you do not receive personal benefit from the retirement board, financial or otherwise, beyond a stipend or retirement allowance

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Ethics – Statutory Requirements (Continued)

§ With State Ethics Commissiono Within 30 days of the start of a term and every two years thereafter, complete online

Conflict of Interest Law training› Note: One State Ethics training per term will count as 3 credits with PERAC toward the

statutorily-required 18 educational credits per term

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PERAC Contacts


§ PERAC’s main number is (617) 666-4446

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Extensions/Email AddressesPatrick Charles, ESQ, Senior Associate General Counsel Ext. 914 [email protected]

Bill Keefe, Assistant Deputy Director Ext. 977 [email protected]


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THE ACCIDENTAL DISABILITY PROCESSPRESENTER: KENNETH HILL, ESQ

G.L. c. 32, § 7(1)

§ Conditions for receiving an accidental disability retirement benefit:o Unable to perform the essential duties of one’s job;o Such inability is likely to be permanent; and

o Such inability is due to an injury sustained or a hazard undergone as a result of, and while in the performance of one’s duties at some definite time and place (without serious and willful misconduct on one’s part).

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Injury and Injury Report

§ Employee who is a member of a Chapter 32 retirement system, sustains an injury while at work.

§ Member should request an injury report form from his/her employer, and complete such form. o Document facts surrounding the incident that caused the injury.

› Date and time› Factors that caused the incident› Witnesses› Location where incident occurred› Injury (specific body part injured and how injured)

§ Employee and/or employer must provide the retirement board with a copy of the injury report within 90 days of the injury.

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Applying for ADR

§ Member should contact his/her retirement board for counseling and to obtain an application.

§ Member should review PERAC’s Guide to Disability Retirement for Public Employees.

§ Board should inform the member that the entire process will take months.

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The Application

§ The application is 17 pages long. It is very important that the member completes the entire application, and includes as much detail as possible.

§ Application requests:o Basic member information;

o Member sign under penalties of perjury;

o Medical condition for which applying for disability;

o Job title and duties, and what duties the member can no longer perform;

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The Application (Continued)

§ Application requests (Cont’d):o Date, time, location and description of incident;

o Workers’ compensation or § 111F benefits;

o Medical treatment received for injury;

o Authorizations to use or disclose protected health information; and

o Member must select whether he/she wants to be examined by a joint regional medical panel, or for three separate single examinations.

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Employer’s Statement

§ 840 CMR 10.07 details information to be obtained by employer.

§ Board shall send the employer an Employer’s Statement form, which requests the following information:o Job description and the essential duties of the position;

o The particular physical or mental requirements for the position;

o The specific duties the applicant cannot or may not be able to perform as a result of the disability claimed;

o Whether the department head believes the applicant may be able to perform the duties of the position; and

o A description of the event, accident or hazard undergone upon which the disability is being claimed, with copies of any and all injury reports.

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Treating Physician’s Statement

§ 840 CMR 10.06§ Applicant will identify his/her treating physician

§ Either the applicant or the retirement board will send the Physician’s Statement to the physician to:o Provide information related to the injury, and answer whether the applicant is incapable of

performing the essential duties of his/her job;o Provide information related to the treatment for the injury, and answer whether the condition

for which the applicant seeks disability retirement is likely to be permanent; ando Provide information related to the injury, and answer whether said incapacity might be the natural

and proximate result of the claimed personal injury sustained or hazard undergone while in the performance of the applicant’s duties (causation).

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Complete Application

§ Upon receipt of a completed application (which includes all pertinent medical records), the retirement board shall either petition PERAC to schedule a medical panel examination or deny the application as a matter of law.o A complete application = member’s application + physician’s statement + signed authorizations

for the release of medical records and income records + employment records + medical records (see 840 CMR 10.06(1)).

§ If denied, the retirement board must provide the applicant with a basis for the board’s decision and the applicant’s right to appeal pursuant to 840 CMR 10.13.

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Medical Panel Formation

§ 840 CMR 10.08 details the formation of the medical panel.

§ Upon receipt of a petition to schedule a medical panel examination, PERAC will review the application and the medical records.

§ Based on the claimed disability, PERAC will determine the branch of medicine involved and the appropriate skillset the medical panel physicians must possess.

§ PERAC will contact the three appropriately skilled physicians and the applicant to arrange either three separate examinations, or one joint examination with all three physicians.** Due to current Covid-19 restrictions, only separate examinations can be scheduled.

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The Medical Panel

§ 840 CMR 10.10 details the medical panel examination process.

§ Upon designation of the medical panel, the retirement board shall provide the physicians with copies of all documents contained within the application packet, including medical records.

§ The medical panel physicians shall review all of those records, and conduct a physical and/or psychiatric examination of the member.

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The Medical Panel (Continued)

§ After examination, each medical panel physician will complete a certification and narrative report regarding whether the applicant is permanently incapable from performing the duties of his or her job, and that such incapacity might be the natural and proximate result of the claimed personal injury sustained or hazard undergone while in the performance of the applicant’s duties.o In order to be eligible for an Accidental Disability Retirement benefit, a majority of the

medical panel physicians must certify “Yes” to incapacity, permanence and causation.

o For certain heart, lung and cancer cases, such disabling condition is presumed to have been caused while in the performance of certain public safety duties.

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Retirement Board Hearing & Decision

§ 840 CMR 10.12 and 10.13 detail the retirement board hearing and decision making process.

§ Upon receipt of medical panel certifications and narrative reports, the retirement board will place the matter on the agenda for an upcoming board meeting.

§ Matter to be heard and discussed during executive session, although the member can request open session.

§ Applicant may or may not testify.

§ Retirement board may issue subpoenas requiring the attendance and testimony of a witness or the production of evidence.

§ If retirement board votes to grant the application, the board must send a copy of that decision and all pertinent information to PERAC for final approval.

§ The retirement board is encouraged to include a statement of the facts found by the board, as it may assist PERAC during the next stage of the application process.

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PERAC Review

§ G.L. c. 32, § 21(1)(d) authorizes PERAC’s review of all disability applications.

§ 30 days to review and approve or remand.

§ PERAC must remand the application back to the retirement board if it determines that the board’s decision was:o Made upon unlawful procedure;o Unsupported by substantial evidence;o Arbitrary or capricious; oro A result of fraud or misrepresentation.

§ If PERAC approves the application, the applicant has successfully completed the application process and is now eligible to receive an accidental disability retirement benefit.

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Comprehensive Medical Examination (CME)

§ 840 CMR 10.14 details the Comprehensive Medical Examination process.

§ Member must participate in a medical evaluation once per year during the first two years after retirement, and once every three years thereafter.

§ Consists of PERAC’s review of all medical records and any additional information provided by the member or the board.

§ Following review, PERAC may determine:o Retiree is permanently disabled, so a CME will not be scheduled; oro Retiree is currently disabled, so a CME will not be scheduled at this time, but may in the future; oro Retiree should proceed to a CME, which consists of a single physician examination.

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Restoration to Service (RTS)

§ 840 CMR 10.15 details the Restoration to Service process.

§ If the CME physician determines that the member is able to perform his/her job duties, proceeds to RTS program.

§ PERAC appoints three physicians to separately examine the member.

§ Physicians must be unanimous in finding the member able to perform his/her job duties.

§ Member shall be returned to former position, provided a vacancy exists. If no vacancy, the member shall be granted a preference for the next available position.

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Restricted Earnings

§ G.L. c. 32, § 91A, and 840 CMR 10.16 detail the earning restrictions and the annual filing requirements for disability retirees.

§ Disability retirees are limited in the amount of money they can earn each year.

§ The combined retirement allowance and total earnings in either public or private sector employment cannot exceed the regular compensation payable to such member had he or she continued in service in the grade held at retirement, plus $15,000.

§ Pursuant to § 91A, disability retirees must provide an annual statement of earned income and relevant tax records.

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NOTES:


PERAC’s Disability Unit Contacts

§ Reach us by email, phone, or by fax

§ PERAC’s main number: (617) 666-4446

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Disability Unit Extensions/Email AddressesKenneth Hill, Assistant Deputy Director Ext. 945 [email protected]

Patrice Looby, RN, Manager of Medical Services Ext. 955 [email protected]

Mariyam Gadatia, RN, Nurse Case Manager Ext. 952 [email protected]

Eileen Tobin, RN, BSN, Nurse Case Manager Ext. 953 [email protected]

Regina Manning, Case Manager I Ext. 951 [email protected]

Erin Groesser, Administrative Assistant Ext. 946 [email protected]

FRAUD/91APRESENTER: SANDRA KING

91A — Fraud Prevention

§ Once a member has been approved for disability retirement they will become subject to MGL c. 32, §91A.

§ This means that they will need to submit to PERAC on an annual basis an Annual Statement of Earned Income. And if they fail to comply, their Retirement Allowance may be terminated. As a result, this Annual Statement of Earned Income will give PERAC the ability to determine if the retiree is within their allowable earnings, since they are restricted under the statute.

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Compliance With 91A

§ If a member has not complied, the board may see them in a Start Termination status in PROSPER. This means PERAC has mailed them a termination letter.

§ After approximately 2 weeks, if they still have not complied, the member’s status will be moved to Final Termination.o The board will receive a Notification in PROSPER to take termination action. o Once the Board Administrator logs into PROSPER you will see under Notifications

New Termination Notification for each member. o The Administrator must respond to the task stating:

91A BOARD ACTION TERMINATION REQUEST FOR <members name>. o The task will stay until an action is selected.

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Compliance With 91A (Continued)

§ The board will not receive anything in the mail, as all notifications go through PROSPER.

§ Once a member has complied, the Administrator will see the member’s status change in PROSPER to OK, Special Status, or Allowable Earnings Determination.

§ This is the same process for Termination after Extension. The Administrator will see the status IRS Extension switch to Start Termination and then Final Termination if they have not complied by the extension deadline of October 15. Once in Final Termination, the Administrator will get the notification to respond to the task(s).

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Noncompliance With 91A Filing

§ Once the board receives the Notification of Termination, the Administrator will then need to send their member a letter, notifying them that their retirement allowance will be terminated and that they have a chance to be heard by the Retirement Board. Once an action has been taken, they will need to update the task in PROSPER. There are currently 4 options: Pending, Termination, Hearing, or Deceased. o Pending — will require a date and comment. There will also be an option to add a copy of the letter that is sent to the member.

o Termination – will require a date and comment. There will also be an option to add a copy of the letter that is sent to the member. There is no need to mail a copy of the letter to PERAC, we will see it here.

o Hearing — will ask for a date.

o Deceased — will ask for the date of death, and require the Administrator to upload the Death Certificate or an Obituary.

§ If an option has not been selected after 30 days, a reminder task will be sent. The board will continue to receive a reminder task every 30 days until a response is received. The Administrator must choose an option to make the task go away.

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91A PROSPER TERMINATION SCREENS

§ Task sent to boards

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NOTES:


Options for boards to respond. Noncompliance with 91A Filing

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For Deceased, a date of death and supporting documentation is required.


Exceeding the Allowable Earnings

§ If a member has a reported earnings amount of $20,000 or greater, the board will see their status as Allowable Earnings Determination. This means that PERAC will ask the boards to provide us with the annual Retirement Allowance figures, as well as current salaries, through a task sent through PROSPER.

§ There are two ways to enter the figures into PROSPER. Either directly on the screen that opens after clicking on the task, or downloading a list onto a .CSV file.

§ After all figures have been submitted by the board, PERAC will be able to do the calculation. If a member has not exceeded their allowable earnings, their status will change to OK. If a member did exceed their allowable earnings the status will be Excess.

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Exceeding the Allowable Earnings (Continued)

§ After PERAC generates and mails the excess letter, the boards will receive a task notifying them that they have a member who has excess earnings. The board will also be able to view all tax document that the member submitted to PERAC, should the board need them to conduct a hearing.

§ The board should also notify their member in writing, and give them the option to pay back, pay through deductions, or request a hearing.

§ Once this has been done, the board will need to respond to the Excess Task in PROSPER. The task will remain until the board responds.

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91A PROSPER Excess Earners Screens

§ First, a task to enter figures.

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$1200.00

$1200.00

$1200.00 Current salary, annuity and

pension must not be 0.00


NOTES:


Excess Notifications Task

PERAC will mail a letter to each member that has exceeded their allowable earnings. At the same time the boards will receive a notification. At this time the boards are instructed to notify the member of their options to repay or provide them a chance to be heard by the board.


Excess Action:Options for the board to respond with.

Jane Doe

Jane Doe

Jane Doe

Jane Doe

Jane Doe

Jane Doe

Upload copies of your letter to member.

The retirement board must submit to PERAC what, if any, action was taken against the member as a result of the member being found in excess. A reminder notice will be sent every 30 days until a response is sent to PERAC.


NOTES:


Board Hearings Regarding 91A Matters

§ Very rarely does PERAC get invited to a hearing for 91A compliance issues. The boards do a great job working with their members to try to bring them into compliance.

§ Hearings can be held to coincide with a board’s monthly meeting, even if it goes beyond PERAC’s thirty-day notice.

§ Members contesting an excess amount may request a hearing with their retirement board if the matter cannot be resolved over the phone. Many times an incorrect figure is being used, which we can amend as long as we are given the chance.

§ If the board and the member cannot agree on a resolution, or if the board would like PERAC in attendance to explain our method used to determine the excess, a representative from PERAC will make every attempt to attend.

79


Fraud Prevention Unit Contacts

§ Reach us by email, phone, or by fax


§ PERAC’s Fax: (617) 628-4414

§ Fraud Hotline: (800) 445-3266 or [email protected]

Fraud Prevention Unit Extensions/Email AddressesKenneth Hill, Assistant Deputy Director Ext. 945 [email protected]

Sandra King, Fraud Prevention Manager Ext. 947 [email protected]

Tracey Legaski, Administrative Assistant Ext. 950 [email protected]

80

Sandy

Looks great

Natacha Dunker

Thanks Sandy!


NOTES:

INVESTMENTS/COMPLIANCEPRESENTER: JOHN GALVIN

Fiduciary Duty

§ A fiduciary’s duty, your role as a member of the retirement board, is owed solely to the members and beneficiaries of the system.

81


Procurement

Procurement — Explains the procurement process

§ Documentation Requirements

§ Required Actions for Proper Procurement (M.G.L. c. 32, § 23B)

§ Fiduciary Responsibilities

82

https://www.mass.gov/doc/procurement/download


NOTES:


The Competitive Bid Process

The Competitive Bid Process — Detail example of hiring an investment consultant

§ Competitive Process

§ Open & Fair Process

§ Objective

83


Sample Questions to Ask to Vendors

§ What services and advice can you provide?

§ Ask if they monitor the boards’ investments, including the frequency and any material limitations. If so, indicate whether or not the services described are offered as part of your standard services.

§ How will you choose investments to recommend to the board?

§ What is your relevant experience, including your licenses, education and other qualifications?

§ What do these qualifications mean?

§ What fees will be paid?

§ Help me understand how these fees and costs might affect the investments.

84

https://www.mass.gov/doc/the-competitive-bid-process/download

Thomas O'Donnell

@[email protected]

Thomas O'Donnell

John Galvin will be solo on this road trip. Please remove my name from the slides. Thanks,Tom

Natacha Dunker

Thanks, will do Tom!


NOTES:


Sample Questions to Ask to Vendors (Continued)

§ If we give you $1,000,000 to invest, how much will go to fees and costs, and how much will be invested for me?

§ How might your conflicts of interest affect me, and how will you address them?

§ How do you make money?

§ Do you or your firm have legal or disciplinary history?

§ Who is my primary contact person?

§ Who can I talk to if I have concerns about how this person is treating me?

§ What is the return, risk, and cost of the investment?

85


Understanding Investments

Understanding Investments

§ Asset Classes explained

§ Selecting an Investment Manager

§ Outline of the Competitive Process

86

https://www.mass.gov/doc/understanding-investments/download


NOTES:


Mutual Fund Fees and Expenses

Mutual Fund Fees and Expenses§ SEC study on how investment fees and expenses impact returns§ If you don’t understand the fees then ask!

87


PRIM

THERE ARE TWO WAYS TO INVEST WITH PRIM§ AS A PARTICIPATING SYSTEM:

o A “Participating System” elects to transfer all its assets to PRIM. Mandatory five-year period of participation. An affirmative decision by the Retirement Board requires notification to chief executive officer and legislative body having jurisdiction over the Board and the PRIM Board.

§ AS A PURCHASING SYSTEM:

o A “Purchasing System” elects to invest some or all of its assets in the total PRIT Fund, or in the asset class sleeves offered by PRIM through “Segmentation”. A majority vote of the Retirement Board is all that is required to become a Purchasing System. No minimum dollar investment period. A Retirement Board may terminate its relationship with 30 days’ notice per PRIM’s Operating Trust.

88

https://www.mapension.com/invest-with-us/

https://www.mass.gov/doc/investment-fees-mutual-fund-fees-and-expenses/download


NOTES:


Perform Regular Reviews

§ Review Investment and accounting matters

§ Review Funding and budget matters

§ Accounting reports for prior month end– Investment Statements, Cash Receipts & Disbursements, Journal Entries, Checking account statement and reconciliation

§ Have representative from vendors — you pay for their services — they answer to you.

§ Are they meeting your goals/their deliverables?

89


Useful Sites

§ SEC — Investment Adviser check

§ FINRA — Broker Check

§ National Conference on Public Employee Retirement Systems Webcasts

§ PERAC Compliance and Investments

90

https://adviserinfo.sec.gov/

https://brokercheck.finra.org/

https://www.ncpers.org/center-for-online-learning

https://www.mass.gov/compliance-and-investments-perac


NOTES:


Compliance Unit Contacts



Compliance Unit Extensions/Email AddressesThomas J. O’Donnell, Compliance Director Ext. 922 [email protected]

John Galvin, Compliance Analyst Ext. 927 [email protected]

Rose Morrison, Administrative Assistant Ext. 931 [email protected]

91

ACTUARIAL TOPICS PRESENTER: JOHN BOORACK

Cost of Living Adjustments (COLAs)

§ Board has two separate responsibilities with regard to COLAo Adopting annual COLAo Increasing COLA base

92



NOTES:


Annual COLAs

§ Each year, PERAC sends out COLA Notice (e.g. PERAC Memo #4/2021) which provides the annual COLA rateo Based on Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W)

o Rate in the Notice will be less than or equal to 3.0%

§ Board can vote to approve the rate provided in the COLA noticeo Process must be completed by June 30th

o Must notify PERAC within 30 days of the vote

§ If percentage in the Notice is less than 3.0%, Board can vote to approve a rate up to 3.0%o Legislative Body needs to be notified, but does not need to vote on this action

93


Increase COLA Base

§ Board can vote to increase the COLA base in multiples of $1,000o Board must submit vote to the Legislative Body for approvalo Once a new base is adopted, this becomes the base for all future COLAs

› No need for annual vote to maintain this revised COLA base

o Board and Legislative Body need to vote to approve a subsequent, higher COLA base

94


NOTES:


The Cost of An Increased COLA Base

§ “Rule of Thumb” approximation is that for each $1,000 increase in the COLA base, the actuarial accrued liability increases about 0.5%o Unfunded actuarial liability would increase

more because the assets remain unchanged

§ It applies to all current and potential retirees of the system

§ The increased costs form a pyramid

CALENDAR YEAR

Year of COLA 2021 2022 2023 2024 … 20xx

20xx $30

… … …

2024 $30 … $30

2023 $30 $30 … $30

2022 $30 $30 $30 … $30

2021 $30 $30 $30 $30 … $30

95


Unfunded Actuarial Liability and Funded Ratio

§ Two different ways to compare the actuarial value of assets (AVA) to the actuarial accrued liability (AAL)

§ Unfunded Actuarial Liability = AAL – AVAo Dollar basis

§ Funded Ratio = AVA / AALo Percentage basis

§ Fully Fundedo A plan is fully funded when UAL = $0 / when funded ratio = 100%

96


NOTES:


Actuarial Assumptions

§ Demographico Retiremento Disabilityo Death/Mortalityo Termination/Withdrawal

§ Economico Investment return assumptiono Salary increaseo Inflationo COLA percentage

97


Actuarial Assumptions (Continued)

§ Assumptions are set by the Boardo Based on the advice of the Actuary

§ Board determines the Investment Return Assumption/Discount Rateo Actuary performs analysis and recommends an assumption

o Board either follows the recommendation or selects its own assumption

§ Most other assumptions are determined based on an Experience Study

98


NOTES:


Investment Return Assumption

§ One of the principal assumptions – because it affects all plan members

§ Long-term assumption

§ Reviewed annually by actuaries

§ Inverse relationship with actuarial accrued liability (AAL)o Decrease in the assumption increases AALo Increase in the assumption decreases AAL

99


Actuarial Funding

§ Purpose is to accumulate assets in an orderly fashion that are sufficient to pay all promised benefits to current plan members (active and retired)

§ Chapter 32 requires plans to be fully funded no later than June 30, 2040

§ If the plans had been funding since inception, they would be fully funded now (if all actuarial assumptions had been exactly realized)o Actuarial losses and changes to assumptions/plan provisions have all served to increase the actuarial

accrued liability

§ Actuarial funding didn’t begin until early 1990’s, therefore we are playing a catch up gameo Until then, the plans operated on a “pay-as-you-go” basis – only paid the retiree benefits due in any

given year

100


NOTES:


Funding Schedules

§ Schedule adopted by the Board is a strategy to become fully funded by a certain date, if all assumptions are exactly realized

§ The schedule must follow certain rules/requirements as set out in Chapter 32

§ Plan must be fully funded by June 30, 2040o PERAC recommends fully funded by end of FY35 – provides some flexibility

§ Consists of Normal Cost and Past Service Costo Could include other add-ons

› ERIs, Expenses, Net 3(8)(c) payments, Pension Holidays

101


Funding Schedules (Continued)

§ Unfunded Actuarial Accrued Liability = Actuarial Accrued Liability minus Plan Assets§ Past Service Cost = Amortization of Unfunded Actuarial Accrued Liability

102

PRESENT VALUE OF FUTURE NORMAL COSTS

ACTUARIAL ACCRUED LIABILITY

NORMAL COST

PAST SERVICE COST

ANNUAL ACTUARIAL FUNDING REQUIREMENT

UNFUNDED ACTUARIALACCRUED LIABILITY

PLAN ASSETS


NOTES:


Funding Schedules (Continued)

103


Annual Appropriations

§ Funding schedule determines the annual contributions to the pension fund§ This cost is split between the different employers/governmental units within the plan

§ Several methods to allocate the cost to different unitso Payroll Method (Statute)

› Allocation based on September 30 pay for each unit to total pay

o Actuarial Method*› Allocation based on the liability each unit contributes to the total liability

o Other reasonable methods*› Valuation pay method – Similar to payroll method but use the pay determined in the most recent valuation for each unit

*must be adopted by the Board.

104


NOTES:


Actuarial Unit Contacts



105

Actuarial Unit Extensions/Email AddressesJohn Boorack, Actuary Ext. 935 [email protected]

Timothy Larkin, Senior Actuarial Analyst Ext. 932 [email protected]

Michael Humbert, Senior Actuarial Analyst Ext. 933 [email protected]

Kathleen Smolak, Actuarial Analyst Ext. 958 [email protected]

Sherry Brooks-Ross, Benefit Calculations Specialist Ext. 930 [email protected]

Related Links on PERAC website:• PERAC UNITS: mass.gov/service-details/perac-units• PERAC REGULATIONS: mass.gov/lists/perac-regulations• COMMISSION POLICIES: mass.gov/lists/commission-policies• PERAC EDUCATION INFORMATION: mass.gov/perac-education• MASSACHUSETTS PUBLIC RETIREMENT SYSTEMS:

mass.gov/massachusetts-public-retirement-systems• RECENT PERAC UPDATES: mass.gov/service-details/recent-perac-updates• CONTACT US: mass.gov/service-details/perac-staff-directory

Compliance Unit Guides:• Procurement: mass.gov/doc/procurement/download• Competitive Bid Process: mass.gov/doc/the-competitive-bid-process/download• Understanding Investments: mass.gov/doc/understanding-investments/download• Mutual Fund Fees & Expenses:

mass.gov/doc/investment-fees-mutual-fund-fees-and-expenses/download

Other related links:• Securities and Exchange Commission/Investment Adviser Check: adviserinfo.sec.gov/• FINRA Broker Check: brokercheck.finra.org/• National Conference on Public Employee Retirement Systems Webcasts:

ncpers.org/center-for-online-learning

https://www.mass.gov/doc/the-competitive-bid-process/download

https://www.mass.gov/service-details/perac-staff-directory

https://www.mass.gov/doc/procurement/download

https://www.mass.gov/doc/understanding-investments/download

https://www.mass.gov/doc/investment-fees-mutual-fund-fees-and-expenses/download

https://adviserinfo.sec.gov/

https://brokercheck.finra.org/

https://www.ncpers.org/center-for-online-learning

https://www.mass.gov/service-details/perac-units

https://www.mass.gov/lists/commission-policies

https://www.mass.gov/service-details/recent-perac-updates

https://www.mass.gov/perac-education

https://www.mass.gov/massachusetts-public-retirement-systems

NOTES:


NOTES:

MRETIREMENT ON-RAMP (9/28/2021)| 51

COMMONWEALTH OF MASSACHUSETTSPublic Employee Retirement Administration CommissionFive Middlesex Avenue, Suite 304 | Somerville, MA 02145Phone: 617-666-4446 | Fax: 617-628-4002TTY: 617-591-8917 | Web: www.mass.gov/perac

Documents

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