State Retiree Benefits Fact Sheet – Massachusetts

  • December 18, 2007
Massachusetts' pension system for its teachers is in weaker shape than most states, while its state employee system is about on par with the national average. On an aggregate basis, the state underfunded its annual required contributions in 2003 and 2004, but has done a better job of keeping up with those payments in the last two years. Massachusetts faces a substantial long-term bill for retiree health care and other non-pension benefits: $13.3 billion for state employees, if it doesn't consistently fund the actuarial required contribution. (In Massachusetts, non-pension benefit costs for teachers will appear at the local level.) But Massachusetts is one of the most aggressive states in putting aside money to cover that bill—in fiscal year 2008 the state fully funded its annual required contribution of about $1.1 billion. That is smart fiscal policy, because the interest the state is likely to earn when it invests more money over the long term can be applied to paying down the bill. So if Massachusetts makes its full contribution each year, it can cut the $13.3 billion long-term bill to $7.6 billion.