The Massachusetts Retirees Association and the Special COLA Commission deserve credit for focusing attention on a legitimate concern. Many long-retired public employees have seen the purchasing power of their pensions eroded by decades of inflation and rising healthcare costs. I strongly support enhanced benefits for long-term retirees and I support periodic increases in COLA bases when circumstances warrant.
My disagreement is not with the objective. It is with the mechanism being proposed to achieve it.
The Association’s proposal would dedicate a portion of excess pension investment earnings to a reserve fund that could later be used to finance COLA base increases. While this may appear to be a prudent way to fund benefit improvements, it is ultimately an accounting construct that obscures the real policy question…