ATTENTION MEMBERS OF THE TAUNTON RETIREMENT SYSTEM
In light of the dire economic news coming from Washington and Wall Street over the past month the City of Taunton Retirement Board, which is responsible for your pension, would like to ease your concerns as to how the current economic crisis impacts on your retirement benefit.
To be clear, Massachusetts’ public pensions are perfectly safe and secure. Retirees and employees have a contractual right to your pension benefit and it cannot be reduced or taken away. Besides, our defined benefit system is designed to withstand the ups and downs of the global financial market. These are serious times for our country, but thankfully our pensions are not in jeopardy.Unlike defined contribution (DC) plans, such as 401k retirement accounts whereby employees make investment choices through mutual funds, Massachusetts public retirees and employees are enrolled in a defined benefit (DB) plan, in which asset allocation decisions are made by the local retirement board through a well diversified portfolio of investment managers.
Pension benefits under DB plans are based on one’s years of creditable service, age, and highest consecutive three-year regular compensation average. In contrast, DC plans depend entirely on the investment performance of one’s 401k or other retirement account, rising and falling with the market.
Here in Taunton, our Retirement Board members and staff maintain regular contact with our professional investment consultant. We closely monitor all changes in the financial markets and feel that our asset allocation can and will withstand these tough times. While we hoped to never have to experience such poor market conditions, changes were made to our investment portfolio in recent years that better protect the fund during downturns. Those allocations are now working as designed.There seems to be little doubt that the coming months will be trying times for our economy. Rest assured that your pension and retirement security is safe. If you have any questions or concerns, please feel free to contact any member of the Retirement Board or our Board’s staff.
Most Sincerely,Taunton Retirement Board
