The pension fund that serves Greater Boston transit workers needs roughly $1 billion over 18 years to stay solvent, according to a system executive.
“The coming years will require increasingly large taxpayer contributions as well as MBTA employee contributions to keep the fund afloat,” Brian Shortsleeve, general manager of the Massachusetts Bay Transportation Authority, told the authority’s fiscal oversight board on Monday.
“Without immediate and decisive action to put the plan on a more sustainable path we will face only bad choices to pay for retiree benefits,” Shortsleeve said of the MBTA Retirement Fund.
According to Shortsleeve, retirees drawing benefits exceed current workers paying into the $1.6 billion system by nearly 900.
Options, according to Shortsleeve, include a pension surcharge on fares, diversion of capital investment funds to cover pension liability, and a taxpayer bailout through state legislation.
Employees of the “T,” as locals call the system, receive both a full pension and Social Security benefits, unlike other state workers.
Gov. Charlie Baker has recommended merging the MBTA pension system into the state-run Pension Reserves Investment Management Board.
“The state system is about 20 times as big and outperforms the MBTA as a standalone system, and I would hope the folks on the [MBTA] side take this seriously because clearly something’s got to change,” said Baker.
Free-market think tank Pioneer Institute in December called for such a move, urging the oversight board to work with Baker, labor leaders and lawmakers to move the fund out of Social Security, institute a new pension structure for all retirement fund members and develop a plan to phase out the fund and move it into PRIM.
State lawmakers must approve any fare increases and the Boston Carmen’s Union, Local 599, must approve any benefit changes.
The pension fund is roughly 75% publicly funded, but has long existed as a private trust, shrouded in secrecy.
Controversy has long engulfed the pension fund, which began in the late 1940s when the MBTA’s predecessor, the Metropolitan Transit Authority, absorbed bankrupt private systems.
Backed by a 1973 state Supreme Judicial Court ruling, the fund has resisted efforts to release pension data in the face of a sunshine provision to a 2009 transportation law and repeated prodding from transparency advocates, who cite the public contributions toward pension costs.
The T, through farebox revenues and state grants, funds about three-fourths of the pension system.
In 2014, the fund revealed that it lost a $25 million investment in an apparent Ponzi scheme through a hedge fund run by bankrupt Fletcher Asset Management.