SECTION 1. Section 1 of chapter 32 of the General Laws, as appearing in the 2020 Official Edition, is hereby amended by striking the definition of “Beneficiary'' and inserting in place thereof the following new definition:-
“Beneficiary”, any person who is owed a retirement pension, is paid a retirement pension, is paid an early retirement pension or is paid a survivor’s pension or a person entitled to any present or potential benefit on account of membership of a person other than himself, under the provisions of sections one to twenty-eight, inclusive. Beneficiaries include, but are not limited to: (i) newly hired state employees and current workers owed a pension obligation as part of their employment agreement that can only be collected decades from now, upon retirement; (ii) new retirees who are eligible and are starting to collect their monthly financial payments owed as part of the pension obligation; (iii) The oldest retirees who continue to collect their monthly financial payments owed as part of the pension obligation, regardless of their age; and (iv) Massachusetts taxpayers who guarantee pension obligations are fulfilled in the event a pension fund fails to meet that obligation on its own.
SECTION 2. Said section 1 of chapter 32 is hereby amended by striking the words "Commonwealth's Pension Liability Fund" and replacing it with the following:- "Commonwealth Pension Promise Fund".
SECTION 3. Said section 1 of said chapter 32 is hereby further amended by inserting after the definition of “Date the system becomes operative” the following new definition:-
“Dignified retirement”, The outcome of a successful pension fiduciary-beneficiary social contract and the intention of the Commonwealth Pension Promise Fund is a dignified retirement with financial security and environmental/social security.
SECTION 4. Said section 1 of said chapter 32 is hereby further amended by inserting after the definition of “District” the following new definitions:-
“Divestment”, the act of selling securities and other assets held by the Commonwealth Pension Promise Fund for breaches of fiduciary duty to comply with the obligation to deliver to beneficiaries a dignified retirement and fulfil the Duty of Care, Duty of Loyalty and Duty of Impartiality, among other specific/explicit duties.
“Duty of Care”, the explicit fiduciary duty to protect the best interests of beneficiaries without harm to others.
“Duty of Impartiality”, the explicit fiduciary duty to diverse beneficiaries in protecting the interests of one beneficiary class without harming another beneficiary class. See “Intergenerational loyalty”.
“Duty of Loyalty”, the explicit fiduciary duty to perform the duties of a fiduciary in the best interests of the beneficiary, regardless of the fiduciaries’ other points of view.
“Duty to a Common Good”, the explicit fiduciary duty to meet the foundational imperative of public pensions to manage the funds to meet the obligation as a public good.
“Duty to a Safe Future”, the explicit fiduciary duty to invest in fiduciary-grade enterprises that do not create negative externalities that accrue to future beneficiaries.
“Duty to Monitor”, the explicit fiduciary duty to ensure that non fiduciary third-party vendors are transparent, compliant with Commonwealth law and fulfilling the fiduciary duty of the fiduciary trustees held accountable for the actions of the non-fiduciary third party.
“Duty to Negotiate”, the explicit fiduciary duty to acknowledge the purchasing power of public pensions to negotiate with fiduciary-grade enterprises better terms that meet fiduciary values.
SECTION 5. Said section 1 of said chapter 32 is hereby further amended by inserting after the definition of “Employee” the following new definition:-
“Environmental, Social, Governance (“ESG”)", “ESG” stands for environmental, social, and governance. ESG investing is a way of investing in companies based on their commitment to one or more ESG factors. It is often also called sustainable investing, socially responsible investing, and impact investing.
The environmental factor may focus on a company’s impact on the environment or the risks and opportunities associated with the impacts of climate change on the company, its business and its industry. The social factor may focus on the company’s relationship with people and society, or whether the company invests in its community. The governance factor may focus on issues such as how the company is run and executive compensation.
SECTION 6. Said section 1 of chapter 32 of the General Laws is hereby amended by striking the definition of “'Fiduciary” and inserting in place thereof the following new definition:-
''Fiduciary'', any person who exercises any discretionary authority or discretionary control respecting management of the funds of any retirement system or exercises any authority or control respecting management or disposition of its assets on behalf of its beneficiaries. Fiduciaries have important responsibilities and are subject to standards of conduct because they act on behalf of participants in a retirement plan and their beneficiaries. These “Duties”, defined specifically above, include broadly: (i) Acting solely in the interest of plan participants and their beneficiaries and with the exclusive purpose of providing benefits to them; (ii) Carrying out their duties prudently; (iii) Following the plan documents Diversifying plan investments; and (iv) Paying only reasonable plan expenses.
SECTION 7. Said section 1 of said chapter 32 is hereby further amended by inserting after the definition of “Fiduciary” the following new definitions:-
“Fiduciary Duty”, the legal and professional obligation of persons or institutions entrusted to manage the best interests of a beneficiary, including but not limited to the eligible beneficiaries of the Commonwealth’s public pensions. A Full Expression of Fiduciary Duty is two parts, pertaining to but not limited to, management of the Commonwealth’s public pensions as a public good through (i) financial performance and (ii) the protection of future social and environmental benefits.
“Fiduciary Malpractice”, includes breaches, intentional or otherwise, of the explicit fiduciary standards as outlined in chapter 32.
“Fiduciary Minimums”, sufficient cash flow, generated through fiduciary-grade investments and as required by actuarial forecasts, that support the provision of retirement benefits – financial, social and environmental – to current and future members and the general public.
“Fiduciary Money”, the cash and/or cash value held in the actuarial risk pool, designed by actuaries to deliver on the pension promise.
“Fiduciary-Grade Investments”, an investment that generates fiduciary minimum returns, such as cash flows, without creating or reckoning with negative externalities harmful to the future.
SECTION 8. Said section 1 of said chapter 32 is hereby further amended by inserting after the definition of “Hospital district” the following new definitions:-
“Intergenerational loyalty”, a unique obligation of public pension plans with their diverse sets of beneficiaries. See Duty of Impartiality. One subset of beneficiary, like current retirees, cannot benefit at the expense of another subset of beneficiary, like current workers not yet eligible to collect their owed pension promise.
“Loss”, financial, social and environmental setbacks, now or in the future, created by pension investment strategies. Fiduciary duty is more than financial performance, but includes a reckoning with negative externalities that also constitute a loss to future beneficiaries collecting their pension promise.
SECTION 9. Said section 1 of said chapter 32 is hereby further amended by inserting after the definition of “Membership service” the following new definition:-
“Negative Externalities”, long-term damage or degradation to environmental, social and other public goods from current activities, like nonfiduciary financial investments, that accrue to the future and future beneficiaries/youngest beneficiaries owed a pension promise.
SECTION 10. Said section 1 of said chapter 32 is hereby further amended by inserting after the definition of “Pension fund” the following new definition:-
“Pension Promise”, a social contract, with terms and conditions, between public pension fiduciaries guided by explicit fiduciary duties and their eligible pension beneficiaries to deliver regular payments of financial support upon the retirement date of the beneficiary. Beneficiaries who are still working and/or are not yet eligible to receive retirement payments as per the pension promise are still owed a pension promise whenever they are eligible to retire in the future.
SECTION 11. Said section 1 of said chapter 32 is hereby further amended by inserting after the definition of “Prior service” the following new definition:-
“Public good”, public pensions are designed, firstly, as a public good to support elderly Americans with financial security to the larger benefits accruing to workers, taxpayers, the economy and the Commonwealth. Preserving the public good enshrines the fund’s financial obligation to current retirees who have earned their retirements through a career of public service.
SECTION 12. Said section 1 of said chapter 32 is hereby further amended by inserting after the definition of “Retirement system funding schedule” the following new definition:-
“Scale”, the financial size and economic influence of public pensions, compared to other financial funds, in fulfilling the pension promise.
SECTION 13. Said section 1 of said chapter 32 is hereby further amended by inserting after the definition of “Service” the following new definition:-
“Social Contract”, the agreement, with terms and conditions, of a pension promise between a fiduciary and beneficiary owed that pension promise.
SECTION 14. Said section 1 of said chapter 32 is hereby further amended by inserting after the definition of “Special fund for military service credit” the following new definitions:-
“Speculation”, a type of investment strategy that gambles fiduciary money on markets and exchanges and other financial forums that manage market-clearing prices and share value of securitized assets and must be reviewed for breaches of fiduciary duty.
“Standing”, the legal entitlement of a beneficiary to challenge fiduciary duty and potential breaches of fiduciary duty. Commonwealth taxpayers, as sponsors of the public pensions, have standing to challenge fiduciary performance.
SECTION 15. Said section 1 of said chapter 32 is hereby further amended by inserting after the definition of “State police surgeon” the following new definitions:-
“Stewardship”, the safer alternative path investment strategy that curates a healthy future for all beneficiaries owed a pension promise, and the general public.
“Sufficiency”, the level of cashflow return from financing activities needed to meet actuarial minimums and costs in order to manage the pension plan for as long as it is obligation to deliver a pension promise.
SECTION 16. Said section 1 of said chapter 32 is hereby further amended by inserting after the definition of “Teacher” the following new definition:-
“Third-party Experts, Consultants, Vendors, Offerors, Asset Managers”, nonfiduciary individuals or entities contracted and awarded with public pension money to generate financial returns from pension fund fiduciary monies in accordance with agreed strategy.
SECTION 17. Said chapter 32 is hereby amended by adding the following 2 new sections:-
Section 106. Purpose of the Commonwealth Pension Promise fund
The Commonwealth Pension Promise Fund, shall, by a social contract called a “pension promise”, provide regular financial payments to eligible pension beneficiaries for as long as a beneficiary is alive. The purpose extends to fiduciary duty practices that meet fiduciary minimum cash flows invested in fiduciary-grade enterprises that have no or minimized negative externalities or social/environmental damage that accrue to future or youngest beneficiaries owed a dignified retirement equal to those dignified retirements of the beneficiaries before them.
Section 107. Pensions as public goods
Public Pensions shall be public goods, in keeping with their historical development to assist older Commonwealth citizens for the benefits of workers, taxpayers, society and the economy. The public good enshrines a retiree’s right to receive pension benefits whenever they retiree and if they are already retired.
SECTION 18. Section 23(3) of chapter 32 of the General Laws, as appearing in the 2020 Official Edition, is hereby amended by striking the definition of “Fiduciary Standards” in its entirety and inserting in place thereof the following new definition:-
"Fiduciary Standards”, A fiduciary as defined in section 1 shall execute the Duties of Care, Loyalty and Impartiality along with the Duties of Negotiation, A Safe Future and Common Good, as outlined in section one and in keeping with the care, skill, prudence and diligence of a reasonable person acting in a stewardship manner, as defined in section one. A Fiduciary’s purpose is to deliver the pension promise, as described in Section 1(a), that is made to all eligible public pension beneficiaries and members, regardless of their age, employment status with the state or retirement status to contribute to a dignified retirement and, additionally, a public good, as describe in Section 1(b) for all Commonwealth taxpayers who contribute as sponsors to any underfunded position. A Pension Promise is two-fold: 1) Providing a regular payment of financial support in keeping with a dignified quality of life and 2) protecting the social and environmental benefits that contribute to that dignified retirement.
Fiduciaries, on their own or through a non-fiduciary consultant, advisor or hired cash flow manager, must meet the annual minimum fiduciary return through fiduciary-grade investments, as outlined in section 1, that generate sufficient cash flows, minimum or no long-term negative externalities, as outline in section 1.
Fiduciary-grade investments must meet the goals of diversification, risk mitigation for current and future retirees, and stewardship strategies that minimize the risk of large financial and environmental losses. Where a fiduciary makes a non-fiduciary choice that breaches any of the explicit duties in managing the public pension, that choice must be defended in a full public disclosure before that choice is executed.
Losses are defined in section 1. Each member of a retirement board established under this chapter shall, upon the commencement of the member's term, file with the commission a statement acknowledging the member is aware of and will comply with the standards set forth in chapter 268A, this chapter and rules and regulations promulgated under this chapter.
Pension beneficiaries, members and citizens with standing as defined in section 1 can challenge, in legal and other forums, the fulfilment of fiduciary duty and the actions of fiduciaries on the grounds that the Duties of Care, Loyalty and Impartiality, Negotiation, A Safe Future and Common Good have been breached.
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