Amendment #849 to H4000
Relative to reporting standards for retirement systems
Representatives O'Connell of Taunton, Diehl of Whitman and Kuros of Uxbridge move to amend the bill by adding the following section:-
“SECTION XXXX: Chapter 32 is hereby amended by inserting after Section 20C the following section:
SECTION 20E. (1) Extraordinary-Status Retirement System. – For the purposes of this section, the words “extraordinary-status retirement system” shall mean any person, corporation, association, trust, partnership or other legal entity which receives or expends public funds for the payment or administration of pensions as defined in Section 1 of Chapter 32 for any current or former employees of the commonwealth, of any constituent unit or of any political subdivision thereof, excluding any retirement system established under the provisions of Section 20 of this chapter, Chapter 34B, the retirement board of the Massachusetts Water Resources Authority and the Pension Reserves Investment Management Board.
(2) Accounting Standards. ¬– (a) Each extraordinary-status retirement system shall prepare annually financial statements according to the standards established by the Governmental Accounting Standards fBoard. Such financial statements shall include all required and optional supplementary information as defined by said standards.
(b) Each extraordinary-status retirement system shall prepare annually an actuarial valuation and shall conduct an experience investigation every five years in accordance with standards established by the Public Employee Retirement Administration Commission and file a copy of the report with every governmental unit of the commonwealth from which it has received funds during any of the previous ten calendar years and with the Public Employee Retirement Administration Commission.
(i) The periodic experience investigation required shall accompany the earliest completed actuarial valuation report occurring after the five-year period covered by the investigation.
(ii) Each extraordinary-status retirement system shall file a copy of its report with every governmental unit of the commonwealth from which it has received funds during any of the previous ten calendar years and with the public employee retirement administration commission.
(iii) The actuarial valuation report shall contain actuarial exhibits, financial exhibits and demographic exhibits. The actuarial exhibits shall be prepared and certified by an enrolled actuary. The remaining exhibits may be prepared by a qualified person other than an enrolled actuary. The financial and demographic exhibits shall be prepared as of the year ending immediately prior to the valuation date.
(iv) All applicable actuarial exhibits shall be prepared in accordance with the entry age normal actuarial cost method with entry age established as the actual entry age for all plan members unless there are compelling reasons of an actuarial nature for the use of an alternative actuarial cost method.
(v) The actuarial cost method shall be used to value all aspects of each extraordinary-status retirement system, unless there are compelling reasons of an actuarial nature for the use of approximation techniques other than the actuarial cost method for aspects of the retirement system other than the retirement benefit.
(vi) The actuarial exhibits shall measure all aspects of the retirement system in accordance with modifications in the benefits, if any, and salaries which as of the valuation date are known or can reasonably be expected to be in force during the ensuing calendar year.
(vii) The actuarial exhibits shall use actuarial assumptions which are, in the judgment of the actuary, the best available estimate of future occurrences in the case of each assumption in the aggregate.
(viii) With respect to economic actuarial assumptions, which shall include estimates of rates of future occurrences concerning, but not necessarily limited to, increases in salary, growth in state revenues, post retirement adjustments, investment earnings, asset appreciation or depreciation and procedures to determine the actuarial value of assets used in the preparation of actuarial valuations of the retirement system and other actuarial calculations, documentation explaining and justifying the choice of assumptions shall be included in the report and shall constitute an inalienable and required part thereof.
(c) The accounting statements and valuation studies for each year shall be completed no later than the end of the following year.
(3) Annual Report. – (a) Each extraordinary-status retirement system shall prepare annually a report which shows the financial condition of the system as of 31 December of the previous year in a manner which can be easily understood by the members of said system. Such report shall contain:
(i) information showing the financial transactions of the previous year;
(ii) statistical information with reference to the membership of the system;
(iii) a summary of the findings of any timely audit reports;
(iv) the board’s investment policy;
(v) a summary of the system’s investment portfolio as of December thirty-first of the previous year;
(vi) the annual financial statements required by subdivision (2);
(vii) information with regard to the system’s most recent actuarial valuation including the unfunded actuarial liability as of the valuation date; and
(viii) a listing of all persons employed by the extraordinary-status retirement system during the year with the corresponding total compensation of each person received from the system during that year.
(b) Each extraordinary-status retirement system shall file a copy of its report with every governmental unit of the commonwealth from which it has received funds during any of the previous ten calendar years and with the Public Employee Retirement Administration Commission.
(c) Each extraordinary-status retirement system shall make available upon request a copy of the report to each member of the system and to any other persons within ten days of such request.
(5) Penalties for Noncompliance. – (a) An actuary who prepares, submits, approves or endorses an actuarial valuation or experience study which does not conform to the standards established in paragraph (b) of subdivision (2) shall be debarred by the meaning of and under the provisions of Section 21A. Any other law or provision notwithstanding, such debarment shall last for a period of at least five years. This paragraph shall apply to both any physical person performing the functions of an actuary that has been found in violation and any legal entity on behalf of which such person is performing those functions pursuant to employment, ownership or contract.
(b) An accountant who prepares, submits, approves or endorses financial statements which do not conform to the standards established in paragraph (a) of subdivision (2), including supplementary information requirements, shall be debarred by the meaning of and under the provisions of Section 21A. Any other law or provision notwithstanding, such debarment shall last for a period of at least five years. This paragraph shall apply to both any physical person performing the functions of an accountant that has been found in violation and any legal entity on behalf of which such person is performing those functions pursuant to employment, ownership or contract.
(c) A person who causes or conspires with another to cause a violation of subdivision (3) of this section shall forfeit and pay to the appropriate retirement board not more than $2,000 for each violation.
(d) Any person who wilfully refuses or neglects to comply with any provision of this section or any rule or regulation established thereunder shall be punished for each such violation by a fine of not more than $1,000 or imprisonment for not more than one year, or both. This punishment shall apply in addition to any payment imposed under paragraph (c) of this subdivision.
(e) Any legal of physical person shall have standing to and may file a civil action in the superior court to enforce paragraph (c) of subdivision (3) and paragraphs (a) and (b) of subdivision (5).
(6) The Public Employee Retirement Administration Commission shall enforce the provisions of this section."