Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same as follows:
SECTION 1. Notwithstanding any general or special law to the contrary, there is hereby established in the town of Lincoln a trust fund to be known as the Group Insurance Liability Fund, as set out in sections 2 to 4, inclusive, for the purpose of funding the town’s future liabilities for contributions to retired employees’ health insurance premiums.
SECTION 2. As used in this act, the following words shall have the following meanings:
“Normal cost of post-retirement benefits”, that portion of the actuarial present value of future premium costs or claim costs payable by the town on behalf of, or direct payments payable by the town, to retired employees, including school teachers, of the town and the eligible surviving spouses or dependents of deceased employees, including school teachers, of the town, under this act which is allocable to a particular fiscal year, as determined by an actuary under section 4.
“Post-retirement benefit liability”, the present value of the town’s obligation for future premium payments and claim costs on behalf of, or direct payments to, retired and prospectively retired employees of the town and the eligible surviving spouses or dependents of deceased and prospectively deceased employees of the town attributed by the terms of the plan to employee’s service rendered to the date of the measurement under this act, as determined by an actuary under section 4.
“Unfunded post-retirement benefit liability”, the difference between the post-retirement benefit liability on the measurement date and the actuarial value of the assets of the Group Insurance Liability Fund on the same date, as determined by an actuary.
“Unfunded post-retirement benefit liability amortization payments”, the amount which, when paid into the Group Insurance Liability Fund annually over a period of years together with the normal cost of post-retirement benefits for each year of that period of years, will reduce to zero at the end of that period the unfunded post-retirement benefit liability in existence as of the beginning of the period as determined by an actuary.
SECTION 3. The town treasurer shall manage the Group Insurance Liability Fund in consultation with the board of selectmen and the town administrator. The fund shall be credited with all amounts appropriated or otherwise made available by the town for the purposes of meeting the current and future cost of premiums payable by the town on behalf of, or direct payments payable by the town to, retired employees of the town and the eligible surviving spouses or dependents of deceased employees of the town under this act, and the town shall be expressly authorized to appropriate or otherwise make available funds for such purposes. Amounts in the fund, including any earnings or interest accruing from the investment of these amounts, shall be expended only for the payment of these premiums or direct payments, except as otherwise provided in this act, and only in accordance with a schedule of payments developed by the actuary in consultation with the board of selectmen. Subject in each instance to the approval of the town administrator, the town treasurer shall invest and reinvest the amounts in the fund not needed for current disbursement consistent with the prudent investor rule and sections 3, 4, 5, 8 and 9 of chapter 203C of the General Laws. The treasurer may employ any qualified bank, trust company, corporation, firm or person to advise it on the investment of the fund and may pay for this advice and other services as determined by the board of selectmen.
SECTION 4. An actuary shall determine, as of January 1, 2009 and not less frequently than every second year after that date, the normal cost of post-retirement benefits, the post-retirement benefit liability and the unfunded post-retirement benefit liability. All these determinations shall be made in accordance with generally-accepted actuarial standards, and the actuary shall make a report of these determinations. The report shall, without limitation, detail the demographic and economic actuarial assumptions used in making these determinations, and each report after the first report shall also include an explanation of the changes, if any, in the demographic and economic actuarial assumptions employed and the reasons for any changes. The report shall also include a comparison of the actual expenses by the town for premium or direct payments constituting the post-retirement benefit liability during the period since the last determination and the amount of these expenditures which were predicted under the previous report for that period.
The actuary, in consultation with the board of selectmen, shall establish a schedule of annual payments to be made to the Group Insurance Liability Fund designed to reduce to zero the unfunded post-retirement benefit liability. This schedule shall reduce the initial unfunded post-retirement benefit liability over a period of years not to exceed 30. Any additional unfunded liability created after the last such determination by the provision of any new benefit or by any increase in the premium share payable by the town shall be separately amortized over the 15 years following the date of the determination in which the additional liability was first recognized. Each annual payment shall be equal to the sum of the unfunded post-retirement benefit amortization payment required for that year and the payments required to meet the normal cost of post-retirement benefits for the fiscal year.
All payments for the purposes of meeting the town’s share of premium costs for direct payments to retired employees of the town and the surviving spouses or dependents of deceased employees of the town under this act shall be made from the Group Insurance Liability Fund in accordance with a schedule of disbursements established by the actuary.
SECTION 5. This act shall take effect upon its passage.
Approved January 10, 2009