A recent Boston Herald article highlighting some of Massachusetts’ largest public pensions produced eye-catching numbers. A retiree receiving $200,000, $250,000 or $300,000 a year attracts attention.
But those numbers alone create a misleading impression about what public pensions actually cost taxpayers.
I am a retired pension actuary with four decades in the pension field and more than 30 years on a municipal retirement board. A serious discussion about public pensions requires substituting facts for impressions.
Perhaps the most important missing fact is what employees themselves pay. Most Massachusetts public employees hired since 1996 contribute 9% of regular compensation, plus 2% above $30,000 — more than 10% of salary for most career employees, every year for decades.
And those contributions are invested.
Consider an employee starting at $75,000, receiving 4% annual raises and working 30 years. That employee would contribute approximately $445,000.
At an 8% investment return, those same contributions grow to approximately $1.34 million.
That additional value remains in the retirement system, financing benefits and reducing what taxpayers otherwise would contribute.
And this is not theoretical. Over roughly four decades, most Massachusetts retirement systems have generated average annualized returns of 8% to 9% or better, with Wellesley and Haverhill approaching 10%.
The Herald itself reported that the PRIT Fund earned $14.7 billion in fiscal 2026, a 12.7% return, and grew to a record $129.5 billion even after paying benefits. Investment earnings dramatically reduce pension costs ultimately borne by taxpayers.
Other facts also get lost amid attention to large checks. Massachusetts pensions are generally based on “regular compensation,” not total earnings. Overtime, most bonuses, severance and unused vacation and sick leave generally are excluded. The notion that employees can load up on overtime before retirement and “pad” their pensions is wrong.
None of this means taxpayers bear no cost. Employers have real pension costs, including disability and survivor benefits. Massachusetts also deliberately provides richer benefits to police officers, firefighters, and certain other public-safety employees. Their greater risks and physical demands often justify shorter careers and earlier retirement. Those benefits have real costs but reflect a conscious public-policy decision — not evidence that ordinary public pensions are excessively generous.
But an annual pension check is not the same as its annual cost to taxpayers.
What matters is how much employees contributed, what those contributions earned, the actuarial value of their benefits, and what portion ultimately had to be financed by taxpayers.
Public pensions should absolutely be scrutinized. But that scrutiny should be based on actuarial economics, not eye-catching pension checks.
The Herald told its readers how large some pension checks are. It didn’t tell them what those pensions actually cost taxpayers — or who actually paid for them. Those are the facts that matter.
Let’s substitute facts for impressions.
David Kornwitz