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SENATE DOCKET, NO. 1512 FILED ON: 1/16/2025
SENATE . . . . . . . . . . . . . . No. 1796
The Commonwealth of Massachusetts
_________________
PRESENTED BY:
Michael D. Brady
_________________
To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
Court assembled:
The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:
An Act relative to pensions and the best interest of beneficiaries.
_______________
PETITION OF:
NAME:DISTRICT/ADDRESS :Michael D. BradySecond Plymouth and Norfolk 1 of 16
SENATE DOCKET, NO. 1512 FILED ON: 1/16/2025
SENATE . . . . . . . . . . . . . . No. 1796
By Mr. Brady, a petition (accompanied by bill, Senate, No. 1796) of Michael D. Brady for
legislation relative to pensions and the best interest of beneficiaries. Public Service.
The Commonwealth of Massachusetts
_______________
In the One Hundred and Ninety-Fourth General Court
(2025-2026)
_______________
An Act relative to pensions and the best interest of beneficiaries.
Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority
of the same, as follows:
1 SECTION 1. Chapter 32 of the General Laws, as appearing in the 2022 Official Edition,
2is hereby amended by striking section 23 in its entirety and inserting the following new section:-
3 Section 23. (1)(a) The funds of the state employees' retirement system and the teachers'
4retirement system and the assets of the Boston retirement system attributable to teachers who are
5members of that system shall be held in the PRIT Fund. The board of each such system shall
6annually, on or before December 31, file in the office of the commissioner, on a form prescribed
7by the commissioner, a sworn statement of the financial condition of the system as of June 30 of
8the prior fiscal year and of all the financial transactions of the system during the previous year.
9The commissioner may, for cause shown, extend the time for filing any such statement.
10 (b) Notwithstanding any general or special law to the contrary, assets of the Boston
11retirement system attributable to teachers who are members of the system shall be invested in the
12PRIT Fund, and for purposes of those assets and the payment of benefits to those teachers and 2 of 16
13their beneficiaries, the Boston retirement system shall be considered a participating system in the
14PRIT Fund, but the system shall not receive a share of any appropriations made under section
1522B or under paragraph (b) of subdivision (8) of section 22, and the board of the system shall not
16be able to revoke this participation.
17 (2) Systems for Counties, Cities and Towns. — (a) The county, city or town treasurer, the
18secretary-treasurer of the Massachusetts Department of Transportation, the treasurer of the
19Massachusetts Bay Transportation Authority, the treasurer of the Massachusetts Housing
20Finance Agency, the secretary-treasurer of the Massachusetts Port Authority, the treasurer of the
21Blue Hills Regional Vocational School system, the treasurer of the Greater Lawrence Sanitary
22District, and the treasurer of the Minuteman Regional Vocational Technical School District shall
23be the treasurer-custodian of the system established under the provisions of sections one to
24twenty-eight, inclusive, or under corresponding provisions of earlier laws, in any county, city or
25town, the Massachusetts Department of Transportation, the Massachusetts Bay Transportation
26Authority, the Massachusetts Housing Finance Agency, the Massachusetts Port Authority, the
27Blue Hills Regional Vocational School system, the Greater Lawrence Sanitary District, or the
28Minuteman Regional Vocational Technical School District, as the case may be, and shall have
29the custody of the funds of any such system. Payments from such funds shall be made by them
30only upon vouchers signed by two persons designated by the board of any such system by a vote
31a duly attested copy of which, bearing upon its face specimen signatures of such persons, shall be
32filed with the treasurer-custodian as their authority for making payments upon vouchers so
33signed. No voucher shall be drawn unless it shall have been previously authorized by vote of the
34board. 3 of 16
35 (b) The board of each system shall invest and reinvest the funds of the system in the
36PRIT Fund under subdivision (8) of section 22, in the PRIT Fund by purchasing shares of the
37fund, as provided for in the trust agreement adopted by the PRIM board under subdivision (2A),
38or under the standards in subdivision (3), provided that: (i) no investment of funds shall be made
39in stocks, securities or other obligations of a company which derives more than 15 per cent of its
40revenues from the sale of tobacco products; (ii) in investing funds the board shall employ an
41investment manager or investment managers who shall invest the funds of the system; and (iii)
42no funds shall be invested directly in mortgages or collateral loans.
43 (c) No investment of funds shall take place until the board has received from the
44commission an acknowledgement of receipt of the following: (i) certification that, in making the
45selection, the board has complied with the process established in section 23B; (ii) a copy of the
46vendor certification required under section 23B; (iii) copies of disclosure forms submitted by the
47selected vendor; (iv) a certification that the investment is not a prohibited investment as set forth
48in regulations of the commission; (v) if the board has retained a consultant, a copy of the
49consultant reports pertaining to the investment and the selected vendor; and (F) a copy of the
50board certification required under section 23B.
51 The commission may withhold the acknowledgement if it determines that it is in the best
52interest of the retirement system; provided, however, that it must so notify the board within 10
53days of receipt of completed documents as required by this section.
54 (d) Prior to the retention of an investment consultant the board shall have received from
55the commission an acknowledgement of receipt of the following: (i) certification that, in making
56the selection, the board has complied with the process established in section 23B; (ii) copy of the 4 of 16
57vendor certification required under section 23B; (iii) copies of disclosure forms submitted by the
58selected consultant; and (iv) copy of the board certification required under section 23B.
59 (e) The board of each such system shall designate one or more banks or trust companies,
60organized under the laws of the commonwealth or of the United States, in which the treasurer-
61custodian shall keep on deposit such sums as may be required for current disbursements;
62provided, that any such sum on deposit in any one bank or trust company shall not exceed ten per
63cent of the amount of the paid-up capital and surplus thereof. The board shall also designate one
64or more such banks or trust companies in which the securities of the system shall be kept under
65the name of the retirement system in one or more safe deposit boxes. The board, subject to rules
66promulgated by the commission, may deposit such securities in a securities depository registered
67with the Securities and Exchange Commission of the United States. Such securities may be kept
68under the joint custody of the treasurer-custodian and a member of the board other than the
69treasurer-custodian, who shall be designated by the board, or such securities may be kept by a
70custodian who shall be designated by the board, which custodian shall be a bank or trust
71company, organized under the laws of the commonwealth or of the United States. The board may
72cause any stock, bond or other security, or cash, of any such system to be registered and held, or
73deposited and held, in the name of one or more nominees appointed by him for the purpose of
74facilitating security trading, money management and certificate delivery. The board shall
75designate the members of any such nominee only from among the following individuals: the
76assistant treasurers of the respective county, city, or town; any employee of a custodian that is
77authorized pursuant to this paragraph to have custody of securities or cash of a system; and the
78treasurer-custodian himself. Each individual so designated shall be covered with respect to their
79service on behalf of any such nominee by a fidelity bond, in such form and amount as the public 5 of 16
80employee retirement administration commission may determine, which coverage may be by
81separate bond or by incorporation in a bond otherwise required by section three of chapter 35e,
82section 35 of chapter 41, section 39 A of chapter 41 or other applicable law or practice. Such
83custodian shall collect the interest and dividends on all securities deposited with it, shall collect
84all called and matured securities deposited with it, and shall deposit the same in a bank or trust
85company as directed by the board; shall advise the board of all such deposits, of all stock
86dividends, rights, calls and maturities of all securities deposited with it; shall purchase, sell,
87deliver, and receive securities on the order of the board; and shall prepare and deliver to the
88board a list, at such time as the board may require, of all securities held by it with their current
89market values. Such custodian may make a reasonable charge for such services.
90 (f) Any person who assists any board or member thereof in the purchase, sale, investment
91or reinvestment of the funds of any such system, without the written consent of the public
92employee retirement administration commission after notice in writing by him to such board or
93member to desist therefrom as provided for in subdivision (4) shall be punished as provided for
94in section 24.
95 (g) The board of each such system shall annually, on or before May first, file in the office
96of the public employee retirement administration commission, on a form prescribed by him, a
97sworn statement of the financial condition of such system as of December 31 of the previous
98year and of all the financial transactions thereof during the previous year. The commission may
99for cause shown extend the time for filing any such statement.
100 (h) The board may employ any qualified bank, trust company, corporation, firm, or
101person to advise it on the investment of the fund and may pay for such advice. 6 of 16
102 (i) (i) Clauses (i) to (vii), inclusive, of paragraph (b) shall not apply to the board of any
103local retirement system which upon application is determined by the commission to have a
104record of investment management which merits broader investment powers, provided that:—no
105funds are to be invested directly in mortgages or in collateral loans;
106 (ii) no new investment of funds shall be made in the stocks, securities or other obligations
107of any company that:
108 (A) acts in a manner that diminishes the economic opportunities available to workers in
109the commonwealth;
110 (B) refuses to uphold worker's rights including the recognition of representative unions
111and their rights to bargain collectively, to strike, to picket peacefully, the establishment of a
112policy that strike breakers will not be hired;(iii) subsequent to the date of such determination no
113new investment of funds shall be made in stocks, securities or other obligations of any company
114which derives more than 15 per cent of its revenues from the sale of tobacco products;
115 (j) Clauses (i), (ii), and (iii) of paragraph (i) shall apply to any retirement system named
116in paragraph (a).
117 (2A) Pension Reserves Investment Management Board. — (a) There shall be an unpaid
118pension reserves investment management board which shall have general supervision of the
119investment and reinvestment of the PRIT Fund established under the provisions of subdivision
120(8) of section 22.
121 Such board shall consist of nine members as follows: the governor, ex officio, or their
122designee, the state treasurer, ex officio, or their designee, who shall serve as chair of the board, a 7 of 16
123private citizen experienced in the field of investment or financial management appointed by the
124state treasurer, an employee or retiree who is a member of the state teachers retirement system
125who shall be elected by the members in or retired from such a system for a term of three years in
126such a manner as the board shall determine, an employee or retiree who is a member of the state
127employees' retirement system who shall be elected by the members in or retired from such
128system for a term of three years in such a manner as the board shall determine, the elected
129member of the state retirement board, one of the elected members of the teachers' retirement
130board, who shall be chosen by the members of the teachers' retirement board, a person who is not
131an employee or official of the commonwealth who shall be appointed by the governor, and a
132representative of a public safety union who shall be appointed by the governor. The appointed
133members shall serve for four years. Any vacancy among the appointed members that may occur
134before the expiration of a term shall be filled by an appointment by the treasurer, or the governor,
135whoever had the right of making the initial appointment. Any appointed member of the board,
136including members appointed to fill a vacancy shall be eligible for reappointment. Any appointed
137member may be removed from their appointment for cause by the treasurer or the governor,
138whoever had the right of making the original appointment.
139 (b) Five members of the board shall constitute a quorum. The members of the board shall
140not receive a salary but shall be reimbursed for actual and necessary expenses. The provisions of
141chapter 268A shall apply to all members of the board; provided, however, that the board may
142make investments in which a member has an interest or involvement if, however, such interest or
143involvement is disclosed in advance to the other members of the board and contemporaneously
144recorded in the minutes of the board; and provided, further, that no member having such an 8 of 16
145interest or involvement may participate in any particular matter, as defined in section one of
146chapter 268 A, relating to such investment.
147 (c) The PRIM board may commingle moneys on deposit in the PRIT Fund for purposes
148of investment; provided, however, that the board shall maintain appropriate records to account
149for amounts credited to particular accounts or funds. The PRIM board may offer to purchasing
150systems, and may allocate to the state employees' and teachers' retirement systems, shares in the
151PRIT Fund which represent undivided interests in specified portions of the assets of the fund
152rather than undivided interests in the whole.
153 (d) The PRIM board shall annually on or before May first, file with the clerk of the house
154of representatives and with the secretary of the retirement board of each system which is a
155participant in said fund, on a form prescribed by the commission, a sworn statement of the
156financial condition of said fund as of December 31 the previous year. The commission may for
157cause shown extend the time for filing any such statement.
158 (e) The PRIM board shall:
159 (i) act as trustees for each participating retirement system for which it invests or manages
160monies in accordance with the standard of care set forth in subdivision (3); provided, however,
161that the duties and obligations of the PRIM board and of participating or purchasing systems
162shall be set forth in a declaration of trust adopted by the PRIM board; and provided, further, that
163any declaration of trust and any amendments thereto adopted by said board shall be subject to the
164approval of the joint committee on public service; and provided, further, that if said committee
165takes no final action relative thereto within 45 days of the date of the filing thereof with the clerk 9 of 16
166of the house of representatives and the senate, such declarations of trust and such amendments
167thereto shall be deemed to be approved;
168 (ii) employ an executive director as provided in paragraph (f);
169 (iii) employ investment advisors, legal counsel, and consultants as it deems necessary;
170 (iv) establish a formula to measure the value of the shares in said fund purchased by or
171held by participating retirement systems and other purchasing retirement systems;
172 (v) determine and allocate annually to participating and other purchasing retirement
173systems earnings on shares owned by said systems;
174 (vi) adopt an annual budget and supplemental budgets as deemed necessary by the board
175subject to the approval of the house and senate committees on ways and means; provided,
176however, that if the said committees has taken no final action to disapprove any such budget,
177within 60 days of its being filed with said general court it shall be deemed to be approved; and
178provided, further, that if the general court disapproves any such budget within such 60 days, said
179board shall operate under the annualized budgetary level most recently approved pending the
180filing and subsequent approval of any other such annual or supplemental request;
181 (vii) approve or ratify decisions of the executive director;
182 (viii) formulate policies and procedures deemed necessary and appropriate to carry out its
183function;
184 (ix) maintain a record of its proceedings; 10 of 16
185 (x) undertake any other activities necessary to implement the duties and powers set forth
186herein.
187 (xi) File quarterly, on or before March first, June first, September first, and December
188first of each year, with the house and senate committee on ways and means and with the joint
189committee on public service a report detailing brokerage transactions, fees paid to investment
190consultants and managers, master trustee and custody fees, a detailed investment portfolio
191analysis describing all holdings in the PRIT Fund, and a budget status report detailing expenses
192by month; provided, however, that said analysis and said reports shall be made available on the
193first day of each month upon the request of the chairman of any said committees.
194 (xii) Assess fees to participating and other purchasing retirement systems for the
195reasonable and necessary expenses incurred by the board in managing the PRIT Fund, which
196shall be paid by the board from earnings of the PRIT Fund without appropriation and in
197conformance with the budgetary levels established pursuant to clause (vi).
198 (xiii) acts as treasurer-custodian of the PRIT Fund and shall have the custody of the funds
199and securities of said fund.
200 (xiv) put a mechanism in place to monitor current market conditions to detect and
201immediately notify the board of potential high-risk corporate investments, so that the board can
202take action, when possible, to prevent investment losses.
203 (f) The PRIM board shall select an executive director who shall serve at the pleasure of
204the board. The provisions of sections 9 A, 45, 46 and 46 C of chapter thirty, chapter 31, and
205chapter 150 E shall not apply to the executive director or any other employees of the board. 11 of 16
206 (g) The executive director, shall with the approval of the board:
207 (i) plan, direct, coordinate and execute administrative and investment functions in
208conformity with the policies and directives of the board;
209 (ii) employ professional and clerical staff as necessary.
210 (iii) report to the board on all operations under his control and supervision;
211 (iv) require state officials from any department or officials from any participating
212retirement system to produce and provide access to any financial documents the board deems
213necessary in the conduct of its investment activities;
214 (v) undertake any other activities necessary to implement the powers and duties set forth
215herein.
216 (h) (i) Subject to the approval or ratification of the PRIM board, the executive director
217shall invest and reinvest such funds held by such board to the extent not required for current
218disbursements
219 (A). as much as reasonably possible to benefit and expand the economic climate within
220the commonwealth;
221 (B). as much as reasonably possible to benefit the best interests of members and
222beneficiaries and the financial and social welfare of workers within the commonwealth
223including, but not limited to, consideration of potential long-term consequences of an investment
224to members ’wages and job security. 12 of 16
225 (C). as much as reasonably possible ensure that funds are invested in banks or financial
226institutions which directly or through any subsidiary may make loans to small businesses, as
227defined in clause (a) of subdivision (7), and that when electing to make such investments the
228board shall review the guidelines for investing in small businesses contained in said subdivision
229(7) and monies shall be invested as much as reasonably possible in such banks, financial
230institutions or companies which provide capital to small businesses under those guidelines so
231long as such use is consistent with sound investment policy in accordance with the procedures
232and processes employed to oversee the allocation of traditional investment of funds, and the
233other requirements of this section.
234 (ii) (A) No public pension funds under this subdivision shall remain invested in the
235stocks, securities, or other obligations of any company which derives more than 15 per cent of its
236revenues from the sale of tobacco products; provided, however, that if sound investment policy
237so requires, the PRIM board may vote to spread the sale of such stocks, securities or other
238obligations of such company over no more than three years, so that no less than one-third the
239value of said investment is sold in any one year.
240 (B) So long as any funds remain invested in any stocks, securities, or other obligations of
241any such company, the PRIM board shall annually, on or before January 31, file with the clerk of
242the senate and the clerk of the house of representatives a report listing all such related
243investments held by the fund and their book value as of the preceding December first. The
244investment and fund management policies adopted by the PRIM board shall not be subject to any
245rules or regulations promulgated by the public employee retirement administration commission
246governing the investment of funds by the retirement boards. 13 of 16
247 (i) at least two members of the PRIT board shall be minority people, as set forth in the
248definition of ''Minority'' contained in section forty C of chapter seven of the General Laws, as
249added by section seven of chapter five hundred and seventy-nine of the acts of nineteen hundred
250and eighty.
251 (j) The PRIM board shall be subject to the provisions of sections 39A and sections 40(E)
252to 40 (J), inclusive, of chapter seven.
253 (3) Fiduciary Standards. — A fiduciary as defined in section one shall:
254 (a) discharge their duties for the exclusive purpose of providing benefits to members and
255their beneficiaries with the care, skill, prudence and diligence under the circumstances then
256prevailing that a prudent person acting in a like capacity and familiar with such matters would
257use in the conduct of an enterprise of a like character and with like aims and by diversifying the
258investments of the system so as to minimize the risk of large losses unless under the
259circumstances it is clearly prudent not to do so.
260 (b) Discharge their duties in the best interests of members and their beneficiaries by
261equally considering investment returns, employer contributions to the fund, and employee
262contributions to the fund.
263 Each member of a retirement board established under this chapter shall upon the
264commencement of the member's term file with the commission a statement acknowledging the
265member is aware of and will comply with the standards set forth in chapter 268A, this chapter
266and rules and regulations promulgated under this chapter. 14 of 16
267 (4) Orders to protect the system. — If the commission determines after a hearing that the
268investment or record keeping practices of any board are not being conducted with reasonable
269care, skill, prudence or diligence, he may order such board to take or desist from any action that
270in his judgment is necessary to preserve the integrity of the system. If the commission has reason
271to believe that the investment and record keeping practices of any board are not being conducted
272with reasonable care, skill, prudence or diligence, he may issue a temporary order which shall
273remain in effect until an investigation, hearing and determination can be made. Violation of any
274such order shall be punished as provided for in section 24.
275 (5) Confidentiality of certain records. Any documentary material or data made or
276received by a member of the PRIM board which consists of trade secrets or commercial or
277financial information that relates to the investment of public trust or retirement funds, shall not
278be disclosed to the public if disclosure is likely to impair the government's ability to obtain such
279information in the future or is likely to cause substantial harm to the competitive position of the
280person or entity from whom the information was obtained. The provisions of the open meeting
281law shall not apply to the PRIM board when it is discussing the information described in this
282subdivision. This subdivision shall apply to any request for information covered by this
283subdivision for which no disclosure has been made by the effective date of this subdivision.
284 (6) The guidelines for investing in small businesses with a principal place of business in
285the commonwealth shall be:
286 (a) For the purposes of this section small business shall be a business entity, including its
287affiliates, that: (i) is independently owned and operated; (ii) has a principal place of business in
288the commonwealth; and (iii) would be defined as a ''small business'' under applicable federal law, 15 of 16
289as established in the United States Code and promulgated from time to time by the United States
290Small Business Administration.
291 (b) Investments shall be made by banks or financial institutions with demonstrated
292experience making capital available to small businesses with good management, which are fast
293growing and identify the potential to use increased capital to create jobs and which are
294experiencing difficulty in accessing capital.
295 (c) Capital shall be provided to small businesses in a variety of financial instruments,
296including but not limited to: working capital and expansion loans to businesses, both secured and
297non-secured; provide lines of credit; capital expenditure loans; term loans; project finance loans;
298grants; loan guarantees; and mezzanine and structured finance loans.
299 (d) Capital shall not be provided unless financial and managerial advisory services are
300also provided to the business that is served.
301 (7)(a) It shall be the policy of the PRIM board to use minority investment managers to
302manage PRIT Fund assets, encompassing all asset classes, and to increase the racial, ethnic, and
303gender diversity of PRIT Fund investments to the greatest extent feasible, consistent with sound
304investment policy. The PRIM board and the executive director shall take affirmative steps to
305remove any barriers to the full participation of minority investment managers in investment
306opportunities. Such affirmative steps shall include, but not be limited to, consideration of
307whether current investment policy discourages the use of minority investment managers through
308quantitative or qualitative restrictions, including, but not limited to, number of years track record
309and minimum assets under management. 16 of 16
310 (b) It shall be the goal of the PRIM board that not less than 20 per cent of investment
311managers be minorities, females and persons with disabilities. It shall further be the goal of the
312PRIM board to utilize businesses owned by minorities, females and persons with disabilities for
313not less than 20 per cent of total contracts awarded pursuant to section 23B.
314 (c) Annually, not later than January 15 of each year, the PRIM board shall file with the
315house and senate committee on ways and means and with the joint committee on public service a
316report detailing its progress toward implementing the policies and goals outlined above. Such
317report shall include documentation related to all minority investment managers considered for
318investment, including documentation, where applicable, of the reasons for declining any such
319investment.