Newton’s decision to transfer all of its pension assets into the state’s system could motivate other municipalities to follow suit.
After weighing for years whether to divest its $265 million fund, the Newton Retirement Board took the plunge last week. On Friday, Paul Levy, president and chief executive officer of Beth Israel Deaconess Medical Center and a member of the commission urging the change by Newton, recommended that all Bay State communities make the shift.
"Most communities do not have the technical expertise to manage the very, very large sum of money that's in a retirement fund," Levy said.
Mayor David Cohen said that in tight fiscal times, "we must examine all opportunities for cost reductions and revenue enhancements. This is the right vote for our city," he said.
Pension funds cover benefits for retirees and for employees who have left work because of disability.
The future of such pension funds is being debated as many communities struggle to stretch property-tax dollars to cover municipal needs.
If a local pension fund's investments perform poorly, the community must make up the difference to pay benefits. With higher returns, the fund is less dependent on municipal reserves.
The $48 billion state fund, called the Pension Reserve Investment Trust, currently manages all or part of the assets of 74 municipal retirement systems, according to Alison Mitchell, a spokeswoman for state Treasurer Timothy Cahill, whose office oversees the fund.
Newton will now be one of the four largest communities in the state system in terms of assets; the others are Springfield, Lowell, and Framingham, Mitchell said.
-- Connie Paige
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