City also ahead of schedule to fully fund retirement system

For the second year in a row, the City of Somerville’s Retirement Board was ranked first out of 106 retirement boards in the state on its investment returns. In 2020, the city’s retirement investment portfolio earned a 27.59% annual rate of return. This distinction is part of a longer trend of high investment returns. The Somerville Retirement Board has a five-year investment return of 13.77% and a 10-year investment return of 11.31%, both of which also rank first among Massachusetts retirement boards.

 “It’s encouraging to see our retirement investments performing so well and I commend the Retirement Board for their diligent work on behalf of our retirees,” said Mayor Joseph A. Curtatone. “When our retirement investments perform well, it ensures we are able to honor our commitments to those who worked hard on behalf of residents of this city during their careers and do so without overburdening taxpayers.”

“It is extremely gratifying to see our investment managers performing at such a high level and generating returns well above our targeted rate of return of 7.75%,” said Retirement Board Member John M Memory, Chair of the Investment Committee. “I think the number one tenet of the retirement board – the preservation of capital – has guided us over the years to make sound and solid investment decisions, thus ensuring appropriate retirement benefits for our members.” 

The mission of the Somerville Retirement Board is to provide retirement allowance benefits for retirees while guiding, protecting, and serving the interests of all members, retirees, and their beneficiaries. The Somerville Retirement Board performs all duties and functions in a fiduciary manner solely in the interest of all members, retirees, and their beneficiaries.  One of the most important duties includes the investment and monitoring of the Retirement System’s investment portfolio. A strong-performing, fundamental, and diversified investment portfolio is paramount to the strength, stability, funding, and future of the Retirement System.

“Strong investment return positively impacts the city and the taxpayers by keeping the pension appropriation costs manageable and by strengthening the city’s bond rating, which allows us to issue bonds for projects such as the Somerville High School construction at very low rates,” said Chairman of the Retirement Board and city Finance Director Ed Bean.

The City of Somerville is also on track to have its retirement system fully funded before the State law requirement of being fully funded by 2040. The system is currently 66% funded and is expected to be fully funded by 2033.