EASTHAMPTON — The City Council on Wednesday approved increasing a cost-of-living-adjustment for the Easthampton Contributory Retirement System by an additional 2% in the current fiscal year, bringing the cost-of-living-adjustment to 5%.

Mayor Nicole LaChapelle said she submitted the increase request to the council with immediate consideration because she wanted to take advantage of the legislation signed into law on Nov. 16 by former Gov. Charlie Baker, which will help municipalities hedge against inflation. In order to take advantage of the law, municipalities had to approve the increase before Baker left office on Wednesday.

The retirement board voted in favor of a 2% increase and LaChapelle said she strongly supported that recommendation.

City Auditor Hetal Patel also noted that approval of the increase will have no monetary impact on the operating budget as payments to the retirement system are made up front. Patel also noted that barring any drastic changes, the city is on track to have its public retirement system “fully funded” by 2029. 

“We are number one in western Mass. to become fully funded,” Patel said. 

For a retirement system to be considered “fully funded,” a system has to reach a funded ratio of 100%. The funded ratio of a system represents the actuarial value of plan assets divided by the actuarial accrued liability. 

As of Jan. 1, the Easthampton Contributory Retirement System is ranked as No. 17 of the 105 retirement boards of the Public Employee Retirement Administration Commission, which is tasked with oversight of the state’s public pensions. The city’s system has a funded ratio of 88.5% and is scheduled to be fully funded in about six to seven years, according to the state commission. 

Precinct 5 Councilor Dan Rist applauded the efforts of the city’s retirement board and the financial strength of Easthampton.

“You've all read about pensions and how dangerous they are for cities and towns, how they're mismanaged. This city has managed its pension so well that we’ll be fully funded,” Rist said. “Fully funded means we don't have to worry about having to fund a mandated retirement pension by taking money from our coffers that could be used for a lot of other things. So I am impressed. And I thank the city's financial team for keeping that going. And this is well deserved of our retirees.”

Currently, Leominster, Shrewsbury, Watertown and Quincy all have retirement systems that are fully funded. 

Aside from Easthampton, the next retirement system in the western part of the state is the Berkshire County Retirement System, which ranks No. 20 and has a funded ratio of 87.4% 

The ranking of other local retirement systems include: the Franklin Regional Retirement at No. 38 with a funded ratio of 78.3%, the Northampton Retirement Board at No. 44 with a funded ratio of 76.4% and the Hampshire County Retirement System at No. 63 with a funded ratio of 70.7%

“Our retirement account had a phenomenal year,” said LaChapelle. “The value goes up and down every year, and this year we had high returns — a 20.9% increase — so this was a good time to do another 2% to hedge against inflation.”

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