The Town of Colrain Fully Funds its OPEB Liability

The Select Board is pleased to announce that the Town’s OPEB plan is "effectively fully funded."

The Town of Colrain Fully Funds its OPEB Liability

The Colrain Select Board is pleased to announce that, based on a recently completed OPEB Valuation Report prepared by Odyssey Advisors, the Town’s OPEB plan is “effectively fully funded”.*

What is OPEB?

Other Postemployment Benefits (“OPEB”) refers to benefits, other than pension, offered to employees after they leave employment. The most common benefits are medical, dental, and life insurance.

How many towns are funding their liability?

As of January 1, 2019, a survey of Odyssey clients shows that 79% of the towns and cities in Massachusetts are funding; however, most of them are not materially funded. Only 53% of the towns and cities are over 1% funded, 19% are over 10% funded and 11% are over 20% funded.

This significant achievement completes a process that began at the Fiscal Year 2017 Annual Town Meeting when the following article was passed establishing an OPEB Trust:

ARTICLE #31. To see if the Town will vote to accept the provisions of Chapter 32B, Section 20 of the Massachusetts General Laws, as amended, which provides that a town may establish a separate trust fund to be known as the Other Post- Employment Benefits Liability Trust Fund to reduce the unfunded actuarial liability of health care and other post-employment benefits; to see what sum of money the Town will vote to appropriate for the purposes of this article; and to act on anything relating thereto.

Since the establishment of the trust, yearly appropriations of free cash have been added to the trust while the funds have subsequently been invested and experienced growth through earnings.

Congratulations to the Town on this important achievement!

*Assuming the Trust continues to earn the assumed 6.60% rate of return net of expenses.

Posted: to General Town News on Wed, Oct 14, 2020
Updated: Wed, Oct 14, 2020