funds

This memo details boards' responsibilities for administering §91A disability retiree earnings compliance via PROSPER, covering non-filers, salary verification tasks, and excess earnings determinations. Boards must: provide hearing notice/opportunity to non-compliant retirees before any termination action; enter 2025 annual pension, annuity, current salary, and offset figures into PROSPER Salary Verification tasks (via individual entry or CSV upload) and submit for calculation; and, for retirees found to have excess earnings, send required notice, respond to the related PROSPER task documenting action taken, and upload board correspondence (not tax documents). Any data entry errors should be reported to Sandra King for correction.

**PERAC Memo #18/2026 – Tobacco Company List (July 2026)** This memo transmits the updated Tobacco Company List, effective upon receipt, which supersedes all prior lists and identifies companies deriving more than 15% of revenue from tobacco products—investments in which are prohibited under Chapter 119 of the Acts of 1997 (applicable to both individual securities and pooled funds assessed at the pool level). Boards must forward the list (or notice of its availability on PERAC's website) to their investment advisors, clarify it is for Massachusetts public fund use only, and ensure portfolios remain compliant; any non-compliant holdings must be divested prudently and only after consulting with PERAC.

This memo (Q3 2026) lists PERAC's mandatory training opportunities for retirement board members, reiterating the Chapter 32 requirement that members earn at least 3 credits per year and 18 credits over their term to remain eligible to serve. Boards should ensure members register for live PERAC webinars/events using their correct name and email for automatic credit updates, and submit Training Affidavits (with certificates where applicable) in PROSPER for all other approved trainings, including the various July–October 2026 sessions listed (e.g., Retirement Board Best Practices, Fraud Awareness, Open Meeting Law, Administrator Training, and the Emerging Issues Forum).

PERAC introduces a new dedicated PROSPER panel for retirement boards to electronically upload investment manager statements, starting with January 2025 cash books. This replaces the prior practice of submitting statements through various ad-hoc methods, centralizing documentation and streamlining cash book reporting. Boards only need to submit statements for non-PRIM investments; PERAC receives PRIM statements directly. Staff with the Finance role in PROSPER will have automatic access, and a user manual is attached.

PERAC requests that all boards submit actuarial data as of December 31, 2024 — covering active members, retirees/survivors, and disability retirees — via the PROSPER portal by March 31, 2025, using the standard PERAC record format. After submission, boards will receive data analysis reports through PROSPER identifying errors, warnings, and questionable items for review and correction. Boards scheduled for a 2025 PERAC actuarial valuation should have already received a separate data request.

PERAC distributes an updated April 2025 Tobacco Company List under Chapter 119 of the Acts of 1997, which prohibits retirement systems from making new investments in companies deriving more than 15% of revenue from tobacco sales. This list supersedes all prior versions and is effective upon receipt; boards must forward it to their investment advisors. PERAC will assess portfolios for compliance during audits, and any non-compliant investments must be divested in a prudent manner after consulting PERAC.

PERAC alerts boards to a recent attempted fraudulent capital call scam targeting a retirement board, in which an email impersonated an investment consultant employee to solicit a fund transfer; the attempt was caught due to staff vigilance. Additionally, an investment manager reported two fraudulent capital call attempts impersonating one of its own employees. Boards should verify all financial requests and correspondent identities, review Memo 30/2021 best practices, and report any cyber intrusion or attempted fraud to PERAC.

PERAC distributes an updated July 2025 Tobacco Company List, replacing the April 2025 version. The same statutory prohibition under Chapter 119 of the Acts of 1997 applies: retirement systems may not make new investments in companies deriving more than 15% of revenue from tobacco. Boards must forward the updated list to their investment advisors and confirm it supersedes any prior version they may be using.

This memo sets the 2024 "regular interest" rate at 0.1% for regular and additional deductions made after January 1, 1984, as required by G.L. c. 32, § 22(6)(b). The rate is derived from the average rates paid on individual savings accounts at a representative sample of at least 10 financial institutions. Boards must apply this rate to accumulated total deductions for refunds, retirements, and year-end crediting on December 31, 2024.

PERAC distributes the updated April 2024 Tobacco Company List, which supersedes all prior versions and is effective upon receipt. Under Chapter 119 of the Acts of 1997, retirement systems are prohibited from making new investments in any company that derives more than 15% of its revenue from tobacco product sales. Boards must forward the list to their investment advisors and, if any portfolio holdings are found to be non-compliant, must consult with PERAC before divesting in a prudent manner. The list covers more than 100 companies across roughly 30 countries.

PERAC distributes the updated July 2024 Tobacco Company List, which supersedes all prior versions and is effective upon receipt. Under Chapter 119 of the Acts of 1997, Massachusetts retirement systems are prohibited from making new investments in any company that derives more than 15% of its revenue from tobacco product sales. Boards must share the list with their investment advisors and, if any holdings are found non-compliant, must consult with PERAC before divesting. This mid-year update replaces the April 2024 list issued with Memo #10.

PERAC has issued PROSPER tasks to all boards for disability retirees who failed to file their 2023 Annual Statement of Earned Income (91A form) or who reported earnings that may require a benefit adjustment. Boards must provide written notice and a hearing opportunity to non-compliant retirees; benefits may be terminated after the hearing, subject to CRAB appeal. Boards are also asked to respond to upcoming "Salary Verification" tasks in PROSPER by entering 2023 pension and salary figures so PERAC can calculate whether each retiree is within their allowable earnings limit.

This memo provides the 3rd Quarter 2024 mandatory training schedule for retirement board members, who must earn 18 credits over their term and at least 3 per year. Key offerings include July and August webinars on open meeting law, fiduciary duty, and procurement, plus the PERAC Emerging Issues Forum on September 18 in Westborough (3 credits). PERAC is also launching a new New Administrator Training series, with the first session on August 21 in Northampton, designed for staff with fewer than five years of experience. All non-live-PERAC training requires a Training Affidavit submitted through PROSPER.

Chapter 141 of the Acts of 2024 (Salary Transparency Act), signed July 31, 2024, amends G.L. c. 32, § 5(2)(f) to exempt from the anti-spiking provision salary increases required under the Massachusetts Equal Pay Act (MEPA) and employer-wide "systemic wage adjustments," retroactive to July 1, 2018. Because DALA had previously ruled that MEPA increases were not exempt, some members had their retirement allowances improperly reduced. Boards must now identify affected retirees, recalculate their allowances, and pay a lump-sum correction plus correction-of-errors interest, offsetting any contributions that were previously refunded when anti-spiking was applied.

PERAC distributes the updated October 2024 Tobacco Company List, which supersedes all prior versions and is effective upon receipt. Under Chapter 119 of the Acts of 1997, Massachusetts retirement systems are prohibited from making new investments in any company deriving more than 15% of its revenue from tobacco product sales. Boards must share the list with their investment advisors and consult with PERAC before divesting any non-compliant holdings. This replaces the July 2024 list issued with Memo #14.

PERAC is transitioning the FY26 appropriation questionnaire and letter process entirely to PROSPER, replacing the prior paper/email workflow. Boards should complete and submit the questionnaire, which was sent via PROSPER, as soon as possible so PERAC can calculate and return the FY26 appropriation amounts under G.L. c. 32, §§ 22D, 22(6A)(b), or 22F. Two process changes to note: the 5-year projection page will no longer be included in the appropriation memorandum, and starting this year PERAC will only send the appropriation letter to the board — boards are responsible for forwarding copies to the appropriate governmental bodies.

PERAC distributes the updated January 2025 Tobacco Company List, which supersedes all prior versions and is effective upon receipt. Under Chapter 119 of the Acts of 1997, Massachusetts retirement systems are prohibited from making new investments in any company deriving more than 15% of its revenue from tobacco product sales. Boards must forward the list to their investment advisors and consult with PERAC before divesting any non-compliant holdings in a prudent manner. This update replaces the October 2024 list issued with Memo #24.

This memo announces that retirement boards will soon be able to submit Cash Books and Annual Statements entirely through PROSPER, including board approval of the Annual Statement within the system, with the new module expected to be available in March 2023. Boards are instructed not to submit 2022 Annual Statements until after the module launches and they have attended or viewed the training webinar scheduled for February 16, 2023. Staff who currently hold the disability role in PROSPER will automatically receive the new Finance role; additional staff needing access should submit the Individual Account Request Form to PERAC.

This memo sets the "regular interest" rate for calendar year 2023 at 0.1%, as determined by PERAC in consultation with the Commissioner of Banks based on the average rates paid on individual savings accounts at a representative sample of at least ten financial institutions, pursuant to G.L. c. 32, § 22(6)(b). This rate applies to accumulated total deductions and accrued interest for refunds and retirements credited during 2023, and to outstanding balances as of December 31, 2022 credited on that date. No action is required of boards beyond applying this rate in their calculations.

This memo transmits the April 2023 Tobacco Company List, which supersedes all prior versions and takes effect upon receipt, prohibiting retirement systems from making any new investments in companies deriving more than 15% of their revenue from tobacco products as required by Chapter 119 of the Acts of 1997. Boards must forward the list to their investment advisors (noting it is for Massachusetts public fund clients only), and PERAC will assess compliance during audits; any portfolio found out of compliance must be divested in a prudent manner after consulting with PERAC. The 15% rule is applied to pooled funds based on the overall pool, not individual holdings.

This memo transmits the July 2023 Tobacco Company List, which supersedes all prior versions and takes effect upon receipt, prohibiting retirement systems from making any new investments in companies deriving more than 15% of their revenue from tobacco products under Chapter 119 of the Acts of 1997. Boards must forward the list to their investment advisors (for Massachusetts public fund use only), and PERAC will assess portfolio compliance during audits; non-compliant portfolios must be divested in a prudent manner after consulting with PERAC. This is the second tobacco list issued in 2023, following the April 2023 list in Memo #9/2023.

This memo transmits the October 2023 Tobacco Company List, which supersedes all prior versions and takes effect upon receipt, prohibiting retirement systems from making new investments in companies deriving more than 15% of their revenue from tobacco products under Chapter 119 of the Acts of 1997. Boards must forward the updated list to investment advisors (for Massachusetts public fund clients only) and PERAC will verify compliance during audits; non-compliant portfolios must be divested prudently after consulting PERAC. This is the third tobacco list issued in 2023, following the April 2023 (Memo #9) and July 2023 (Memo #14) lists.

This memo transmits the updated text of PERAC's travel and expense regulations at 840 CMR 2.00, showing tracked changes to the existing rules governing retirement board member and staff travel, lodging, meals, and reimbursements. Notable revisions include clarified language on board authorization procedures for travel, updated provisions for mandatory resort fees (now potentially reimbursable if they include internet/Wi-Fi), updated credit card usage rules under the newly numbered § 2.11, and refined conflict-of-interest restrictions on third-party reimbursements. Boards whose supplementary travel regulations were approved by PERAC before June 6, 2003 remain valid, and boards may adopt updated supplementary regulations consistent with the revised CMR by submitting them to PERAC for approval.

This memo requests that retirement boards submit the annual appropriation data questionnaire by October 31, 2023, which PERAC uses to calculate FY25 appropriation amounts to be assessed against governmental units under G.L. c. 32, §§ 22D, 22(6A)(b), or 22F. Boards are strongly encouraged to submit through the PERAC website rather than by mail; the previously included five-year projection page has been discontinued, and boards needing to make pension reserve fund transfers should petition PERAC's actuary for approval under § 22(6A)(b). Timely submission is critical to ensure accurate FY25 funding schedule calculations.

This memo establishes PERAC's policy on the use of Outsourced Chief Investment Officers (OCIOs) by retirement boards, describing two permissible models: a "Proprietary OCIO" (which invests in the OCIO's own funds without asset limits) and a "Full OCIO" (which acts as a discretionary investment manager, limited to 10% of board assets). Boards selecting either type of OCIO must follow the same Section 23B procurement process as for any investment manager, and the OCIO must meet nine specific requirements, including fiduciary acknowledgment, flat-fee compensation, full disclosure submissions, and a board-approved process for reviewing manager selections. This memo supersedes Memorandum 18 of 2014 with respect to discretionary manager selections.

This memo transmits the January 2024 Tobacco Company List, which supersedes all prior versions and takes effect upon receipt, prohibiting retirement systems from making new investments in companies deriving more than 15% of their revenue from tobacco products under Chapter 119 of the Acts of 1997. Boards must forward the list to investment advisors (for Massachusetts public fund clients only), and PERAC will assess portfolio compliance during audits; boards found out of compliance must divest prudently after consulting PERAC. This is the fourth and final tobacco list issued in the 2023 memo series, replacing the October 2023 list from Memo #19/2023.

This memo alerts all retirement boards to an attempted cyberattack in which a fraudster impersonated a board administrator to obtain funds from the board's custodian. Boards are directed to implement secondary confirmation measures — including phone verification — for all financial and investment transactions, and to treat any messages expressing urgency or requesting wire changes with heightened scrutiny. PERAC urges boards to share the memo with their investment providers and immediately review transaction protocols.

This memo establishes the "regular interest" rate for calendar year 2022 at 0.1%, as determined by PERAC in consultation with the Commissioner of Banks pursuant to G.L. c. 32, § 22(6)(b). This rate applies to accumulated total deductions and accrued interest for regular and additional deductions made after January 1, 1984, and must be credited for all refunds, retirements, and outstanding year-end balances in 2022.

This memo requests that all retirement boards submit actuarial data for active members, retirees/survivors, and disability retirees as of December 31, 2021, by March 31, 2022. Data should be submitted in the standard PERAC record format via the Interchange File Transfer website to PER-edoc-Actuary@per.state.ma.us; after submission, boards will receive data analysis reports to review and correct errors before actuarial valuations are completed.

PERAC Memo #10/2022 transmits the updated April 2022 Tobacco Company List, which replaces all prior versions and takes effect immediately upon receipt. Boards must forward the list to their investment advisors (or notify them it is on the PERAC website), ensure no new investments are made in listed companies (those deriving over 15% of revenue from tobacco, including pooled funds meeting that threshold), and consult with PERAC before divesting to bring any non-compliant portfolio into compliance.

This memo requests that retirement boards verify 2021 salary information for disability retirees through the PROSPER system to determine whether any retiree exceeded their allowable post-retirement earnings limit under G.L. c. 32, § 91A. Boards must enter each disability retiree's 2021 annual pension and current salary figures into PROSPER, which will calculate whether earnings thresholds have been exceeded. Where excess earnings are found, PERAC will issue an Excess Earnings letter and boards must notify the retiree and suspend the allowance until any overpayment is recovered.

This memo transmits the quarterly Tobacco Company List dated July 2022, which supersedes all prior lists and takes effect immediately upon receipt by retirement boards. Under Chapter 119 of the Acts of 1997, boards are prohibited from making new investments in companies deriving more than 15% of revenue from tobacco products, and must forward this list to their investment advisors for use only with Massachusetts public fund clients. PERAC will review each board's portfolio for compliance during audits and requires non-compliant boards to divest in a prudent manner after consulting PERAC.

This memo distributes the updated October 2022 Tobacco Company List, which replaces all previous lists and is effective immediately upon receipt. Under Chapter 119 of the Acts of 1997, retirement systems are prohibited from making new investments in companies deriving more than 15% of their revenue from tobacco products; boards must forward the list to their investment advisors and consult with PERAC before divesting any non-compliant holdings identified in PERAC's audit process.

This memo requests that retirement boards submit appropriation data by October 31, 2022, needed for PERAC to calculate FY24 appropriation amounts for all governmental units under G.L. c. 32, §§ 22D, 22(6A)(b), or 22F. Boards should submit the questionnaire through the PERAC website rather than by hard copy, and PERAC notes it will no longer include the five-year projection page in appropriation memos — future payment projections are available in each system's current funding schedule.

This memo distributes the updated January 2023 Tobacco Company List, which replaces all previous lists and is effective immediately upon receipt. Under Chapter 119 of the Acts of 1997, retirement systems are prohibited from making new investments in companies deriving more than 15% of their revenue from tobacco products; boards must forward the list to their investment advisors and consult with PERAC before divesting any non-compliant holdings identified in PERAC's audit process.

Sets the 2021 "regular interest" rate on member contributions at 0.1% per G.L. c. 32, § 22(6)(b). Applies to accumulated deductions and accrued interest for refunds, retirements, and December 31, 2021 year-end balances.

Transmits the updated list of public employees ineligible to join a Chapter 32 retirement system under G.L. c. 32, § 15 due to misappropriation, criminal conviction, or related offenses. Most recent additions are bolded; boards should check the list against their active members.

Transmits the Q2 2021 (April 2021) Tobacco Company List, updating the roster of companies prohibited from new investment under Chapter 119 of the Acts of 1997 (15% tobacco revenue threshold). Supersedes all prior lists and is effective upon receipt by retirement boards.

PERAC revised the Member's Application for Distribution of Accumulated Total Deductions and created a new Beneficiary Application to standardize refund procedures across all Massachusetts retirement systems and update payment options to comply with federal tax law. Both forms are available on the PERAC website under Forms.

Q3 2021 mandatory board member training schedule (July–September 2021), all-virtual. Highlights include a PERAC/OIG webinar on fiduciary duty and fraud awareness, a new self-guided cybersecurity training through Wizer (register by July 15), and the Retirement Onramp session for new members. No Emerging Issues Forum in September.

Transmits the Q3 2021 (July 2021) Tobacco Company List, updating the roster of companies prohibited from new investment under Chapter 119 of the Acts of 1997 (15% tobacco revenue threshold). Supersedes all prior lists and is effective upon receipt by retirement boards.

Instructs boards on handling 91A PROSPER tasks for disability retirees who failed to file the 2020 Annual Statement of Earned Income or whose earnings may require a benefit adjustment. Boards must provide written notice and a hearing opportunity; PROSPER will also issue Salary Verification tasks requiring boards to enter 2020 annual pension and current salary figures for excess earnings calculations.

Transmits the Q4 2021 (October 2021) Tobacco Company List, updating the roster of companies prohibited from new investment under Chapter 119 of the Acts of 1997 (15% tobacco revenue threshold). Supersedes all prior lists and is effective upon receipt by retirement boards.

Requests boards submit FY23 appropriation data via the PERAC website questionnaire by October 31, 2021, necessary for PERAC to calculate governmental unit contribution amounts under G.L. c. 32, §§ 22D, 22(6A)(b), or 22F per the board's funding schedule.

Alerts retirement boards to a phishing scheme in which a former employee's board email account was hacked and used to fraudulently transfer investment assets. Boards should review IT user access authorizations, remove departed staff immediately, confirm vendor security protocols for wire instructions, and conduct diligent review of bank and investment statements.

Transmits the Q1 2022 (January 2022) Tobacco Company List, updating the roster of companies prohibited from new investment under Chapter 119 of the Acts of 1997 (15% tobacco revenue threshold). Issued in December 2021; supersedes all prior lists and is effective upon receipt by retirement boards.

Transmits the Q1 2020 Tobacco Company List, updating the roster of companies prohibited from new investment under Chapter 119 of the Acts of 1997 (15% tobacco revenue threshold). Boards must forward the list to investment advisors; PERAC will review portfolios for compliance during audits, and non-compliant boards must divest in a prudent manner after consulting PERAC.

Releases PERAC's 2018 Comparative Analysis of Investment-Related Expenses, detailing management, custodian, and consultant fees for each public pension system based on 2018 Annual Statements of Financial Condition. The report provides a benchmarking tool for board members, public officials, and taxpayers to assess each system's investment costs against those of peer systems.

Provides guidance and template documents — an Investment Consultant Questionnaire and a Selection Evaluation Scoresheet — for retirement boards conducting investment consultant RFP processes. RFP scoring must be completed before fee proposals are opened to prevent fee submissions from influencing the assessment; finalists are then selected for interviews and scored on a composite basis.

Sets the 2020 "regular interest" rate on member contributions at 0.1%, as determined by averaging rates paid on individual savings accounts at a representative sample of financial institutions per G.L. c. 32, § 22(6)(b). This rate applies to accumulated deductions and accrued interest for refunds, retirements, and year-end balances throughout calendar year 2020.

Third COVID-19 update consolidating earlier guidance, covering teleconference board meetings, immediate suspension of PERAC medical panel scheduling, extension of 91A filing deadline to July 15, annual statement extension flexibility, pension funding impacts from the economic downturn, and retiree payroll continuity requirements during the March 24–April 7, 2020 shelter-in-place order.

PERAC Memo #19/2020 transmits the updated Tobacco Company List (dated April 2020), which supersedes all prior versions and is effective immediately upon receipt. Boards must forward the list (or notify) their investment advisors that it applies solely to Massachusetts public fund clients, ensure no new prohibited investments (including in pooled funds exceeding the 15% tobacco-revenue threshold) are made, and consult with PERAC before divesting any non-compliant holdings identified during audit review.

Addresses COVID-19-related concerns about delayed FY21 municipal appropriation payments, clarifying that retirement boards have authority to adjust interest calculations for payments made on dates different from those in their funding schedules. Any resulting change in unfunded actuarial liability will be accounted for in the next schedule; PERAC encourages boards to work with member units on mutually beneficial administrative solutions.

PERAC Memo #23/2020 transmits the updated (July 2020) Tobacco Company List pursuant to Chapter 119 of the Acts of 1997, which bars retirement systems from making new investments in companies deriving more than 15% of revenue from tobacco sales. This list supersedes all prior versions effective immediately; boards must forward it (or notice of its availability) to their investment advisors, ensure it is used only for the board's own Massachusetts public fund purposes, and review portfolios—including pooled funds assessed at the pool level—for compliance, consulting PERAC before divesting any non-compliant holdings.

Q3 2020 mandatory board member training memo listing exclusively virtual offerings due to COVID-19, including live webinars on retirement options, post-retirement employment, and the rescheduled Emerging Issues Forum keynote. The annual in-person Emerging Issues Forum was cancelled; the annual administrators' trainings are under evaluation with safety as a priority.

Transmits the Q4 (October 2020) Tobacco Company List, updating the roster of companies prohibited from new investment under Chapter 119 of the Acts of 1997 (15% tobacco revenue threshold). This list supersedes all prior lists and is effective upon receipt; boards must forward it to investment advisors and PERAC will assess compliance during audits.

Requests appropriation data from retirement boards by October 31, 2020, so PERAC can calculate the FY22 appropriation amounts for all governmental units under G.L. c. 32, §§ 22D, 22(6A)(b), or 22F. Boards are directed to submit via the online questionnaire on the PERAC website; hard copies are also accepted.

Initiates the 2019 G.L. c. 32, § 91A allowable earnings process for disability retirees who reported earnings that may trigger a benefit adjustment. Boards will receive PROSPER tasks to verify current salary and pension figures; if excess earnings are confirmed, PERAC issues an excess letter and the retiree's allowance is suspended until the overage is repaid.

Q1 2021 mandatory board member training memo (issued December 2020) listing all-virtual offerings for January–March 2021, including PERAC webinars on the legislative update, annual statement and cash books, and an administrator roundtable. Registration process changed — attendees must now register via website links rather than PROSPER; credits are updated by PERAC staff approximately one week after each live event.

Transmits the Q1 2021 (January 2021) Tobacco Company List, updating the roster of companies prohibited from new investment under Chapter 119 of the Acts of 1997 (15% tobacco revenue threshold). Issued in December 2020; supersedes all prior lists and is effective upon receipt by retirement boards.

This memo transmits the updated April 2019 Tobacco Company List under Chapter 119 of the Acts of 1997, which prohibits new retirement system investments in companies deriving more than 15% of revenue from tobacco sales; the new list supersedes all prior versions effective immediately. Boards must share the list with their investment advisors (noting it's restricted to Massachusetts public fund use only), ensure portfolios—including pooled funds assessed at the entire-pool level—comply going forward, and, if non-compliant holdings are found, consult with PERAC before prudently divesting.

This memo transmits the second quarterly Tobacco Company List for 2019 (dated July 2019), issued pursuant to Chapter 119 of the Acts of 1997, which prohibits Massachusetts retirement systems from making new investments in companies deriving more than 15% of their revenue from tobacco product sales. Boards are directed to forward the list to their investment advisors and are reminded that it supersedes all prior versions, effective upon receipt. PERAC will review board portfolios for compliance during audits, and any non-compliant board must divest holdings in a prudent manner after first consulting with PERAC.

This memo transmits the third quarterly Tobacco Company List for 2019 (dated October 2019), issued pursuant to Chapter 119 of the Acts of 1997, which prohibits Massachusetts retirement systems from making new investments in companies deriving more than 15% of their revenue from tobacco product sales. Boards are directed to forward the list to their investment advisors and are reminded that it supersedes all prior versions, effective upon receipt. PERAC will review board portfolios for compliance during audits, and any non-compliant board must divest holdings in a prudent manner after first consulting with PERAC.

This memo transmits the first quarterly Tobacco Company List for 2018 (dated January 2018), issued pursuant to Chapter 119 of the Acts of 1997, which prohibits Massachusetts retirement systems from making new investments in companies deriving more than 15% of their revenue from tobacco product sales. Boards are directed to forward the list to their investment advisors and are reminded that it supersedes all prior versions, effective upon receipt. PERAC will review board portfolios for compliance during audits, and any non-compliant board must divest holdings in a prudent manner after first consulting with PERAC.

This memo requests that all boards submit active member, retiree/survivor, and disability retiree data as of December 31, 2017 via the PERAC Interchange File Transfer system by March 31, 2018. After submission, boards will receive data analysis reports to review for errors; boards scheduled for a 2018 actuarial valuation should have already received a separate data request.

This memo establishes the 2018 regular interest rate at 0.1% under G.L. c. 32, § 22(6)(b), determined from the average rates paid on individual savings accounts at a representative sample of financial institutions. This rate applies to accumulated deductions for refunds and retirements during 2018 and is credited on December 31, 2018 for balances outstanding as of December 31, 2017.

This memo covers several investment compliance reminders for retirement boards: contract relationships governed by § 23B must be re-bid before April 2019 (seven years from Chapter 176 of the Acts of 2011); boards must formally acknowledge SEC vendor disclosures at a board meeting with minutes reflecting the review; and accounting procedures for investment fees, carried interest, and ancillary expenses have been updated for 2018. Boards investing assets independently must submit annual reviews of investment objectives and asset allocation, including systems committed to PRIT or an OCIO strategy; RFP processes must not restrict entry to Massachusetts-only providers.

This memo transmits the second quarterly Tobacco Company List for 2018 (dated April 2018), issued pursuant to Chapter 119 of the Acts of 1997, which prohibits Massachusetts retirement systems from making new investments in companies deriving more than 15% of their revenue from tobacco product sales. Boards are directed to forward the list to their investment advisors and are reminded that it supersedes all prior versions, effective upon receipt. PERAC will review board portfolios for compliance during audits, and any non-compliant board must divest holdings in a prudent manner after first consulting with PERAC.

This memo transmits the third quarterly Tobacco Company List for 2018 (dated July 2018), issued pursuant to Chapter 119 of the Acts of 1997, which prohibits Massachusetts retirement systems from making new investments in companies deriving more than 15% of their revenue from tobacco product sales. Boards are directed to forward the list to their investment advisors and are reminded that it supersedes all prior versions, effective upon receipt. PERAC will review board portfolios for compliance during audits, and any non-compliant board must divest holdings in a prudent manner after first consulting with PERAC.

This memo alerts boards that investment side letter agreements increasingly contain provisions conflicting with Massachusetts Public Records Law (G.L. c. 4, § 7; c. 66). Boards are advised to include language in all side letters for limited partnerships, group trusts, and similar vehicles explicitly acknowledging that Public Records Law requirements supersede confidentiality provisions in the agreement. A sample side letter clause is provided.

This memo alerts boards to an active scam in which a fraudster impersonates a member to redirect their retirement allowance to a prepaid debit card account by submitting a direct deposit change with a routing number pointing to Green Dot Bank. PERAC is aware of one successful interception and two attempted ones, and urges boards to verify any direct deposit change requests directly with the member before processing.

This memo transmits the fourth quarterly Tobacco Company List for 2018 (dated October 2018), issued pursuant to Chapter 119 of the Acts of 1997, which prohibits Massachusetts retirement systems from making new investments in companies deriving more than 15% of their revenue from tobacco product sales. Boards are directed to forward the list to their investment advisors and are reminded that it supersedes all prior versions, effective upon receipt. PERAC will review board portfolios for compliance during audits, and any non-compliant board must divest holdings in a prudent manner after first consulting with PERAC.

This memo requests boards to submit FY2020 appropriation data by October 31, 2018, needed for PERAC to calculate governmental unit appropriation amounts under G.L. c. 32, §§ 22D, 22(6A)(b), or 22F. The questionnaire is available on the PERAC website; electronic submission is strongly preferred.

This memo reminds all § 23B investment service providers that "compensation, in whatever form" must be disclosed annually and in RFP responses, including non-cash arrangements such as directed brokerage, conference sponsorships, charitable or political contributions made at investor request, and economic interests in general partnerships. PERAC flags recent filings showing law firm economic interests contingent on fund-raising success as examples of arrangements that must be fully disclosed.

This memo provides procurement guidance as boards approach the April 2019 contract re-bid deadline under § 23B. Key reminders: RFPs must not exclude qualified vendors through minimum Massachusetts client counts, asset thresholds, or other bid-tailoring requirements that limit competition; award points for such criteria rather than using them as pass/fail gates. Boards are also strongly advised to conduct in-person interviews with finalists, as case law (Unisys) shows that interviews are a critical shield against breach-of-fiduciary-duty claims when investments later fail.

This memo transmits the Tobacco Company List dated January 2019 (issued December 14, 2018), pursuant to Chapter 119 of the Acts of 1997, which prohibits Massachusetts retirement systems from making new investments in companies deriving more than 15% of their revenue from tobacco product sales. Boards are directed to forward the list to their investment advisors and are reminded that it supersedes all prior versions, effective upon receipt. PERAC will review board portfolios for compliance during audits, and any non-compliant board must divest holdings in a prudent manner after first consulting with PERAC.

This memo requests that retirement boards submit actuarial data for active members, retirees/survivors, and disability retirees as of December 31, 2016 by March 31, 2017, using the standard PERAC record format via the Interchange File Transfer website. Boards will receive data analysis reports after submission to help identify and correct errors prior to actuarial valuations. Boards scheduled for a 2017 valuation by PERAC should have already received a separate data request.

This memo formally establishes the 2017 regular interest rate for annuity savings accounts at 0.1%, as determined in consultation with the Commissioner of Banks pursuant to G.L. c. 32, § 22(6)(b). This rate applies to accumulated total deductions and accrued interest, must be used for refunds and retirements during calendar year 2017, and must also be credited on December 31, 2017 for outstanding balances.

This memo encourages retirement board administrators to attend PERAC's Annual Statement training sessions in early 2017, and covers several asset management reminders: the approaching April 2019 deadline for existing investment service contracts under Section 23B, the requirement to formally acknowledge annual vendor disclosures at board meetings with minutes reflecting the review, and the obligation to annually review and submit investment objectives and asset allocation plans whether invested directly, through PRIT, or via an OCIO strategy.

This memo warns retirement boards about an unsolicited investment event at Gillette Stadium sponsored by STS/LStar that some board members received invitations to attend. PERAC advises that retirement system assets cannot be directly invested in real estate, and that STS does not appear to be SEC-registered as required under PERAC's Placement Agent Policy. The memo also clarifies that MACRS did not sponsor or endorse the event.

This memo transmits the April 2017 Tobacco Company List, which replaces all prior versions and is effective immediately upon receipt. Under Chapter 119 of the Acts of 1997, retirement systems are prohibited from making new investments in companies that derive more than 15% of their revenue from tobacco products. Boards must forward the list to their investment advisors and PERAC will verify compliance through its audit process.

This memo transmits the July 2017 updated Tobacco Company List, which replaces all prior versions and is effective immediately upon receipt. Under Chapter 119 of the Acts of 1997, retirement systems may not make new investments in companies deriving more than 15% of their revenue from tobacco. Boards must forward the list to their investment advisors; PERAC will verify compliance during audits.

This memo addresses concerns raised by retirement boards regarding MTRS requests for Section 3(8)(c) reimbursements for past member service, some of which are retroactive five years or more, as MTRS works through its processing backlog. PERAC reminds boards that these systems have benefited from investment use of the member funds during the interim period, and that such reimbursement requests do not affect the system's current appropriation. No specific action is required beyond continued cooperation with MTRS in fulfilling these reimbursement requests.

This memo reminds boards that investment service providers must file annual vendor disclosures with both the retirement board and PERAC under Section 23B of Chapter 32. Where a vendor has a relationship with a third party solicitor under SEC Rule 206(4)-3(b), the solicitor must also make disclosures directly to the board. Copies of all such disclosures must be submitted to PERAC via PROSPER as part of the Acknowledgement Process before any Acknowledgement Letter is issued.

This memo requests that retirement boards complete and return the appropriation data questionnaire by October 31, 2017 so that PERAC can calculate FY19 appropriation amounts for all governmental units under G.L. c. 32, §§ 22D, 22(6A)(b), or 22F. Boards are encouraged to submit the questionnaire online via the PERAC website; questions should be directed to PERAC actuary Jim Lamenzo.

This memo transmits the October 2017 updated Tobacco Company List, which replaces all prior versions and is effective immediately upon receipt. Under Chapter 119 of the Acts of 1997, retirement systems may not make new investments in companies deriving more than 15% of their revenue from tobacco products. Boards must forward the list to their investment advisors; PERAC will verify compliance during its audit process.

PERAC Memo #7/2016 establishes the "regular interest" rate under G.L. c. 32, §22(6)(b) at 0.1% for calendar year 2016, based on average savings account rates from a sample of financial institutions. Boards must apply this 0.1% rate to accumulated total deductions and accrued interest when crediting interest on refunds and retirements processed during 2016, and also apply it to outstanding balances as of December 31, 2015 when crediting interest on December 31, 2016. No further action beyond correct application of this rate is required.

PERAC Memo #11/2016 transmits the updated Tobacco Company List (dated April 2016), which supersedes all prior versions, identifying companies deriving more than 15% of revenue from tobacco sales in which retirement systems are prohibited from making new investments under Chapter 119 of the Acts of 1997. Boards must apply this list—including to pooled fund holdings assessed in aggregate—when reviewing new investments, forward it to their investment advisors (for Massachusetts public fund use only), and, if any post-1998 non-compliant holdings are found during a PERAC audit, consult with PERAC before divesting in a prudent manner.

This memo transmits PERAC's updated Tobacco Company List (dated July 2016), which replaces all prior versions and identifies companies from which retirement boards are prohibited from making new investments under Chapter 119 of the Acts of 1997 (the 15%-tobacco-revenue rule). Boards must forward the list to their investment advisors (or direct them to it on the PERAC website), noting the list is for Massachusetts public fund use only, and must ensure their portfolios—including pooled funds assessed at the pool level—remain in compliance, consulting PERAC before divesting if a violation is found during audit.

This memo (PERAC Memo #18/2016) reminds retirement board members of the statutory requirement to complete mandatory annual training under Chapter 32, warning that failure to do so will disqualify a member from continuing to serve for the remainder of their term. It lists upcoming Q3 2016 training opportunities (in-person sessions, webinars, and online courses) along with registration details, and outlines PERAC's pre-approved list of external programs eligible for education credits. Boards should ensure members register for and complete sufficient training sessions to maintain compliance and eligibility for continued board service.

PERAC Memo #22/2016 addresses forfeiture of retirement allowances under G.L. c. 32, §15 for members convicted of misappropriation or related offenses, noting the varying effective dates and requirements of the statute's subsections. It transmits a partial list, compiled from DA/AG notifications, of public employees potentially subject to forfeiture. Boards must review the attached list, report any updates, discrepancies, or additions, and submit copies of all relevant investigation/hearing/decision documents since October 2002 to Kim Boisvert by September 30, 2016.

PERAC Memo #23/2016 transmits the updated October 2016 Tobacco Company List, which supersedes all prior lists and identifies companies deriving over 15% of revenue from tobacco sales, in which retirement systems are prohibited from making new investments under Chapter 119 of the Acts of 1997. Boards must share this list with their investment advisors (noting it is restricted to Massachusetts public fund use only) and ensure no new prohibited investments—including in noncompliant pooled funds—are made; any board found out of compliance during a PERAC audit must consult with PERAC before divesting to correct the portfolio.

This memo lists Q4 2016 mandatory training opportunities for retirement board members (MACRS sessions, PERAC-hosted disability process and board responsibilities trainings, OML sessions, and various webinars/online options), and reiterates PERAC's pre-approval process and list of pre-approved third-party programs eligible for education credit. Boards should note that members who fail to meet the annual training mandate become ineligible to continue serving for the remainder of their term, so administrators should ensure members register for and complete qualifying sessions before year-end.

PERAC Memo #26/2016 requests that retirement boards submit the annual Appropriation Data Questionnaire—needed to calculate FY18 required appropriations under G.L. c.32, §22D, §22(6A)(b), or §22F—by October 31, 2016, preferably via PERAC's website. Boards must complete and return this questionnaire, and should also confirm their funding schedule has been submitted to PERAC for approval within the past two years, contacting PERAC if an update is needed.

PERAC Memo #27/2016 transmits the updated Tobacco Company List (dated January 2017), which supersedes all prior lists, identifying companies deriving more than 15% of revenue from tobacco sales in which retirement systems are prohibited from making new investments under Chapter 119 of the Acts of 1997. Boards must apply this list immediately upon receipt—including to pooled funds evaluated on an entire-pool basis—and should distribute it to their investment advisors (for Massachusetts public fund use only), ensuring no new prohibited investments are made; any existing non-compliant holdings identified through PERAC's audit process must be divested prudently after consultation with PERAC.

PERAC Memo #5/2015 announces that, per G.L. c. 32, §22(6)(b), the "regular interest" rate for member deductions in calendar year 2015 has been set at 0.1%, based on average savings rates from a sample of financial institutions. Boards must apply this rate to accumulated total deductions and accrued interest when crediting interest for 2015 refunds and retirements, and also credit it on outstanding balances as of December 31, 2014, on December 31, 2015.

**PERAC Memo #8/2015 – Remarriage Penalty** This memo revises PERAC's prior guidance (Memo #34/2000) on the elimination of the "remarriage penalty" in light of the Superior Court's 2014 decision in *Boston Retirement Board v. CRAB and Edith Carell*, which held that the repeal of the remarriage penalty (effective July 1, 2000) applies even to beneficiaries whose survivor benefits were terminated due to remarriage *before* that date. Boards must now recognize that eligible surviving spouses who remarried prior to July 1, 2000 may reapply and, if approved, receive benefits prospectively from the date of reapplication (not retroactively to the remarriage date), and boards should reassess any such prior denials or terminations accordingly.

PERAC Memo #9/2015 transmits the updated (April 2015) Tobacco Company List, superseding all prior versions, which identifies companies deriving more than 15% of revenue from tobacco sales and therefore prohibited from new investment under Chapter 119 of the Acts of 1997. Boards must forward or make this list available to their investment advisors (for Massachusetts public fund use only), ensure new purchases comply with the list—including for pooled funds assessed on an entire-pool basis—and, if a portfolio is found non-compliant during a PERAC audit, consult with PERAC before undertaking any prudent divestiture.

PERAC Memo #12/2015 addresses CRAB's amended decision in Zavaglia v. Gloucester/Salem Retirement Boards, which clarifies when inactive members may purchase prior creditable service. While service purchases generally require active membership, CRAB identified specific statutory exceptions—including G.L. c. 32 §§3(4), 3(4A), 4(1)(q), 4(1)(r), and 3(6)(d)—covering teachers on leave, certain veterans' organization service, Peace Corps volunteers, and members reinstated after separation. Although the decision technically binds only the parties involved, PERAC recommends boards follow these guidelines for consistency when evaluating buyback requests from inactive members; no immediate mandatory action is required, but boards should apply this framework going forward.

PERAC Memo #13/2015 transmits the updated Tobacco Company List (July 2015), which replaces all prior versions and identifies companies deriving more than 15% of revenue from tobacco sales—investments in which are prohibited under Chapter 119 of the Acts of 1997. Boards must ensure this list is provided to their investment advisors (for Massachusetts public fund use only) and must review portfolios, including pooled funds, for compliance; any non-compliant holdings must be divested prudently, in consultation with PERAC prior to taking action.

This memo reminds boards of their obligation under PERAC Regulation 4.03 to submit monthly cash book entries, trial balances, journal entries, and custodian/fund statements to PERAC within four weeks of month's end, in accurate and timely fashion. It cites an incident where one board's inaccurate/late financial data submission caused the 2014 Annual Report to be incomplete, and warns that repeated noncompliance will trigger remedial action by the Commission. Boards should ensure timely, accurate monthly filings and follow proper procedures (referenced in prior memos) when correcting or revising previously submitted Cash Books or Annual Statements.

PERAC Memo #18/2015 notifies boards that Section 54 of Chapter 46 of the Acts of 2015 amends G.L. c. 32, §23B by extending the maximum permissible contract term (including renewals, extensions, and options) for investment, actuarial, legal, and accounting service contracts from five years to seven years, effective immediately. Boards should review existing contracts: those with terms of five years or fewer may run to completion, but any extension may not push the total term beyond seven years, and boards should apply the new seven-year cap going forward when procuring or renewing covered service contracts.

This memo transmits PERAC's updated Tobacco Company List (October 2015), which replaces all prior lists and identifies companies deriving more than 15% of revenue from tobacco sales, in accordance with Chapter 119 of the Acts of 1997 prohibiting new retirement system investments in such companies. Boards must forward the list to their investment advisors (noting it is restricted to Massachusetts public fund use only), ensure no new prohibited investments are made, and—if a portfolio audit reveals noncompliance, including in pooled funds meeting the 15% threshold—consult with PERAC before divesting in a prudent manner.

PERAC Memo #22/2015 requests that all retirement boards complete and return the annual appropriation questionnaire—needed to calculate FY17 governmental unit appropriation amounts under G.L. c.32, §22D, §22(6A)(b), or §22F—by October 31, 2015, preferably via PERAC's website. Boards should also confirm that they have submitted a funding schedule for PERAC approval within the past two years, as required, and contact PERAC if an updated schedule is needed.

This memo transmits PERAC's updated Tobacco Company List (dated January 2016), which replaces all prior versions and takes effect immediately upon receipt, identifying companies deriving over 15% of revenue from tobacco sales in which retirement systems are prohibited from making new investments under Chapter 119 of the Acts of 1997. Boards must share the list with their investment advisors (noting it is restricted to Massachusetts public fund use only), ensure their portfolios—including pooled funds assessed at the pool level—comply with the divestment requirement, and consult with PERAC before taking any divestment action if non-compliance is found during audit.

PERAC Memo #27/2015 supplements prior guidance (notably Memo #54/2012 and Memo #18/2014) on completing Annual Vendor Disclosure forms required under G.L. c. 32, §23B, clarifying that sub-advisors/investing managers must file disclosures (or the fund-of-funds/manager-of-managers cannot allocate assets to them), and that "Compensation Paid" and "Compensation Received" sections must specifically identify recipients and fully disclose all forms of compensation (e.g., carried interest, transaction/monitoring/financing/redemption fees), not just generic categories. Boards should ensure their investment providers are aware of and comply with these detailed disclosure expectations when reviewing and accepting Annual Disclosure filings.

PERAC Memo #07/2014 transmits the updated (January 2014) Tobacco Company List required under Chapter 119 of the Acts of 1997, which bars retirement systems from making new investments in companies deriving more than 15% of revenue from tobacco sales. Boards must replace any prior list with this version, distribute it to their investment advisors (for Massachusetts public fund use only), and ensure portfolio compliance—applying the 15% threshold at the pooled-fund level where applicable—consulting PERAC before divesting if non-compliance is found.

PERAC Memorandum #08, 2014 sets the "regular interest" rate under G.L. c. 32, §22(6)(b) at 0.1% for calendar year 2014, based on average savings account rates from a sample of financial institutions. Boards must apply this 0.1% rate to accumulated total deductions and accrued interest when crediting interest for refunds and retirements processed during 2014, and also apply it on December 31, 2014 to outstanding balances as of December 31, 2013.

PERAC Memorandum #14, 2014 announces that the Commission voted to require SEC (or, where applicable, Massachusetts Secretary of State) registration as a prerequisite for issuing an Acknowledgement Letter for any proposed investment. Boards should note that they may not proceed with an investment in an entity that lacks such registration, since PERAC will withhold the Acknowledgement Letter in these circumstances; boards should therefore verify an investment manager's SEC or SOS registration status before submitting investments for approval.

PERAC Memo #15/2014 transmits the updated April 2014 Tobacco Company List, which supersedes all prior lists and identifies companies (including pooled funds) deriving more than 15% of revenue from tobacco sales in which investment is prohibited under Chapter 119 of the Acts of 1997. Boards must ensure their portfolios comply with this list immediately upon receipt, forward or notify investment advisors of the list (for Massachusetts public fund use only), and—if PERAC's audit reveals noncompliant holdings acquired after January 13, 1998—divest in a prudent manner only after consulting with PERAC.

This memo announces that PERAC's Fund of Funds/Manager of Managers policy is now in effect, providing retirement boards with guidance on how such investment structures can satisfy Section 23B's mandatory contractual requirements regarding disclosure, indemnification, and fiduciary status. Boards considering or currently utilizing these investment vehicles should review the attached policy to ensure compliance, noting that PERAC will evaluate non-conforming structures on a case-by-case basis and consider the policy's application an evolving process. No immediate action is required beyond familiarizing staff with the policy; questions should be directed to PERAC's Investment Unit.

PERAC Memo #20/2014 transmits the updated Tobacco Company List (dated July 2014), which supersedes all prior versions and is effective immediately upon receipt. Boards must ensure their portfolios contain no new investments in listed companies (those deriving more than 15% of revenue from tobacco sales), including pooled funds assessed at the fund level, and should forward or make the list available to their investment advisors for Massachusetts public fund use only. If a board's portfolio is found non-compliant during PERAC's audit, the board must consult with PERAC before undertaking prudent divestiture.

PERAC Memo #24/2014 clarifies that errors discovered in Cash Book filings, PERAC Annual Statements, or other accounting records should generally be corrected in the period in which they are discovered, consistent with GAAP practice, rather than by retroactively altering previously filed/original records—since retroactive changes undermine the integrity and comparability of reported investment and financial results. Boards must not make direct changes to original source documents or prior-period filings on their own initiative; any proposed prior-period adjustment requires prior consultation with, and approval from, PERAC before being made.

This memo transmits PERAC's updated Tobacco Company List (October 2014), which supersedes all prior versions, identifying companies deriving more than 15% of revenue from tobacco sales in which retirement systems are prohibited from making new investments under Chapter 119 of the Acts of 1997. Boards must forward the list to their investment advisors (or direct them to it on the PERAC website), and if a PERAC audit finds a board's portfolio holds prohibited investments made after January 13, 1998, the board must consult with PERAC before prudently divesting to achieve compliance. Note also that the 15% rule applies to pooled funds in the aggregate, meaning noncompliant pooled investment vehicles will appear on the list as well.

This memo reminds boards of the mandatory annual training requirement for board members under Chapter 32 and lists pre-approved training programs/sponsors eligible for education credit, including specific credit hours for each (e.g., NCPERS, NCTR, PRIM, State Ethics Commission seminars, MACRS October Conference). No board action is strictly required, but administrators should inform board members of these approved opportunities—particularly the State Ethics Commission seminars (October 23 and December 4, 2014, in-person or via webinar) and the MACRS October Conference—to help members satisfy their annual training obligations and avoid disqualification from continued board service.

PERAC Memo #32/2014 requests that retirement boards submit appropriation questionnaire data needed to calculate FY16 governmental unit appropriations under G.L. c.32, §22D, §22(6A)(b), or §22F. Boards must complete and return the questionnaire (preferably via PERAC's website) by October 31, 2014, and should ensure their funding schedule has been updated and submitted to PERAC within the last two years, contacting PERAC if it has not.

PERAC Memo #34/2014 introduces GASB Statements 67 and 68, which establish new financial reporting (not funding) standards for public pension plans—GASB 67 for plan reporting (effective for plan years beginning after June 15, 2013) and GASB 68 for employer reporting (effective for fiscal years beginning after June 15, 2014). Boards must collaborate with actuaries, auditors, and investment consultants to ensure accurate census data, financial statements, and required schedules/disclosures (e.g., net pension liability, contribution schedules, discount rate sensitivity); PRIM will assist by supplying PRIT-related data such as money-weighted returns and asset allocation for clients invested in the PRIT Fund. No funding action is required, but boards should begin coordinating with these parties to meet the new reporting requirements on the applicable timelines.

PERAC Memo #36/2014 provides guidance on properly recording and reporting investment-related fees (managers, custodians, consultants) on Schedules 5 and 7 of the Annual Statement of Financial Condition. Boards must track and report fees for all investment service providers—entering $0 rather than leaving blanks when no fees are currently paid but assets remain—and must ensure Schedule 5 (pooled fund activity) reconciles with the Assets page while Schedule 7 (management fees) captures all providers, including those on Schedule 5. Boards should review their Annual Report submissions to ensure full, accurate completion of these schedules going forward.

Under Chapter 119 of the Acts of 1997, retirement systems are prohibited from making new investments in companies deriving more than 15% of revenue from tobacco sales, and PERAC's enclosed January 2015 Tobacco Company List supersedes all prior lists effective upon receipt. Boards must forward the list to their investment advisors (or notify them it is posted on PERAC's website), ensure the list is used only for the board's own fund, and note that the 15% rule applies to pooled funds in aggregate. No immediate divestment action is required unless PERAC's audit identifies non-compliant holdings, in which case the board must consult with PERAC before prudently divesting.

PERAC Memo #9/2013 establishes the "regular interest" rate for member accounts under G.L. c. 32, § 22(6)(b) at 0.1% for calendar year 2013, based on average savings account rates from a sample of financial institutions. Boards must apply this rate to accumulated total deductions and accrued interest when crediting interest for refunds and retirements processed during 2013, and must also credit it on December 31, 2013 to outstanding account balances as of December 31, 2012.

PERAC Memo #13/2013 transmits the updated (April 2013) Tobacco Company List, which replaces all prior lists and is effective immediately upon receipt, identifying companies deriving more than 15% of revenue from tobacco sales in which new investments are prohibited under Chapter 119 of the Acts of 1997. Boards must forward the list to their investment advisors (or direct them to it on PERAC's website), noting it is restricted to use for Massachusetts public fund clients only; boards found holding non-compliant securities—including pooled funds meeting the 15% threshold—must consult with PERAC before divesting in a prudent manner.

PERAC Memo #14/2013 follows up on Memos #4/2013 and #7/2013 regarding the requirement under G.L. c. 32, §3(8)(b) (as amended by Ch. 176 of the Acts of 2011) that certain buyback repayments be calculated using actuarial assumed interest rather than regular interest. It transmits the revised 2013 repayment worksheet, make-up worksheet, and cumulative interest factor sheet reflecting actuarial assumed interest rates for calculations covering buybacks under G.L. c. 32 §§3(6)(c), 3(6)(d), 3(8)(b), and related make-up provisions. Boards should begin using these updated 2013 forms immediately when calculating applicable buyback and make-up repayment amounts, and may contact John Boorack with questions.

PERAC Memo #16/2013 requests that all retirement boards assist in compiling data for PERAC's 2012 Annual Report by reviewing and verifying two enclosed documents: a board data sheet (contact/meeting information current as of today, but board member/administrator names as of December 31, 2012) and a list of investment managers, custodian, and consultant retained as of December 31, 2012. Boards must annotate any corrections (including manager name changes, fund liquidations, or terminations with supporting documentation/dates), or mark the documents "correct" if no changes are needed, and return them to Rose Cipriani by May 3, 2013.

This memo transmits PERAC's updated Tobacco Company List (dated July 2013), which supersedes all prior lists and identifies companies deriving more than 15% of revenue from tobacco sales, in accordance with Chapter 119 of the Acts of 1997 prohibiting new retirement system investments in such companies. Boards must ensure their portfolios (including pooled funds assessed at the pool level) comply with this list going forward, distribute it to their investment advisors for Massachusetts public fund use only, and consult with PERAC before divesting to bring any non-compliant holdings identified through PERAC's audit process into compliance.

This memo summarizes the CRAB decision in MacAloney v. Worcester Regional Retirement System, which held that G.L. c. 32, §4(2)(b)'s five-year full-time credit provision for call/reserve/permanent-intermittent firefighters and police officers does not preempt local board rules granting additional pro-rated service credit for call service beyond that initial five-year period, and that such service beyond five years, as well as prior non-membership service, remains subject to make-up payment requirements under §§3(2)(c), 3(3), 3(5), and 4(2)(c). Retirement boards must apply §4(2)(b)'s five-year full-time credit rule independently from other creditable service provisions, and should grant pro-rated credit (subject to applicable make-up payments) for any call/intermittent service extending beyond the initial five years, consistent with this now-final and binding CRAB decision.

This memo requests that boards submit FY15 appropriation data (via the online questionnaire or PERAC's website) needed to calculate governmental unit appropriations under G.L. c.32, §§22D, 22(6A)(b), or 22F, with a deadline of October 31, 2013. Boards must complete and return the appropriation questionnaire by that date, and should also confirm their funding schedule has been resubmitted to PERAC for approval within the last three years, contacting PERAC if an update is needed.

PERAC Memo #31/2013 transmits the updated October 2013 Tobacco Company List, which supersedes all prior lists and is effective immediately upon receipt, identifying companies deriving more than 15% of revenue from tobacco sales in which new investments are prohibited under Chapter 119 of the Acts of 1997 (including pooled funds that meet this threshold). Boards must forward the list to their investment advisors (or direct them to it on the PERAC website, noting it is for Massachusetts public fund use only) and ensure no new prohibited holdings are acquired, since PERAC will review portfolios for compliance during audits. If a board's portfolio is found non-compliant, it must consult with PERAC before prudently divesting from the affected holdings.

Memorandum #32 (2013) advises boards on implementing the SJC's *Herrick v. Essex Regional Retirement Board* decision, which held that when a board's legal error in denying benefits is corrected, the member is entitled to interest on the retroactive lump-sum payment to make them actuarially whole. PERAC directs boards to adopt a consistent interest rate (suggesting the § 22(6)(b) regular interest rate or the 3% statutory refund rate) and apply it to all G.L. c. 32 § 20(5)(c)(2) adjustments going forward—covering both underpayments and overpayments (subject to waiver provisions). Boards must also pay interest retroactively to any member/beneficiary who already received a corrective adjustment and now petitions for interest on that underpayment period.

This memo explains the new local option under G.L. c. 32, §20(6), effective February 16, 2012, which replaces the former $3,000 stipend option and allows retirement board members' annual stipend to be set between $3,000 and $4,500 (with ex officio members capped at $4,500 total for active administration services). Boards themselves do not vote on this—the local legislative body (city council, town meeting, county/regional advisory council, district members, or authority governing body) must accept the option, and the specific dollar amount must be stated in that vote. Boards should notify PERAC of acceptance with certified copies of the vote, and may wish to bring the option to their legislative body's attention, but must adopt a new acceptance vote (even if the old $3,000 option was previously accepted) to raise the stipend above $3,000.

This memo transmits PERAC's updated January 2012 Tobacco Company List, which supersedes all prior lists effective immediately upon receipt, identifying companies deriving over 15% of revenue from tobacco sales (per Chapter 119 of the Acts of 1997) in which retirement systems are prohibited from making new investments. Boards must distribute or notify their investment advisors of this list (for Massachusetts public fund use only), ensure post-1/13/1998 portfolios do not hold prohibited securities—including pooled funds assessed at the fund level—and consult with PERAC before divesting to bring any noncompliant portfolio into compliance.

PERAC Memo #05/2012 establishes the "regular interest" rate for 2012 at 0.1%, as determined under G.L. c. 32, §22(6)(b) based on average savings account rates from a sample of financial institutions. Boards must apply this 0.1% rate to accumulated total deductions and accrued interest for refunds and retirements processed during 2012, and credit it to outstanding member account balances as of December 31, 2011 on December 31, 2012.

This memo announces that PERAC's Placement Agent Policy (originally detailed in Memo #34/2011) is now in effect, requiring investment managers to file a Placement Agent Disclosure Form with both the retirement board and PERAC when responding to RFPs, negotiating contract amendments, or engaging in substantive discussions with a board. Boards must ensure this disclosure form is obtained from managers as part of any ongoing or new contract negotiations, and must incorporate the specified contract terms/remedies (e.g., fee reimbursement) into all new contracts and amendments executed on or after January 1, 2012. Administrators should review any contracts currently being negotiated or amended to confirm compliance with these disclosure and contract-term requirements.

This memo alerts boards that Chapter 176 of the Acts of 2011 establishes a new mandatory competitive sealed proposal (RFP) process under G.L. c. 32, §23B for procuring investment, actuarial, legal, and accounting services, effective February 16, 2012, and reminds boards that fiduciary duty under §23(3) still governs all procurement decisions. Boards must immediately review any procurements in progress: any covered procurement not resulting in an executed contract by February 16, 2012 will be voided and must be restarted under the new RFP requirements, including specific RFP content, written evaluation criteria, and a six-year document retention file for each contract.

This memo addresses the need for retirement boards to counsel members who are considering withdrawing their contributions, given that Chapter 176 significantly changes retirement rights and benefits for anyone who later re-enters public service and becomes a member on or after April 2, 2012 (e.g., higher minimum retirement age, new age factors, five-year salary averaging, new contribution rates, loss of §10 termination allowance). Boards should fully inform any member seeking a withdrawal of these consequences, referencing PERAC Memo #36/2011 for details, before processing the withdrawal.

This memo requests that retirement boards assist PERAC in compiling data for its 2011 Annual Report by verifying board contact/member information, confirming the list of investment managers, custodian, and consultant as of December 31, 2011, and calculating and reporting their Target Investment Rate of Return. Boards must review, annotate (or mark as correct), and return the data sheet, manager/custodian/consultant list, and target rate of return to PERAC by February 28, 2012.

**Memorandum #30, 2012** transmits an updated Tobacco Company List (dated April 2012), which supersedes all prior versions, identifying companies deriving more than 15% of revenue from tobacco sales in which retirement systems are prohibited from making new investments under Chapter 119 of the Acts of 1997. Boards must share the list with their investment advisors (noting it is restricted to use for Massachusetts public fund clients only) and ensure their portfolios—including pooled fund holdings assessed at the pool level—remain compliant; any non-compliant holdings identified through PERAC's audit process must be divested prudently, in consultation with PERAC before taking action.

This memo provides a quarterly update on the mandatory 18-hour annual training requirement for retirement board members under Chapter 176 of the Acts of 2011 (M.G.L. c. 32, §20, Subdivision 7), effective for 2012. It confirms educational credit awarded for MACRS Conference sessions and various PERAC-hosted programs (ethics, actuarial basics, disability), and clarifies the pre-approval process for outside training events. Boards should ensure members are aware of the requirement, distribute PERAC's forthcoming statement-of-completion forms to members, and confirm that members submit completed forms to PERAC by January 31, 2013, since failure to meet the training requirement will bar a member from continuing to serve beyond their current term.

PERAC Memo #36/2012 notifies retirement boards that, following his criminal conviction, the Commission has formally prohibited Timothy McDaid (former Executive Director of the Maynard Retirement Board) from serving in any capacity—as member, employee, consultant, or service provider—with any Massachusetts public retirement system, pursuant to 840 CMR 1.03. Boards should ensure they do not employ or engage McDaid directly or through any affiliated firm, partnership, or entity; any such entity that fails to disclose his involvement will be subject to sanctions under G.L. c. 32, §21A. No further action is required beyond ensuring compliance with this prohibition.

This memo reminds boards that, as the five-year anniversary approaches for systems that voluntarily transferred assets to PRIT in 2007 under Chapter 68 (in lieu of a Commission-ordered permanent transfer for underperformance/low funded ratio), PERAC intends to reassess those systems' status. Boards should be aware that if a system withdraws from PRIT at this point, the Commission may promptly issue a permanent transfer Order under Section 22(8)(c½) if the system still meets the underperforming criteria (funded ratio below 65% and 10-year returns at least 2% below PRIT). No immediate action is required beyond awareness, but affected boards should consider this risk before deciding to withdraw from PRIT.

PERAC Memo #45/2012 transmits an updated Tobacco Company List (July 2012), which replaces all prior lists and identifies companies deriving more than 15% of revenue from tobacco sales, in which retirement systems are prohibited from making new investments under Chapter 119 of the Acts of 1997. Boards must distribute the list to their investment advisors (restricted to use for Massachusetts public fund clients only) and ensure portfolio compliance, including with pooled funds assessed on a look-through basis; any non-compliant holdings must be divested prudently, in consultation with PERAC before action is taken.

**PERAC Memo #48/2012** requests that retirement boards submit data needed to calculate FY14 appropriation amounts owed by governmental units under G.L. c.32, §22D, §22(6A)(b), or §22F. Boards must complete and return the attached appropriation questionnaire (preferably via PERAC's website) **no later than October 31, 2012**, and should also confirm that a funding schedule has been submitted for PERAC approval within the past three years, contacting PERAC if an update is needed.

PERAC Memo #49/2012 continues the Commission's review (begun in Memo #27/2012) of how Chapter 176 of the Acts of 2011 affects existing PERAC investment regulations and guidelines, providing a summary chart of the impact on each provision reviewed. It reiterates that boards must invest through PRIT or an employed investment manager consistent with the amended Chapter 32, §23 restrictions (tobacco, South Africa/Northern Ireland, no direct mortgage/collateral loan investments) and the fiduciary duty standard under §23(3); PERAC notes further guidance on hedge fund investment and indemnification is still forthcoming. No immediate board action is required beyond reviewing the attached summary and ensuring investment practices conform to the revised statutory framework.

PERAC Memo #50/2012 transmits an updated Tobacco Company List (October 2012), which supersedes all prior lists and identifies companies from which retirement boards are prohibited from making new investments under Chapter 119 of the Acts of 1997 (companies deriving more than 15% of revenue from tobacco sales, including pooled funds meeting this threshold). Boards must apply this list immediately, forward it to their investment advisors for Massachusetts public fund use only, and ensure no prohibited purchases occur after January 13, 1998; any portfolio found out of compliance during a PERAC audit must be divested prudently after consultation with PERAC.

PERAC Memo #51/2012 clarifies the requirements of G.L. c. 32, §23B, which mandates that contracts with investment service providers include specific fiduciary, disclosure, and indemnification terms: providers must be designated fiduciaries, must annually disclose compensation arrangements and conflicts of interest to the board and PERAC, and contracts may not contain provisions indemnifying the contractor by the retirement board. The memo explains how these requirements apply particularly to complex structures like partnership/trust agreements (e.g., general partners in limited partnerships) where the "contractor" and indemnification language must be carefully identified. **Action required:** Boards must review and ensure all investment service contracts—including partnership and trust agreements—comply with §23B's fiduciary, disclosure, and no-indemnification requirements, and should consult legal counsel to properly apply these terms to non-standard investment vehicles.

PERAC Memo #54/2012 reminds retirement boards that all "investment service providers" (managers, consultants, custodians, trusts, proxy/litigation services, and related vendors) must file annual disclosure forms with both the board and PERAC by January 1 of each year, and as part of any RFP process, per c. 32 §23B and 840 CMR 17.04(7)-(8). Disclosures must cover compensation arrangements (paid or received, directly or indirectly) related to services provided to the board or any other client, as well as any potential conflicts of interest. Boards are asked to forward this notice to their vendors to ensure compliance and confirm required disclosures are filed on time.

PERAC Memo #56/2012 transmits the updated Tobacco Company List (dated January 2013), which replaces all previously issued lists and takes effect immediately upon receipt. Boards must ensure their investment advisors have and use this current list to comply with the statutory prohibition (M.G.L. c. 32 restrictions under Chapter 119 of the Acts of 1997) against new investments in companies deriving more than 15% of revenue from tobacco sales—including pooled funds meeting that threshold—and must consult with PERAC before divesting to bring any noncompliant holdings into compliance.

This memo announces that PERAC has set the "regular interest" rate under G.L. c. 32, §22(6)(b) at 0.2% for calendar year 2011, based on average savings account rates from a sample of financial institutions. Boards must apply this 0.2% rate to accumulated total deductions and accrued interest when crediting interest for 2011 refunds and retirements, and also credit it on December 31, 2011 for outstanding balances as of December 31, 2010.

This memo announces PERAC's requirements for preparing the Calendar Year 2010 Annual Statement, distributed via CD along with sample statements and preparation guides, and notes updates related to 3% interest on refunds, ERI funds, and Buyback agreement accounting. Boards must complete and return the signed Annual Statement to PERAC by May 1, 2011, and submit their pre-closing cashbook and trial balance for December 2010 prior to February 28, 2011. Boards are also encouraged (though not required) to sign up for the seminar or request the CD presentation for training assistance.

PERAC Memorandum #08, 2011 provides the updated quarterly list (as of 12/31/10) of investment managers previously granted exemptions under 840 CMR 19.01 for international equity, international fixed income, real estate, and alternative investment asset classes, limited to funds/managers still open to new investors. Boards do not need to seek a new exemption when hiring a manager already on this list, but must still submit a Competitive Process Notification Form, Vendor Certification Form, and Disclosure Form, and receive PERAC's acknowledgement before transferring funds; boards may also hire non-listed managers by requesting a separate exemption. No exemption is required for domestic equity or fixed income managers—only the three forms noted above apply.

PERAC Memo #09/2011 transmits the updated (January 2011) Tobacco Company List, which supersedes all prior lists and takes effect immediately upon receipt, identifying companies deriving more than 15% of revenue from tobacco sales in which retirement systems are barred from making new investments under Chapter 119 of the Acts of 1997. Boards must distribute the list to their investment advisors (noting it is restricted to use for Massachusetts public fund clients only), and should be aware that PERAC will review portfolios during audits for compliance—including pooled funds assessed on an aggregate basis—and that any board found holding a prohibited investment must consult with PERAC before divesting in a prudent manner.

**Summary:** This memo requests that all retirement boards assist PERAC in compiling data for its 2010 Annual Report by verifying/updating three items: (1) board contact information and membership as of December 31, 2010; (2) the list of investment managers, custodian, and consultant retained as of December 31, 2010, noting any name changes, terminations, or liquidations; and (3) the board's Target Investment Rate of Return based on current asset allocation. **Action required:** Boards must review, annotate/correct, and return the data sheet, manager/custodian/consultant list, and calculated Target Investment Rate of Return to Rose Cipriani at PERAC by **February 22, 2011**, even if no changes are needed (in which case the materials should simply be marked "correct" and returned).

This memo announces PERAC's initiation of the process to revise its Investment Regulations, consolidating existing guidance (e.g., Hedge Fund Guidelines, Placement Agent Policy, Mandate Modification, and Futures/Options rules) into formal regulation, updating procurement requirements, and removing outdated provisions. The draft is not final—public hearings and a comment period will follow before any changes are adopted—so boards need not take immediate action but should monitor the process and may wish to submit comments or attend hearings.

PERAC has adopted draft regulations overhauling investment, bookkeeping, and procurement rules for retirement systems—codifying past guidance (e.g., Hedge Fund Guidelines, Placement Agent Policy, Mandate Modification, Futures/Options use) while updating outdated provisions and adding procurement requirements. Boards should review the draft regulations and summary on PERAC's website and may attend one of the scheduled public hearings (May–June 2011) or submit written comments by the July 1, 2011 deadline before final regulations are filed with the Legislature. No immediate compliance action is required beyond optional participation in the comment process.

This memo (PERAC Memo #18, 2011) transmits the updated, PERAC-maintained list of investment managers/funds in international equity, international fixed income, real estate, and alternative investments that have previously received exemptions under 840 CMR 19.01 and remain open to new investors. Boards hiring a manager already on this list do not need to seek a new exemption, but must still submit a Competitive Process Notification Form, Vendor Certification Form, and Disclosure Form and receive PERAC acknowledgement before transferring funds; boards may also still pursue exemptions for managers not on the list, and no exemption is needed at all for domestic equity/fixed income hires. No other action is required beyond noting the quarterly-updated list, available on PERAC's website.

This memo transmits PERAC's updated Tobacco Company List (dated April 2011), which replaces all previous versions and identifies companies deriving more than 15% of revenue from tobacco sales in which retirement systems are prohibited from making new investments under M.G.L. c. 32, as established by Chapter 119 of the Acts of 1997. Boards must ensure their investment advisors receive or access this list (noting it is restricted to use for Massachusetts public fund clients only), and if a PERAC audit reveals non-compliant holdings—including in pooled funds meeting the 15% threshold—the board must divest prudently after consulting with PERAC.

PERAC Memo #25/2011 transmits an updated Tobacco Company List (dated July 2011) that supersedes all prior lists, identifying companies deriving more than 15% of revenue from tobacco sales in which retirement systems are prohibited from making new investments under Chapter 119 of the Acts of 1997. Boards must forward the list to their investment advisors (or notify them it is on the PERAC website), ensure no prohibited purchases occur (including in pooled funds assessed at the pool level), and, if a portfolio is found out of compliance during a PERAC audit, consult with PERAC before divesting in a prudent manner.

Memorandum #26 (2011) requests that all retirement boards submit appropriation data needed for PERAC to calculate FY13 governmental unit appropriations under G.L. c.32, §22D, §22(6A)(b), or §22F. Boards must complete and return the appropriation questionnaire (preferably online) by October 31, 2011, and should also confirm their funding schedule has been resubmitted to PERAC for approval within the last three years, contacting PERAC if an update is needed.

This memo transmits an updated Tobacco Company List (dated July/October 2011), which supersedes all prior lists and identifies companies deriving more than 15% of revenue from tobacco sales, in which retirement systems are barred from making new investments under Chapter 119 of the Acts of 1997 (applied also to pooled funds exceeding the 15% threshold). Boards must forward the list to their investment advisors (or direct them to it on PERAC's website), noting it is restricted to use for Massachusetts public fund clients only. Since PERAC will audit portfolios for compliance, boards should review current holdings against this list and, if any prohibited investments are found, must consult with PERAC before prudently divesting to come into compliance.

This memo announces PERAC's new Placement Agent Policy, adopted after public hearing in response to Pension Reform legislation, which requires investment managers to disclose detailed information about any placement agents used in connection with investment by Massachusetts public pension systems (compensation, agreements, qualifications, registrations, and any board/staff connections). Boards must ensure managers provide this disclosure information to both the board and PERAC before/during RFP responses, contract amendments, or substantive discussions with managers, and should expect PERAC to issue standardized forms for compliance before January 1, 2012.

This memo introduces the governance-related provisions of Chapter 176 of the Acts of 2011 (Pension Reform and Benefit Modernization), covering investment oversight changes, board member eligibility/education/disclosure requirements, procurement reform, and enforcement measures, with a separate memo to follow on benefit-structure provisions. Most governance provisions take effect February 16, 2012; boards should note that PERAC will no longer issue individual investment manager exemptions/waivers but will instead require submission of procurement documentation, vendor and board member certifications, and consultant reports for acknowledgement before proceeding with investments or consultant retention. Boards should review the new law closely and prepare to comply with new eligibility rules (e.g., prohibiting service by employees/vendors receiving outside remuneration) as further PERAC guidance and forms are issued.

Memorandum #39 (2011) provides guidance on implementing Chapter 176's Section 23B contract requirements, directing boards to review all existing vendor contracts for investment, actuarial, legal, and accounting services to ensure compliance by the February 16, 2012 effective date. Boards should confirm that written contracts have defined terms not exceeding five years (including renewals/extensions); contracts already meeting this standard remain valid until expiration, but any contract lacking a term—or exceeding five years—must be amended or rebid through a new procurement process before the deadline to avoid violating the statute. The memo also reminds boards that non-listed services (e.g., software, medical, investigative) remain subject to the general prudent expert fiduciary standard rather than Section 23B's specific procurement process.

This memo clarifies that when a Board Member uses paid leave to attend Board business and the employer incurs replacement/substitute costs (rather than the Member losing wages), the retirement board may reimburse the employer, capped at the wages the Member would have earned for that shift. Boards should try to schedule meetings around Members' work schedules to minimize such costs, and any employer reimbursement must be fully documented and specifically approved by the Board in advance, with the affected Member abstaining from discussion and voting on the matter.

This memo transmits PERAC's updated (as of 12/31/09) quarterly list of investment managers previously granted exemptions under 840 CMR 19.01 in international equity, international fixed income, real estate, and alternative investments asset classes. Boards may hire managers from this list without seeking a new exemption, but must still submit a Competitive Process Notification Form, Vendor Certification Form, and Disclosure Form, and receive PERAC acknowledgement before transferring funds; no exemption or listing applies to domestic equity/fixed income managers, and boards may still pursue exemptions for managers not on the list.

This memo transmits PERAC's updated Tobacco Company List (December 2009), which supersedes all prior lists and implements Chapter 119 of the Acts of 1997 prohibiting new retirement system investments in companies deriving more than 15% of revenue from tobacco sales. Boards must forward the list to their investment advisors (noting it applies only to Massachusetts public fund clients), ensure portfolio compliance—including for pooled funds assessed at the pool level—and consult with PERAC before divesting if any non-compliant holdings are identified during audit review.

This memo announces that PERAC has set the "regular interest" rate under G.L. c. 32, §22(6)(b) at 0.3% for calendar year 2010, based on average savings rates from a sample of financial institutions. Boards must apply this 0.3% rate to accumulated total deductions and accrued interest when crediting interest for refunds and retirements processed during 2010, and also apply it to outstanding balances as of December 31, 2009, when crediting interest on December 31, 2010.

This memo requests that retirement boards assist PERAC in compiling data for its 2009 Annual Report by verifying board contact/membership information (as of 12/31/2009), confirming the accuracy of their list of investment managers, custodian, and consultant, and calculating/reporting their Target Investment Rate of Return. Boards must annotate and return the data sheet and manager/custodian/consultant list (marking "correct" if no changes are needed), along with the target rate of return, to PERAC by February 16, 2010.

This memo transmits PERAC's quarterly-updated list (as of 3/31/10) of investment managers previously granted exemptions under 840 CMR 19.01 in international equity, international fixed income, real estate, and alternative investment asset classes. Boards may hire managers already on this list without seeking a new exemption, but must still submit a Competitive Process Notification Form, Vendor Certification Form, and Disclosure Form and receive PERAC acknowledgement before transferring funds; boards remain free to pursue exemptions for managers not on the list, and no exemption is needed at all for domestic equity/fixed income hires.

This memo transmits the updated March 2010 Tobacco Company List, which supersedes all prior lists and is effective immediately, identifying companies deriving more than 15% of revenue from tobacco sales in which retirement systems are prohibited from making new investments under Chapter 119 of the Acts of 1997 (this restriction applies to pooled funds as well, if the pool as a whole exceeds the 15% threshold). Boards must share this list with their investment advisors (noting it is restricted to use for Massachusetts public fund clients only), and if a PERAC audit finds non-compliant holdings, the board must divest in a prudent manner after consulting with PERAC before taking action.

This memo announces that PERAC staff have received new @MassMail.State.MA.US e-mail addresses (in addition to their existing 2005 addresses, which remain valid) and introduces the Secure File and E-mail Delivery (SFED) application for exchanging sensitive information securely. Boards should note that only the older @per.state.ma.us addresses work with SFED, and should continue sending appropriation questionnaires/pooled fund statements to the original addresses; no immediate action is required beyond updating contact references and awaiting forthcoming SFED protocols.

This memo transmits PERAC's updated quarterly list (as of 6/30/10) of investment managers previously granted exemptions under 840 CMR 19.01 for international equity, international fixed income, real estate, and alternative investment asset classes. Boards may hire managers from this list without seeking a separate exemption, but must still submit a Competitive Process Notification Form, Vendor Certification Form, and Disclosure Form, and receive PERAC acknowledgement before transferring funds; no exemption is needed for domestic equity/fixed income managers, and boards may still pursue exemptions for managers not on the list.

PERAC Memorandum #30/2010 transmits the updated July 2010 Tobacco Company List, which replaces all prior lists and takes effect immediately upon receipt, identifying companies deriving more than 15% of revenue from tobacco sales in which retirement systems are prohibited from making new investments under Chapter 119 of the Acts of 1997 (including violations arising within pooled funds assessed as a whole). Boards must forward the list to their investment advisors (or direct them to PERAC's website) and note it applies solely to Massachusetts public fund clients; boards found holding non-compliant investments during PERAC's audit must divest prudently and are required to consult with PERAC before taking any divestment action.

This memo explains that effective July 1, 2010 (per Chapter 131 of the Acts of 2010), members who voluntarily terminate service with less than 10 years of creditable service and withdraw their contributions will have their refund interest calculated at a flat 3% rate for the entire period, replacing the prior tiered interest treatment for those with less than 5 or 10 years of service. This change applies only at the time of refund disbursement (not to interest credited while funds remain on deposit), does not affect involuntary withdrawals or members with 10+ years of service, and leaves buyback rules unchanged. Boards should use the PERAC spreadsheet/examples provided (pending an updated withdrawal application form) to manually calculate affected refunds, continue processing disbursements via Refunds to Members #5757 with interest transferred from the Pension Reserve Fund to the Annuity Savings Fund, maintain thorough documentation for potential future reemployment situations, and carefully counsel and provide written notice to members applying for refunds about how this provision affects them.

PERAC Memorandum #33/2010 summarizes provisions of Chapter 188 of the Acts of 2010 (Municipal Relief Act) governing actuarial valuations, funding schedules, and COLA base increases—including the new biennial valuation/six-year experience study requirement, the 95% minimum funding payment rule under §22D, the new §22F option allowing systems to adopt a funding schedule reaching full funding by June 30, 2040 under specified constraints, and the ability under §103(j) to raise the COLA base in $1,000 increments. Boards should review these provisions carefully (referencing the attached law) to determine whether to pursue a revised funding schedule under §22F or a COLA base increase under §103(j); any COLA base increase requires board vote plus approval by the appropriate legislative body and certification filed with PERAC, and once accepted cannot be revoked.

This memo clarifies that PERAC's acknowledgement letters for prospective investment managers confirm receipt of required documents (competitive process letter, disclosures, vendor certification) but do NOT constitute authorization to proceed without full compliance with 840 CMR investment regulations—boards should obtain separate legal counsel assurance on this point. Where a manager's documents conflict with specific PERAC regulations, boards must submit specific, narrowly-tailored supplementary regulation requests (PERAC will not issue blanket exemptions), citing the exact regulations at issue and the rationale for relief.

PERAC Memo #35, 2010 requests that all retirement boards submit appropriation data needed to calculate FY12 governmental unit appropriations under G.L. c.32, §22D, §22(6A)(b), or §22F. Boards must complete and return the enclosed questionnaire (or submit via PERAC's website) by October 31, 2010, and boards whose funding schedules have not been updated within the past three years should contact PERAC to arrange a new submission, as required by law.

This memo transmits PERAC's quarterly-updated list (as of 9/30/10) of investment managers previously granted exemptions under 840 CMR 19.01 for international equity, international fixed income, real estate, and alternative investment asset classes; only funds still open to new investors are included. Boards do not need to seek a new exemption when hiring a listed manager, but must still submit the Competitive Process Notification Form, Vendor Certification Form, and Disclosure Form under 840 CMR 17.04(8)(a)-(b) and obtain PERAC acknowledgement before transferring funds; boards may also pursue exemptions for managers not on the list. Note that domestic equity/fixed income managers never require exemptions, and this list is separate from PERAC's general Investment Managers, Consultants, and Custodians directory.

PERAC Memo #38 (2010) transmits the updated October 2010 Tobacco Company List, which supersedes all prior lists and takes effect immediately upon receipt, identifying companies deriving more than 15% of revenue from tobacco sales (including qualifying pooled funds) in which new investments are prohibited under Chapter 119 of the Acts of 1997. Boards must share this list with their investment advisors (noting it is for Massachusetts public fund use only), ensure their portfolios comply with the restriction, and—if any noncompliant holdings are found during PERAC's audit—consult with PERAC before divesting in a prudent manner.

This memo announces that PERAC has set the 2009 "regular interest" rate at 0.5%, as required under G.L. c. 32, §22(6)(b), based on average savings account rates from a sample of financial institutions. Boards must apply this 0.5% rate to accumulated total deductions and accrued interest when crediting interest for 2009 refunds and retirements, and again on December 31, 2009 for outstanding balances as of December 31, 2008.

This memo provides the quarterly-updated (as of 12/31/08) PERAC list of pre-approved investment managers/funds in international equity, international fixed income, real estate, and alternative investments that have already been granted an 840 CMR 19.01 exemption and remain open to new investors. Boards do not need to apply for a new exemption when hiring a manager from this list, but must still submit the Competitive Process Notification Form, Vendor Certification Form, and Disclosure Form and receive PERAC acknowledgement before transferring funds; boards may also still pursue exemptions for managers not on the list, and no exemption is needed at all for domestic equity/fixed income hires (only the three forms).

This memo provides the updated January 2009 Tobacco Company List required under Chapter 119 of the Acts of 1997, which prohibits retirement systems from making new investments in companies deriving more than 15% of revenue from tobacco sales (including pooled funds meeting this threshold). Boards must replace any prior list with this one immediately, distribute it to their investment advisors (for MA public fund use only), and ensure their portfolios remain compliant—consulting with PERAC before divesting if any non-compliant holdings are found during PERAC's audit review.

Memorandum #9 (2009) requests retirement boards' assistance in verifying data for PERAC's 2008 Annual Report, including board contact/meeting information, board member and administrator names as of December 31, 2008, and the current list of investment managers, custodian, and consultant. Boards must also calculate and report their Target Investment Rate of Return (distinct from the Actuarial Rate), based on current asset allocation and projected asset class returns. All annotated materials and the target rate calculation were due to Rose Cipriani at PERAC by February 16, 2009.

This memo transmits PERAC's quarterly updated list (as of 3/31/09) of investment managers previously granted exemptions under 840 CMR 19.01 in the international equity, international fixed income, real estate, and alternative investment asset classes. Boards may hire any manager on this list without seeking a new exemption, but must still submit a Competitive Process Notification Form, Vendor Certification Form, and Disclosure Form to PERAC and receive acknowledgement before transferring funds; no action is required for domestic equity/fixed income hires beyond these three documents, and boards remain free to request exemptions for managers not on the list.

PERAC Memo #17/2009 transmits the updated April 2009 Tobacco Company List, superseding all prior versions, which retirement boards must use to comply with Chapter 119 of the Acts of 1997 barring new investments in companies deriving more than 15% of revenue from tobacco sales. Boards should distribute this list to their investment advisors (for MA public fund use only), apply the 15% test at the pooled-fund level when applicable, and — since PERAC audits portfolios for compliance — must consult with PERAC before divesting any holdings found in violation.

This memo explains how the American Recovery and Reinvestment Act of 2009 (ARRA) affects retiree withholding: new IRS federal withholding tables took effect April 1, 2009, potentially increasing net allowances since retirement income (unlike earned income) doesn't qualify for the Making Work Pay Credit, creating a risk of under-withholding. It also describes two separate one-time $250 payments—a Social Security/Railroad Retirement payment and a Federal/State Retiree Credit (mutually exclusive)—that may apply to certain retirees. **Action required:** Boards should promptly notify the entity issuing retiree checks to implement the new withholding tables, and proactively inform retirees of the under-withholding risk, encourage them to consult a tax professional, and remind them they may file a new W-4P to adjust withholding if desired.

PERAC Memorandum #27 (2009) provides the quarterly-updated list, as of 6/30/09, of investment managers granted exemptions under 840 CMR 19.01 in the asset classes of international equity, international fixed income, real estate, and alternative investments. Boards that have previously received an exemption for a given asset class may hire managers from this list without applying for a new exemption, but they must still submit a Competitive Process Notification Form, Vendor Certification Form, and Disclosure Form, and receive PERAC's acknowledgement before transferring funds; no exemption is required at all for domestic equity/fixed income managers. Boards may also seek exemptions for managers not on the list, and should note this list is distinct from PERAC's general roster of investment managers, consultants, and custodians.

This memo (PERAC Memo #28, 2009) transmits an updated Tobacco Company List (dated July 2009), replacing all prior versions, identifying companies deriving more than 15% of revenue from tobacco sales in which retirement systems are prohibited from making new investments under Chapter 119 of the Acts of 1997. Boards should share the list with investment advisors (noting it is for Massachusetts public fund use only), ensure their portfolios—including pooled funds assessed on a whole-pool basis—remain in compliance, and consult with PERAC before divesting any non-compliant holdings identified during audit review.

PERAC Memo #32/2009 notifies boards that, following PRIM's termination of its Portable Alpha program and increase in Absolute Return allocation, PRIT's total hedge fund exposure will drop from 11% to 8%, correspondingly lowering the maximum permissible hedge fund allocation for local retirement systems to 8%. Boards already exceeding 8% may retain their current allocations without action, but any board seeking a new or continued allocation above 8% must formally request a supplementary regulation with detailed justification.

Memorandum #37 (2009) addresses Chapter 21 of the Acts of 2009, which amended G.L. c. 32, §11(1) to require retirement boards to contact a withdrawing member's employer before releasing accumulated total deductions, to confirm whether the member owes an obligation under an employee benefit plan (e.g., a §125 cafeteria plan). If an obligation is owed, the board must withhold the refund until the employer certifies it has been satisfied—but the board may not divert or release the funds directly to the employer. Boards must update their Application for Withdrawal of Accumulated Total Deductions form (Section B) to include this employer certification, per the revised form attached to the memo.

PERAC Memorandum #38/2009 requests that retirement boards submit appropriation data needed to calculate FY11 governmental unit appropriations under G.L. c. 32, §22D or §22(6A)(b). Boards must complete and return the enclosed questionnaire (or submit via PERAC's website) no later than October 31, 2009, and should also confirm their funding schedule has been resubmitted for approval within the past three years, contacting PERAC if an update is needed.

PERAC Memorandum #39 (2009) provides retirement boards with the updated quarterly list, current as of 9/30/09, of investment managers who have received a PERAC exemption under 840 CMR 19.01 for international equity, international fixed income, real estate, and alternative investment asset classes. Boards hiring a manager already on this list do not need to seek a new exemption, but must still submit a Competitive Process Notification Form, Vendor Certification Form, and Disclosure Form to PERAC and receive acknowledgement before transferring funds; no exemption or listing applies to domestic equity/fixed income managers, and boards remain free to request exemptions for managers not on the list.

PERAC Memo #40/2009 transmits the updated October 2009 Tobacco Company List, replacing all prior lists, effective immediately upon receipt, pursuant to Chapter 119 of the Acts of 1997, which bars new retirement system investments in companies deriving over 15% of revenue from tobacco sales. Boards must share the list with their investment advisors (noting it is restricted to Massachusetts public fund use only), ensure their portfolios—including pooled funds assessed on a whole-pool basis—comply with the prohibition, and, if non-compliant, consult with PERAC before prudently divesting any restricted holdings acquired after January 13, 1998.

This memo clarifies prior updates to PERAC's hedge fund guidelines: the asset threshold for boards to independently invest in hedge funds was lowered to $150 million (Memo #37, 2008), and following PRIM's termination of its Portable Alpha Program, the maximum allowable hedge fund allocation was reduced from 11% to 8% (Memo #32, 2009), though boards already exceeding 8% are not required to reduce holdings. No new action is required beyond ensuring boards understand current limits—systems may invest in PRIM's hedge fund segment up to 8% without PERAC approval, hedge fund investments remain limited to funds of funds, and exceptions may still be requested via supplementary regulation.

This memo transmits PERAC's updated (as of 12/31/07) list of investment managers previously granted exemptions under 840 CMR 19.01 for international equity, international fixed income, real estate, and alternative investments, listing only those managers/funds still open to new investors. For boards, no exemption application is needed to hire managers already on this list (for asset classes where the board previously received an exemption), but boards must still submit a Competitive Process Notification Form, Vendor Certification Form, and Disclosure Form, and obtain PERAC acknowledgement before transferring funds; boards may also pursue exemptions for managers not on the list, and note that domestic equity/fixed income hires never require exemptions—only the three forms.

PERAC Memo #6/2008 transmits the updated January 2008 Tobacco Company List, replacing all prior lists, pursuant to Chapter 119 of the Acts of 1997, which bars retirement systems from new investments in companies deriving over 15% of revenue from tobacco sales (including pooled funds meeting that threshold). Boards must share the list with their investment advisors (for Massachusetts public fund use only), ensure no prohibited purchases occur after January 13, 1998, and, if PERAC's audit finds noncompliant holdings, consult with PERAC before prudently divesting to come into compliance.

PERAC Memorandum #7 (2008) sets the "regular interest" rate under G.L. c. 32, §22(6)(b) at 0.6% for calendar year 2008, based on average savings account rates from a sample of financial institutions. Boards must apply this 0.6% rate to accumulated total deductions and accrued interest when crediting interest for 2008 refunds and retirements, and also apply it on December 31, 2008 to outstanding balances as of December 31, 2007. No further action beyond applying this rate is required.

This annual memo clarifies that PERAC's investment regulations impose no meaningful restrictions preventing local systems from adopting asset allocations similar to PRIT, including in alternatives, real estate, international/emerging markets, and hedge funds (up to 10%), and encourages boards to propose new strategies via the supplemental regulation process. Boards are reminded of their fiduciary duty to avoid being overly conservative when pursuing target returns, and are required to continue complying with regulations mandating periodic performance/strategy reviews with investment managers and annual determinations of whether managers are satisfactorily fulfilling their mandates. No new regulatory action is imposed beyond reinforcing these existing compliance obligations.

Memorandum #13 (2008) requests that boards assist PERAC in compiling data for its 2007 Annual Report by verifying and correcting three items: board contact/meeting information and board membership as of 12/31/07, the list of investment managers/custodian/consultant retained as of that date (noting name changes, terminations, or liquidations), and the board's Target Investment Rate of Return per its Statement of Investment Objectives. Boards must review, annotate, and return the data sheets and target rate of return to PERAC (Rose Cipriani) by February 15, 2008, even if no changes are needed—in which case they should mark the materials "correct" and return them by the deadline.

This memo is PERAC's annual compliance reminder covering disclosure practices and conflict-of-interest safeguards. It directs boards to incorporate Disclosure Statements into RFP processes, cross-check vendor disclosures against ADV forms and other retirement boards, verify compliance with 840 CMR 1.03 (including the specific prohibition on Clarke Blizzard and affiliated entities), ensure familiarity with Chapter 268A conflict-of-interest requirements, and review all investment contracts for compliance with 840 CMR 16.02(5) documentation standards. Boards should treat this as an action item requiring internal review of procurement, disclosure, and contract practices to confirm ongoing compliance.

This memo transmits PERAC's quarterly updated list (as of 3/31/08) of investment managers previously granted exemptions under 840 CMR 19.01 for international equity, international fixed income, real estate, and alternative investments. Boards may hire any manager on this list without seeking a new exemption, but must still submit a Competitive Process Notification Form, Vendor Certification Form, and Disclosure Form, and receive PERAC acknowledgement before transferring funds; boards may also pursue exemptions for managers not on the list. No action is required beyond continued compliance with these standard submission procedures when engaging listed managers.

**PERAC Memorandum #18, 2008: Tobacco Company List** — This memo transmits the updated April 2008 Tobacco Company List, which replaces all prior versions and identifies companies deriving more than 15% of revenue from tobacco sales, in accordance with Chapter 119 of the Acts of 1997. Boards must forward the list (or notice of its availability on PERAC's website) to their investment advisors, ensure no new prohibited investments are made, and if a portfolio is found non-compliant during PERAC's audit, consult with PERAC before divesting in a prudent manner; the 15% threshold also applies to pooled funds based on the pool's overall composition.

PERAC Memorandum #21, 2008 notifies retirement boards that, following an Ethics Commission finding that Lawrence Driscoll (former Middlesex Retirement Board member) violated M.G.L. c. 268A, PERAC has invoked 840 CMR 1.03 to permanently bar him from serving in any capacity—member, employee, consultant, vendor, or decision-maker—with any Massachusetts public pension system. Boards should ensure Driscoll has no involvement with their system or its service providers, and any firm or arrangement connected to him must disclose that association or risk losing PERAC regulatory approval.

This memo transmits PERAC's updated (as of 6/30/08) quarterly list of investment managers previously granted exemptions under 840 CMR 19.01 for international equity, international fixed income, real estate, and alternative investment asset classes. Boards hiring managers already on this list do not need a separate exemption application, but must still submit the Competitive Process Notification Form, Vendor Certification Form, and Disclosure Form to PERAC and receive acknowledgement before transferring funds; boards may also pursue exemptions for managers not on the list. No exemption or listing applies to domestic equity/fixed income managers—only the three forms are required for those hires.

**PERAC Memo #26, 2008** transmits an updated Tobacco Company List (dated July 2008), which supersedes all prior versions and takes effect immediately upon receipt, implementing the prohibition under Chapter 119 of the Acts of 1997 against new investments in companies deriving more than 15% of revenue from tobacco sales. Boards must forward the list (or notice of its availability on PERAC's website) to their investment advisors, with a reminder that the list is restricted to use for Massachusetts public fund clients only. PERAC will audit portfolios for compliance—including assessing pooled funds against the 15% threshold at the pool level—and any board found holding prohibited investments after January 13, 1998 must divest prudently, after first consulting with PERAC before taking action.

PERAC Memo #29/2008 announces amendments to 840 CMR 10.12 and 10.14 governing retirement board hearings on excess earnings or failure to file annual earned income statements under M.G.L. c. 32, §§91, 91A, or 91B. Key changes require boards to give 30 days' notice of hearings (with the Commission entitled to attend and present evidence but not cross-examine retirees), to allow retirees 15 days to request a hearing upon notice of excess earnings, to schedule any requested hearing within 45 days (with at least 30 days' notice), and to notify the member of the decision within 30 days after the hearing. Boards must update their hearing procedures to conform to these revised notice and timing requirements and ensure the Commission is copied on all related correspondence.

PERAC Memo #31, 2008 requests that retirement boards submit appropriation data needed to calculate FY10 amounts to be appropriated by governmental units under G.L. c. 32, §22D or §22(6A)(b). Boards must complete the appropriation questionnaire (preferably via PERAC's website) and return it by October 31, 2008, and should also confirm their funding schedule has been submitted for PERAC approval within the last three years, updating it if necessary.

This memo transmits PERAC's quarterly updated list (as of 9/30/08) of investment managers previously granted exemptions under 840 CMR 19.01 for international equity, international fixed income, real estate, and alternative investments, which remain open to new investors. Boards may hire managers from this list without seeking a new exemption, but must still submit a Competitive Process Notification Form, Vendor Certification Form, and Disclosure Form to PERAC and receive acknowledgement before transferring funds; boards may also pursue exemptions for managers not on the list, and no exemption is needed for domestic equity/fixed income hires.

**PERAC Memo #35/2008** transmits the updated October 2008 Tobacco Company List, which replaces all prior versions effective immediately upon receipt. Under Chapter 119 of the Acts of 1997, retirement boards are prohibited from making new investments in any listed company (including pooled funds where the pool itself derives more than 15% of revenue from tobacco sales) and must forward the list to investment advisors for compliance purposes. Boards should note that PERAC will review portfolios for compliance during audits, and any board found holding a prohibited investment made after January 13, 1998 must divest prudently—but only after first consulting with PERAC before taking action.

Memorandum #37 (2008) announces PERAC's revised Hedge Fund Guidelines, which change the asset-size threshold and allocation limits for boards seeking to invest in hedge funds. Boards with assets over $150 million may request approval to search for hedge fund of funds, while smaller boards may qualify case-by-case or invest without regulatory action up to the PRIT Fund's Absolute Return allocation percentage; total hedge fund exposure remains capped at PRIT's combined Absolute Return/Portable Alpha allocation, with over 50% of that cap required to go to PRIT Absolute Return. Boards considering hedge fund investments must submit a well-documented, prudent strategy and manager-selection process, as PERAC will deny authorization for weak submissions, questionable manager credentials, or flawed selection procedures.

PERAC Memorandum #39/2008 discusses how the severe 2008 market downturn has caused significant drift in retirement systems' asset allocations—equities have fallen well below target ranges while fixed income has risen above target—and explains the rationale for portfolio rebalancing as a disciplined, unemotional strategy to control risk and potentially enhance long-term returns. The memo encourages boards to review their current asset allocation against long-term targets and consider rebalancing (shifting fixed income proceeds back into equities) but does not mandate any specific action, leaving the decision to each board's discretion based on their own investment policy and circumstances.

This memo (Memo #3/2007) transmits PERAC's updated quarterly list of investment managers/funds pre-approved for exemption under 840 CMR 19.01 in international equity, international fixed income, real estate, and alternative investments, as of 12/31/06. Boards with an existing exemption for a given asset class do not need to reapply for managers on this list, but must still submit a Competitive Process Notification Form, Vendor Certification Form, and Disclosure Form (per 840 CMR 17.04(8)(a)-(b)) and await PERAC acknowledgement before transferring funds; boards may also pursue non-listed managers by requesting a separate exemption. No exemption is needed for domestic equity/fixed income managers—only the three forms are required.

This memo transmits PERAC's updated Tobacco Company List (January 2007), which supersedes all prior lists and identifies companies deriving more than 15% of revenue from tobacco sales—investments in which are prohibited under Chapter 119 of the Acts of 1997. Boards must distribute the list to their investment advisors (or direct them to it on PERAC's website), ensure new purchases comply with the list (including pooled funds assessed at the pool level), and, if a compliance audit reveals prohibited holdings, divest prudently only after consulting with PERAC first.

This memo reports that PERAC exercised its authority under 840 CMR 1.03 to remove two individuals—Harry Gannon (Executive Director, Maynard Retirement Board) and Peter Arlos (member, Berkshire Regional Retirement Board)—after each was found by the State Ethics Commission to have violated M.G.L. c. 268A; both subsequently resigned. It reiterates that the regulation bars anyone with such a finding from serving in any capacity (member, officer, employee, consultant, or decision-maker) for a retirement board. No specific action is required of boards beyond awareness, as PERAC will notify boards of future actions taken under this regulation.

This memo covers several investment governance issues: it reminds boards of the requirement under 840 CMR 16.07 to hold periodic performance/strategy review meetings with investment managers (requesting written confirmation these are scheduled/completed), reiterates the five-year re-certification requirement for investment consultants under Regulation 26.04(3), and encourages boards to critically evaluate underperforming managers (including considering index funds) and to pursue greater diversification across asset classes, noting PRIT's advantages in accessing nontraditional/alternative investments. **Action required:** Boards must confirm in writing that manager review meetings are scheduled or completed, and those that hired consultants in 2002 must complete consultant re-certification (via updated regulatory forms, no new search needed).

PERAC Memo #7/2007 establishes the "regular interest" rate under G.L. c. 32, §22(6)(b) at 0.6% for calendar year 2007, based on the average savings account rates from a sample of financial institutions. Boards must apply this 0.6% rate to accumulated total deductions and accrued interest for refunds and retirements processed during 2007, and credit it to outstanding balances as of December 31, 2006 on December 31, 2007. No further board action is required beyond correctly applying this rate in calculations.

This memo requests that boards verify data for PERAC's 2006 Annual Report, including board contact/member information (as of 12/31/06), the list of investment managers, custodian, and consultant, and the board's calculated Target Investment Rate of Return. Boards must review the enclosed data sheets, annotate any corrections (including manager name changes, liquidations, or terminations with supporting documentation), and return all materials—along with the Target Rate of Return—to Rose Cipriani at PERAC by February 14, 2007, even if no changes are needed.

This memo informs retirement boards of PERAC's review of Governor Patrick's municipal government pension proposal, noting that the Commission has not taken a formal position on the initiative. The accompanying analysis is based on 2001-2005 investment returns and existing actuarial valuations, and boards should be aware that the relevant timeframe for assessing system performance may change depending on the final legislative language. No action is required of boards at this time; the memo is provided for informational purposes only.

**Memorandum #20, 2007 – Board Annual Compliance Memorandum** This memo recaps PERAC's compliance focus areas from the past year—ethics training, disclosure statements, and directed brokerage issues—and signals continued emphasis on these areas going forward, including new Ethics Commission seminars available to boards. Boards should proactively review compliance with 840 CMR 1.03 (prohibited dual positions), 840 CMR 16.02 (investment manager contracts and Form ADV Part II submissions), and 840 CMR 16.05 (prohibition on directing brokerage), and confirm/report their compliance status to PERAC as requested in prior memoranda (notably #47/2006).

This memo notifies retirement boards of upcoming Joint Committee on Public Service hearing dates on pending pension-related legislation, including minimum pension bills, the Municipal Partnership Act (local GIC and PRIT Fund provisions), COLA base increase bills, and pension governance reform bills. No board action is required, but boards with interest in attending should confirm hearing dates/agenda with the Committee (617-722-2240) beforehand, as schedules are subject to change.

This memo transmits PERAC's quarterly updated list (as of 3/31/07) of investment managers pre-approved for exemption under 840 CMR 19.01 in international equity, international fixed income, real estate, and alternative investment asset classes. Boards retaining or hiring managers from this list do not need to separately apply for an exemption, but must still submit a Competitive Process Notification Form, Vendor Certification Form, and Disclosure Form to PERAC and receive acknowledgement before transferring funds; boards may also pursue exemptions for managers not on the list. No exemption or listing applies to domestic equity/fixed income managers, which only require the standard three-document submission.

PERAC Memo #25/2007 transmits the updated April 2007 Tobacco Company List, superseding all prior lists, identifying companies (and pooled funds) deriving more than 15% of revenue from tobacco sales in which new investments by retirement systems are prohibited under Chapter 119 of the Acts of 1997. Boards must forward the list to their investment advisors (noting it is restricted to use for Massachusetts public fund clients only) and ensure their portfolios comply, as PERAC will review holdings during audits; any non-compliant holdings must be divested prudently, in consultation with PERAC before any action is taken.

PERAC's Commissioners voted to bar Clarke T. Blizzard from any involvement with Massachusetts public pension systems, following his guilty plea to conspiracy to commit extortion involving the Ohio Bureau of Workers' Compensation CFO, pursuant to 840 CMR 1.03. Boards should ensure Blizzard has no role—as trustee, employee, consultant, or service provider—with their system or with any affiliated firm; any entity connected to Blizzard that fails to disclose his involvement will be barred from future PERAC regulatory approval. No action is required regarding firms associated with Blizzard provided his involvement is properly disclosed.

This memo provides retirement boards with PERAC's updated (as of 6/30/07) list of investment managers previously granted exemptions under 840 CMR 19.01 for international equity, international fixed income, real estate, and alternative investment asset classes. Boards hiring managers already on this list do not need to seek a new exemption but must still submit a Competitive Process Notification Form, Vendor Certification Form, and Disclosure Form, and receive PERAC acknowledgement before transferring funds; boards may also still pursue exemptions for managers not on the list. No exemption is required at all for domestic equity/fixed income hires, so those managers are not included in this list.

**Memorandum #28, 2007 (Investment Director Robert A. Dennis, July 12, 2007) — Summary** This memo transmits an updated Tobacco Company List (effective July 2007), issued under Chapter 119 of the Acts of 1997, which prohibits retirement systems from making new investments in companies deriving more than 15% of revenue from tobacco sales; this list supersedes all prior versions and applies to individual holdings as well as pooled funds (a pooled fund is included if the pool as a whole exceeds the 15% threshold). Boards must forward the list to their investment advisors (or direct them to it on PERAC's website), restrict its use solely to Massachusetts public fund clients, and ensure post-January 13, 1998 purchases comply with the prohibition; PERAC will verify compliance during audits, and any board found non-compliant must consult with PERAC before divesting in a prudent manner.

This memo summarizes Chapter 68 of the Acts of 2007, which authorizes PERAC to annually evaluate each retirement system's funded ratio and investment performance and mandate transfer of assets to PRIT for systems that are under 65% funded and have underperformed PRIT by 2%+ annually over 10 years, subject to a limited appeal/exemption process. Boards should be aware that PERAC will conduct its initial review using January 2007 data (or the most recent valuation if none is updated by October 1, 2007) and will directly contact any systems identified as potentially subject to mandatory transfer; no immediate action is required beyond awaiting that notification, though boards should understand the appeal process and local approval requirements should their system be flagged.

PERAC Memo #34/2007 announces that the Commission raised hedge fund/absolute return allocation limits: any retirement system, regardless of size, may now invest up to 10% of assets in PRIT's Absolute Return Segment without PERAC approval, and systems with at least $250 million in assets may invest up to 10% in hedge funds overall, provided any amount above 5% is placed through the PRIT Absolute Return Segment. No board action is required, but boards wishing to increase allocations should ensure compliance with these revised limits and may request supplemental regulations if needed for specific strategies.

This memo (#35, 2007) outlines PERAC's Principles for implementing Chapter 68 of the Acts of 2007, which requires an annual analysis of each retirement system's 10-year investment performance and funded ratio to determine compliance with statutory standards (failing investment performance if 2.00% or more below the PRIT Fund; failing funding standard if funded ratio is below 65%). It specifies the actuarial methodology to be used solely for this Chapter 68 analysis—including use of a full actuarial valuation (no updates/estimates), the greater of market or actuarial asset value, and a cap on investment return assumption increases (no more than .25% above the prior valuation's assumption, not to exceed 8.50%)—and clarifies that these standards do not govern other Chapter 32 actuarial work such as funding schedules. Boards should ensure timely filing of actuarial valuations (by July 1, or October 1 for the first review) since data availability directly affects how their system's funded ratio and investment performance are assessed under this new law.

PERAC Memo #38, 2007 requests that retirement boards submit appropriation questionnaire data needed to calculate FY09 governmental unit appropriations under G.L. c.32, §22D or §22(6A)(b), due no later than October 31, 2007 (submission via PERAC's website is encouraged). Boards should also confirm they have submitted a funding schedule within the past three years, as required, and contact PERAC to update it if not.

This memo transmits PERAC's quarterly-updated list (as of 9/30/07) of investment managers/funds pre-approved via exemption under 840 CMR 19.01 for international equity, international fixed income, real estate, and alternative investment asset classes. Boards may hire managers from this list without seeking a separate exemption, but must still submit a Competitive Process Notification Form, Vendor Certification Form, and Disclosure Form and obtain PERAC acknowledgement before transferring funds; managers not on the list may still be considered via a separate exemption request. No exemption—only the three required forms—is needed for domestic equity/fixed income hires, and this list is distinct from PERAC's general Investment Managers, Consultants, and Custodians listing.

This memo transmits PERAC's updated October 2007 Tobacco Company List, replacing all prior versions, identifying companies deriving more than 15% of revenue from tobacco sales in which retirement systems are prohibited from making new investments under Chapter 119 of the Acts of 1997 (including pooled funds that fail the 15% test at the aggregate level). Boards must forward the list to their investment advisors (noting it is restricted to Massachusetts public fund use only) and ensure portfolio compliance; any non-compliant holdings identified through PERAC's audit process must be divested prudently, but only after consulting with PERAC before taking action.

This memo updates boards on IRC §402(l) (enacted by the Pension Protection Act of 2006), which allows eligible retired public safety officers to exclude up to $3,000 from gross income for health/long-term care insurance premiums deducted from their retirement allowance. It provides an attached Tax Counsel memorandum on proper 1099-R reporting and notes the IRS is reversing course to allow self-insured plan premiums to qualify for the exclusion, though formal guidance is still pending. No immediate board action is required beyond reviewing the attached guidance for correct 1099-R reporting and awaiting further updates.

This memo transmits PERAC's updated (as of 12/31/05) list of pre-approved investment managers exempted under 840 CMR 19.01 for international equity, international fixed income, real estate, and alternative investments, and clarifies that no exemption is needed for domestic equity/fixed income managers. Boards hiring managers already on this list do not need to seek a separate exemption, but must still submit a Competitive Process Notification Form, Vendor Certification Form, and Disclosure Form to PERAC and receive acknowledgement before transferring funds; boards remain free to request exemptions for managers not on the list, which is updated quarterly.

This memo transmits an updated Tobacco Company List (dated December 2005), which replaces all prior versions and identifies companies deriving more than 15% of revenue from tobacco sales—investments in which are prohibited under Chapter 119 of the Acts of 1997. Boards must forward the list to their investment advisors (or direct them to it on PERAC's website) and ensure their portfolios comply, including pooled fund holdings assessed on a whole-pool basis; any non-compliant holdings must be divested prudently, with the board consulting PERAC before taking action.

This memo notifies retirement boards that PERAC has set the "regular interest" rate for 2006 at 0.6%, as determined under G.L. c. 32, §22(6)(b) in consultation with the Commissioner of Banks. Boards must apply this rate to accumulated total deductions and accrued interest for refunds and retirements processed during 2006, and credit it to outstanding balances as of December 31, 2005 on December 31, 2006.

This memo requests that boards assist PERAC in compiling data for the 2005 Annual Report by reviewing and correcting an attached retirement board data sheet (board contact/meeting info current as of today, board member/administrator names as of 12/31/2005) and manager/custodian/consultant list, and by calculating and submitting their portfolio's Target Investment Rate of Return (distinct from the Actuarial Rate). Boards must return the annotated data sheet, manager list, and target rate of return to Rose Cipriani at PERAC by February 10, 2006, even if no changes are needed.

This memo addresses several investment governance topics: compliance with mandatory periodic manager review meetings under 840 CMR 16.07, the 5-year re-certification requirement for investment consultants under Regulation 26.04(3), and the importance of portfolio diversification (including consideration of PRIT Fund investment options). Boards should take action by: (1) providing PERAC written confirmation during the year that manager review meetings are scheduled or completed, (2) re-certifying investment consultants hired in 2001 by submitting updated regulatory forms, and (3) reviewing their portfolios' diversification, with PERAC's Investment Unit available to assist with asset allocation questions.

This memo transmits PERAC's quarterly-updated list (as of 3/31/06) of pre-approved investment managers exempted under 840 CMR 19.01 for international equity, international fixed income, real estate, and alternative investments; only open funds are included. Boards do not need a separate exemption to hire managers already on this list, but must still submit a Competitive Process Notification Form, Vendor Certification Form, and Disclosure Form and receive PERAC acknowledgement before transferring funds; no exemption is needed at all for domestic equity/fixed income managers. Boards wishing to hire managers not on the list must still apply for an exemption, and the list will be updated quarterly on PERAC's website.

This memo transmits PERAC's updated Tobacco Company List (dated March 2006), which supersedes all prior versions, identifying companies deriving more than 15% of revenue from tobacco sales in which retirement boards are prohibited from making new investments under Chapter 119 of the Acts of 1997. Boards must forward the list to their investment advisors (or direct them to PERAC's website), and any board found non-compliant during a PERAC audit must divest in a prudent manner after consulting with PERAC before taking action.

This memo transmits PERAC's quarterly-updated list (as of 6/30/06) of investment managers/funds pre-approved for exemption under 840 CMR 19.01 in international equity, international fixed income, real estate, and alternative investments. Boards hiring managers already on this list need not seek a separate exemption, but must still submit a Competitive Process Notification Form, Vendor Certification Form, and Disclosure Form and receive PERAC acknowledgement before transferring funds; boards may also pursue exemptions for managers not on the list, and no exemption is needed at all for domestic equity/fixed income managers.

This memo transmits an updated (July 2006) Tobacco Company List, superseding all prior versions, identifying companies deriving over 15% of revenue from tobacco sales, in which retirement systems are barred from making new investments under Chapter 119 of the Acts of 1997. Boards must forward the list to their investment advisors (or notify them it's on PERAC's website) and ensure their portfolios—including pooled funds—remain compliant, divesting prudently and consulting PERAC before taking any action if non-compliance is found during audit.

This memo requests data needed for PERAC to calculate FY08 governmental unit appropriations under G.L. c.32, §22D or §22(6A)(b). Boards must complete and return the attached appropriation questionnaire (preferably via PERAC's website) by October 31, 2006, and should also contact PERAC if their funding schedule has not been resubmitted for approval within the past three years, as required.

This memo (PERAC Memo #39/2006) provides retirement boards with the updated quarterly list of investment managers pre-approved for exemption under 840 CMR 19.01 in international equity, international fixed income, real estate, and alternative investment asset classes. Boards do not need to seek a separate exemption when hiring a manager already on this list, but must still submit a Competitive Process Notification Form, Vendor Certification Form, and Disclosure Form to PERAC and receive acknowledgement before transferring funds; boards may also request exemptions for managers not on the list. No exemption or listing applies to domestic equity/fixed income hires, which only require the same three documents.

This memo transmits an updated Tobacco Company List (dated October 2006), which supersedes all prior versions and takes effect immediately upon receipt, per the M.G.L. c. 119 (1997) prohibition on new retirement system investments in companies deriving more than 15% of revenue from tobacco sales. Boards must distribute the list to their investment advisors (or notify them it is available on PERAC's website) and ensure no new prohibited investments are made. Since PERAC audits portfolios for compliance, any board found non-compliant must prudently divest but must first consult with PERAC before taking action; note that pooled funds are assessed against the 15% threshold at the pool level.

This memo addresses growing concerns over ethical violations in public pension systems nationally and encourages retirement boards to proactively address ethics awareness among board members and staff. PERAC recommends—but does not mandate—that boards attend Ethics Commission seminars (held monthly at their Boston office or via community-hosted sessions) and provides contact information for enrollment, with PERAC's Compliance Officer Dana Mahoney available to help arrange sessions if needed. No formal compliance action is required, but boards are encouraged to take advantage of this training opportunity.

This memo provides guidance on reviewing investment manager, consultant, and vendor disclosure statements, focusing particularly on third-party payment arrangements related to marketing and product development fees. It directs boards to incorporate disclosure statements into the RFP process, have board members review them prior to acceptance, follow up on any questions, compare disclosures against ADV filings and other available information, and coordinate with other boards considering the same providers to verify consistency of disclosed information. PERAC also notes it is revising its own disclosure forms and will issue further guidance once that process is complete.

This memo announces PERAC's revised hedge fund investment guidelines, increasing the permitted allocation to hedge funds/absolute return strategies from 5% to 7.5%. Systems with at least $250 million in assets may seek PERAC authorization to run competitive searches for their own hedge fund managers, while smaller systems may continue investing through PRIT's Absolute Return strategy without additional PERAC action; boards investing independently should note the guidance requiring use of funds of funds, diversification standards, and enhanced due diligence expectations.

This memo reminds retirement boards that directed brokerage (directing or instructing investment managers to route commissions to specific brokers) violates PERAC Regulation 840 CMR 16.05, citing recent industry cases involving improper broker incentives and soft-dollar arrangements. Boards must review their Disclosure Statements and brokerage-related files, and submit to PERAC by January 8, 2007 copies of any letters, e-mails, or other communications directing managers to use particular brokers.

This memo requests that boards verify data for PERAC's 2004 Annual Report, including board contact/member information (as of 12/31/2004), and the list of investment managers, custodians, and consultants (noting any liquidations/terminations via separate letter). Boards must also calculate and report their Target Investment Rate of Return based on current asset allocation, distinct from the Actuarial Rate of Return, and return all annotated materials to Rose Cipriani at PERAC by January 17, 2005.

This memo provides retirement boards with the updated (as of 12/31/04) PERAC list of pre-approved investment managers exempted under 840 CMR 19.01 for international equity, international fixed income, real estate, and alternative investment asset classes, replacing outdated versions with only currently open funds/managers. Boards do not need to seek a separate exemption when hiring a manager already on this list, but must still submit a Competitive Process Notification Form, Vendor Certification Form, and Disclosure Form to PERAC and receive acknowledgement before transferring funds; no exemption is required at all for domestic equity/fixed income hires. Boards should note the list is updated quarterly and posted on PERAC's website, and may still request exemptions for managers not included.

This memo transmits PERAC's updated Tobacco Company List (dated January 1, 2005), which replaces all prior versions and identifies companies deriving more than 15% of revenue from tobacco sales—investments prohibited under Chapter 119 of the Acts of 1997. Boards must distribute the list to their investment advisors (or direct them to it on PERAC's website), ensure no new prohibited investments are made, and if a portfolio audit reveals noncompliance, divest prudently only after consulting with PERAC first. Note that pooled funds are evaluated as a whole under the 15% rule, so a noncompliant pool will appear on the list even if only some underlying holdings are tobacco-related.

This memo notifies retirement boards that PERAC has set the "regular interest" rate under G.L. c. 32, §22(6)(b) at 0.6% for calendar year 2005, based on average savings rates from a sample of financial institutions. Boards must apply this 0.6% rate to accumulated total deductions and accrued interest when crediting interest for 2005 refunds and retirements, and also apply it on December 31, 2005 to outstanding balances as of December 31, 2004.

PERAC Memorandum #10/2005 transmits the updated Buy-back and Make-up Repayment Worksheets for calculating 2005 lump-sum repayments, including detailed instructions for computing partial-year and cumulative interest factors on refunded amounts. Boards should use these worksheets (soon available on PERAC's website) to determine the correct repayment amounts for members buying back previously refunded creditable service or making up contributions, applying board-specific terms for any installment arrangements. No other board action is required beyond adopting the updated calculation tool for 2005 transactions.

This memo serves as a general reminder to retirement boards regarding key investment regulation requirements, including: the need for competitive selection processes for new managers (with an exception for successive venture capital partnerships, but not real estate partnerships absent compelling circumstances); the requirement to obtain PERAC acknowledgment of completed regulatory requirements before funding a new manager; and the obligation under 840 CMR 16.07(2)-(3) to hold annual manager performance review meetings and document satisfactory performance determinations. Boards should continue complying with these regulations, are encouraged to schedule manager meetings in advance for the full year, must provide PERAC with an annual listing of manager meetings held or scheduled, and should review brokerage/transaction costs per 840 CMR 16.05 as part of an overall regulatory compliance review.

This memo transmits PERAC's updated (as of 3/31/05) list of pre-approved investment managers exempt under 840 CMR 19.01 in the international equity, international fixed income, real estate, and alternative investment asset classes; only open funds/managers are included, and the list is refreshed quarterly. Boards need not seek a separate exemption when hiring a listed manager in an asset class for which they already have an approved exemption, but must still submit a Competitive Process Notification Form, Vendor Certification Form, and Disclosure Form and obtain PERAC's acknowledgement before transferring funds; boards may also pursue exemptions for managers not on the list, and note that domestic equity/fixed income hires require no exemption at all—just the same three documents.

This memo transmits an updated Tobacco Company List (dated April 1, 2005), which supersedes all prior versions, identifying companies deriving more than 15% of revenue from tobacco sales in which retirement systems are prohibited from making new investments under Chapter 119 of the Acts of 1997. Boards must ensure their portfolios (including pooled fund holdings) comply with this list going forward, distribute it to investment advisors, and—if noncompliance is found during a PERAC audit—consult with PERAC before divesting any prohibited holdings.

This memo transmits an SEC staff report on conflicts of interest among pension investment consultants (e.g., undisclosed fees from money managers, affiliate relationships, and consultants not viewing themselves as fiduciaries), along with a joint SEC/DOL letter listing questions boards should ask consultants. It notes PERAC's Disclosure Forms already require consultants and investment managers to disclose payments between them, and directs boards to review these conflict-of-interest issues carefully with current or prospective consultants using the provided question list—no other formal action is required.

This memo transmits PERAC's updated (as of 6/30/05) list of pre-approved investment managers exempt under 840 CMR 19.01 for international equity, international fixed income, real estate, and alternative investments, published quarterly on PERAC's website. Boards hiring managers from this list do not need to separately apply for an exemption, but must still submit a Competitive Process Notification Form, Vendor Certification Form, and Disclosure Form and receive PERAC acknowledgement before transferring funds; boards may also seek exemptions for managers not on the list, and note that domestic equity/fixed income managers never require exemptions.

PERAC Memo #21/2005 transmits an updated Tobacco Company List (effective July 1, 2005), which supersedes all prior versions and identifies companies deriving more than 15% of revenue from tobacco sales—investments in which are prohibited under Chapter 119 of the Acts of 1997. Boards must forward this list to their investment advisors (or direct them to it on PERAC's website), ensure no post-January 13, 1998 purchases were made in listed companies (including pooled funds meeting the 15% threshold), and, if non-compliance is found during a PERAC audit, consult with PERAC before divesting prudently to correct it.

**Memorandum 24/2005** clarifies how local retirement boards should handle RetirementPlus contributions when a teacher transfers from the TRS or BRS to a local system. The TRS/BRS will transfer the member's full account but will identify the "excess" contributions (above the normal rate) on the transfer memo; local boards must retain these excess contributions if the member retires with 30+ years of creditable service, refund them (with regular interest) if the member retires with less than 30 years and participation was optional, but may not refund them if RetirementPlus participation was mandatory (members hired after July 1, 2001). Boards should apply this framework when processing transfers-in of RetirementPlus members and can direct questions to PERAC or TRS General Counsel.

This memo summarizes the federal district court ruling in *Wheeler v. United States*, which held that when a member retires for superannuation and is later granted retroactive accidental disability retirement, the superannuation payments already received remain taxable as originally classified—they are not retroactively reclassified as non-taxable disability payments. Only the subsequent lump-sum retroactive payment and ongoing accidental disability allowance (calculated without reference to age, service, or contributions) qualify as non-taxable workers' compensation-type payments. The memo requires no action from boards but offers to provide a copy of the case for reference, useful for advising members on the tax treatment of retroactive disability awards.

This memo requests data from retirement boards needed to calculate FY07 appropriation amounts for governmental units under G.L. c.32, §22D or §22(6A)(b). Boards must complete and return the attached appropriation questionnaire (preferably via PERAC's website) by October 31, 2005, and should also confirm their funding schedule has been submitted for PERAC approval within the last three years, contacting PERAC if an update is needed.

This memo transmits PERAC's quarterly updated list (as of 9/30/05) of pre-approved investment managers/funds exempt under 840 CMR 19.01 for international equity, international fixed income, real estate, and alternative investments. Boards hiring a manager already on this list do not need to separately apply for an exemption, but must still submit the Competitive Process Notification Form, Vendor Certification Form, and Disclosure Form to PERAC and receive acknowledgement before transferring funds; boards may also request exemptions for managers not on the list, and no exemption is needed at all for domestic equity/fixed income hires (only the three forms are required).

PERAC Memo #33/2005 transmits an updated Tobacco Company List (dated October 1, 2005) pursuant to Chapter 119 of the Acts of 1997, which bars retirement systems from making new investments in companies deriving more than 15% of revenue from tobacco sales; this list supersedes all prior versions and applies to pooled funds evaluated on an aggregate basis. Boards must share the list with their investment advisors and ensure their portfolios comply, divesting prudently from any noncompliant holdings acquired after January 13, 1998—consulting with PERAC before taking any divestment action.

This memo addresses PERAC's obligations under Chapter 46, Section 116 to prepare cost reports by December 31, 2004, for retirement systems whose governmental units adopted the 2003 Early Retirement Incentive (ERI) program. Boards that accepted the ERI must submit specific member-level data (demographics, service, compensation, and benefit details) for each ERI retiree, or alternatively notify PERAC if a private actuary will perform the cost analysis. Additionally, boards must revise their funding schedules to reflect the added liability—recommended at 15-year level dollar amortization—and notify PERAC of the chosen methodology and effective fiscal year (expected to typically be FY06).

This memo transmits PERAC's updated (as of 12/31/03) list of pre-approved investment managers exempted under 840 CMR 19.01 for international equity, international fixed income, real estate, and alternative investment asset classes. Boards hiring managers already on this list do not need a separate exemption application, but must still submit a Competitive Process Notification Form, Vendor Certification Form, and Disclosure Form and receive PERAC acknowledgement before transferring funds; boards may also pursue exemptions for managers not on the list. No exemption is needed at all for domestic equity/fixed income managers—only the three forms are required there.

This memo transmits PERAC's updated Tobacco Company List (dated January 1, 2004), which supersedes all prior versions and identifies companies (including pooled funds) deriving more than 15% of revenue from tobacco sales, in which retirement boards are barred from making new investments under Chapter 119 of the Acts of 1997. Boards must share this list with their investment advisors, ensure no prohibited purchases occur after January 13, 1998, and—if PERAC's audit reveals noncompliance—must consult with PERAC before prudently divesting to correct the portfolio.

This memo requests boards' assistance in compiling data for the PERAC 2003 Annual Report by verifying board contact/member information, confirming the accuracy of listed investment managers, custodians, and consultants (including noting any liquidated funds or terminated managers via separate letter to the Investment Unit), and calculating/reporting the board's Target Investment Rate of Return. Action required: Boards must review and annotate the attached data sheet and manager list, confirm or correct entries, calculate their Target Investment Rate of Return, and return all materials to Lindsay Deaver at PERAC by February 16, 2004.

This memo announces that PERAC has set the 2004 "regular interest" rate at 0.6%, as determined in consultation with the Commissioner of Banks per G.L. c. 32, §22(6)(b). Boards must apply this rate to accumulated total deductions and accrued interest for refunds and retirements processed during 2004, and credit it to outstanding balances as of December 31, 2003 on December 31, 2004. No further action is required beyond correctly implementing this rate in interest calculations.

This memo transmits the 2004 Repayment Worksheets and instructions for calculating buy-back and make-up payments—used to determine the amount a member owes to restore creditable service tied to previously refunded annuity savings fund balances (plus accrued interest). Boards should use these worksheets (available on PERAC's website) for lump-sum repayment calculations in 2004, applying their own board-specific terms for any installment arrangements; no other action is required beyond adopting the updated calculation tool.

This memo updates boards on the ongoing federal/state investigations into improper mutual fund trading practices (market timing/late trading) at firms including MFS, PIMCO, Janus, Federated, Franklin Resources, FleetBoston/Columbia, State Street Research, and Putnam, noting Putnam remains the only firm where personnel changes have prompted institutional client terminations. Boards with investments at affected firms should evaluate whether performance, client service, and portfolio management team stability remain satisfactory, and should seek assurances on the firms' compliance/ethics controls, consulting their investment consultant or PERAC's Investment Director Robert Dennis as needed. No mandatory action is required beyond this due diligence review.

This memo transmits an updated Tobacco Company List (dated April 1, 2004), which supersedes all prior lists and takes effect immediately upon receipt, identifying companies deriving over 15% of revenue from tobacco sales in which retirement boards are prohibited from making new investments under Chapter 119 of the Acts of 1997. Boards must distribute this list to their investment advisors (or direct them to PERAC's website), and if PERAC's compliance audit finds a portfolio holds prohibited investments made after January 13, 1998, the board must divest prudently after first consulting with PERAC. Note that for pooled funds, the 15% threshold is applied to the entire pool rather than individual underlying holdings.

This memo transmits PERAC's quarterly-updated list (as of 3/31/04), per 840 CMR 19.01, of investment managers/funds pre-approved for exemption in international equity, international fixed income, real estate, and alternative investments, applicable only to funds still open to new investors. Boards hiring managers already on this list need not file a separate exemption application, but must still submit the Competitive Process Notification Form, Vendor Certification Form, and Disclosure Form and receive PERAC acknowledgement before transferring funds; boards may also pursue exemptions for managers not listed, and no exemption is needed at all for domestic equity/fixed income hires.

This memo provides the quarterly (as of 6/30/04) update to PERAC's list of investment managers pre-approved for exemption under 840 CMR 19.01 in international equity, international fixed income, real estate, and alternative investments—only including managers/funds still open to new investors. Boards that already hold an exemption for a given asset class do not need to reapply when hiring a manager from this list, but must still submit a Competitive Process Notification Form, Vendor Certification Form, and Disclosure Form and obtain PERAC acknowledgement before transferring funds; no exemption is needed at all for domestic equity/fixed income managers. Boards may also hire managers not on the list by requesting a separate exemption, and should note this list is distinct from PERAC's general Investment Managers, Consultants, and Custodians directory.

This memo transmits an updated Tobacco Company List (dated July 1, 2004), which supersedes all prior lists and is effective immediately, identifying companies deriving more than 15% of revenue from tobacco sales in which retirement boards are prohibited from making new investments under Chapter 119 of the Acts of 1997. Boards must share this list with their investment advisors, and PERAC will review portfolios during audits for compliance—if a board is found non-compliant, it must divest in a prudent manner after consulting with PERAC beforehand. Note that the 15% rule applies to pooled funds in the aggregate, so a pooled fund exceeding the threshold will appear on the list even if individual holdings within it do not.

This memo reverses guidance from PERAC Memo #10/2004, clarifying that buy-back repayments for prior refunded service should be calculated based only on the amount actually withdrawn by the member, plus interest from the withdrawal date to repayment—not on the full Annuity Savings Fund balance at the time of refund (which may have included amounts withheld under the limited interest or 2-year inactive rules). Boards that previously calculated buy-backs using the total Annuity Savings Fund balance must recalculate the correct repayment amount and refund any excess payments collected from affected members.

This memo notifies boards that the Legislature overrode Governor Romney's vetoes on several FY05 Budget provisions affecting retirement systems: reinstatement of the spousal retirement benefit under G.L. c. 32, §5(1)(e) for spouses married and in service on or before November 1, 2003; a PERAC-led study on raising the $12,000 COLA base; and changes to the confidentiality status of certain PRIM records. Boards must verify member records to identify spouses eligible for the reinstated spousal retirement benefit and, critically, must recalculate and retroactively pay increased allowances to anyone who retired between November 1, 2003 and the Budget's effective date who would benefit from this provision; no board action is required regarding the COLA study, which PERAC will distribute upon completion.

This memo announces a PERAC survey to gather information on how individual retirement boards handle purchases of creditable service (military, non-membership, and refunded service), since practices vary and are left to board discretion. Boards are required to complete and return the questionnaire to PERAC by September 30, 2004; results will later be compiled and shared with all boards and posted on PERAC's website.

This memo requests data from all retirement boards needed to calculate FY06 appropriation amounts under G.L. c.32, §22D or §22(6A)(b). Boards must complete and return the appropriation questionnaire (preferably via PERAC's website) by October 31, 2004, and should also confirm their funding schedule has been submitted for PERAC approval within the past three years, contacting PERAC if an update is needed.

This memo transmits the updated Tobacco Company List (dated October 1, 2004), which supersedes all prior lists and identifies companies deriving more than 15% of revenue from tobacco sales, in which new investments are prohibited under M.G.L. c. 119 of the Acts of 1997. Boards must forward the list to their investment advisors (or direct them to it on PERAC's website), ensure their portfolios—including pooled fund holdings assessed at the pool level—remain in compliance, and, if any non-compliant holdings are found (post-January 13, 1998 purchases), consult with PERAC before divesting in a prudent manner.

PERAC Memo 40/2004 provides the quarterly (as of 9/30/04) updated list of investment managers pre-approved for exemption under 840 CMR 19.01 in international equity, international fixed income, real estate, and alternative investment asset classes, including only funds still open to new investors. Boards hiring a manager on this list need not separately apply for an exemption, but must still submit the Competitive Process Notification Form, Vendor Certification Form, and Disclosure Form and receive PERAC acknowledgement before transferring funds; boards may also seek exemptions for managers not on the list, and no exemption is needed at all for domestic equity or fixed income hires.

This memo notifies boards that Chapters 279 and 280 of the Acts of 2004 change the cost calculation for certain creditable service buybacks (under G.L. c. 32, §§ 3(2)(a)(vii), 3(3), 3(4), 3(4A), 3(5), 3(6)(c), 3(6)(d), and 3(8)(b)), effective July 1, 2005, requiring "buyback interest" (half the actuarial assumed rate) instead of regular interest, and "accumulated buyback deductions" rather than accumulated regular deductions for §§ 3(4), 3(4A), and 3(5) purchases. No immediate board action is required beyond awareness, as PERAC will issue updated forms and further guidance before the effective date; note that a related bill affecting §4 buyback costs was not enacted.

This memo announces new Option A & B actuarial equivalent annuity factors, based on the RP-2000 Combined Healthy Table (50% male/50% female) and 7.0% interest rate, effective December 27, 2004, complementing the Option C factors previously released in Memo #37/2004. Boards should note that while total Option A allowances remain unchanged, the annuity/pension allocation will shift; boards must apply the enclosed A and S factors to calculate retiree annuities from ASF balances going forward.

PERAC Memo 48/2004 releases updated Option A factors and revised Option B factors, effective July 1, 2004, with the Option B figures superseding those issued in Memo #44/2004 (Option A factors are unchanged from that earlier memo). Boards should use the enclosed S (present value) and A (ASF-to-monthly-annuity conversion) factors when calculating retirement allowances under these options going forward; note that total Option A allowances remain unchanged, only the annuity/pension split is affected. No other action is required beyond updating calculations to reflect the new factor tables.

This memo requests boards' assistance in compiling data for the PERAC 2002 Annual Report, including verification of board contact/member information, and confirmation of investment managers, custodians, and consultants on record. Boards must review and annotate the enclosed data sheet and manager list (noting any discrepancies, terminations, or liquidations via separate letter), calculate and report their Target Investment Rate of Return, and return all materials to PERAC by February 14, 2003.

This memo provides the updated (quarterly) PERAC list of investment managers pre-approved for exemption under 840 CMR 19.01 in international equity, international fixed income, real estate, and alternative investments; only open funds/managers remain on the list. Boards with an existing exemption for an asset class may hire listed managers without a new exemption application, but must still submit a competitive process letter, Vendor Certification Form, and Disclosure Form and receive PERAC acknowledgement before transferring funds; boards may also seek exemptions for managers not on the list, and no exemption is needed at all for domestic equity/fixed income hires (only the three documents are required).

This memo transmits the updated Tobacco Company List (effective January 1, 2003), which replaces all prior versions, identifying companies deriving more than 15% of revenue from tobacco sales in which retirement systems are prohibited from making new investments under Chapter 119 of the Acts of 1997. Boards must forward the list to their investment advisors (or direct them to it on PERAC's website), and PERAC will audit portfolios for compliance since January 13, 1998—any noncompliant holdings, including pooled funds meeting the 15% threshold, must be divested prudently after consultation with PERAC.

This memo notifies boards that PERAC, per G.L. c. 32, §22(6)(b), has set the 2003 "regular interest" rate at 1.0%, based on average savings rates from a sample of financial institutions. Boards must apply this 1.0% rate to accumulated total deductions and accrued interest when crediting interest on 2003 refunds and retirements, and must also credit it to outstanding balances as of December 31, 2002 on December 31, 2003.

This memo reiterates PERAC's Hedge Fund Investment Guidelines, emphasizing that only retirement systems with portfolio assets exceeding $250 million are eligible to pursue hedge fund investments, and that qualifying boards must submit a letter to PERAC detailing their objectives and strategic approach before initiating any hedge fund manager search. Boards should note that PERAC will not approve hedge fund managers selected by systems that are ineligible or that fail to follow the required pre-search notification and compliance procedures.

This memo clarifies that the required 9% pension cost recovery on federal grant employee payroll may be treated as an advance payment toward, and used to offset, the system's annual appropriation under its approved actuarial funding schedule, since these employees are already included in the actuarial valuation. Boards using the 9% recovery as an offset must carefully document this practice for audit purposes; boards that failed to collect the 9% but still met their full funding appropriation are not considered to have a funding shortfall, though they were technically non-compliant with federal grant requirements.

This memo reminds boards that PERAC maintains an ongoing list of each board's investment managers, consultants, and custodians, and requires boards to report any changes—terminations, pooled fund liquidations, name changes, or new consultants/custodians—in writing within 30 days of occurrence. It also references Memo #13/1999 for the specific documentation required when a board selects a new manager or consultant.

This memo transmits the updated Tobacco Company List (dated April 1, 2003), which supersedes all prior lists and identifies companies deriving more than 15% of revenue from tobacco sales—investments in which are prohibited under Chapter 119 of the Acts of 1997. Boards must ensure their portfolios (including pooled funds assessed at the pool level) comply with this list going forward and, if noncompliant, must divest prudently after consulting with PERAC; boards should also share the list with their investment advisors.

PERAC Memorandum #15/2003 provides retirement boards with the updated (as of 3/31/03) list of investment managers pre-approved for exemption under 840 CMR 19.01 in international equity, international fixed income, real estate, and alternative investment asset classes, including only those funds still open to new investors. Boards hiring a manager already on this list do not need to separately apply for an exemption for that asset class, but must still submit a competitive process letter, Vendor Certification Form, and Disclosure Form to PERAC and receive acknowledgement before transferring funds; boards may also hire non-listed managers by requesting a separate exemption. No exemption is required at all for domestic equity or fixed income managers, and PERAC will continue to update and publish this list quarterly.

This memo transmits the updated Tobacco Company List (dated July 1, 2003), which supersedes prior versions and identifies companies deriving more than 15% of revenue from tobacco sales—investments in which are prohibited under Chapter 119 of the Acts of 1997. Boards must ensure their portfolios (including pooled funds, assessed at the pool level) comply with this list going forward, and should share it with investment advisors; any non-compliant holdings must be divested prudently, with PERAC consulted before action is taken.

This memo transmits PERAC's updated quarterly list (as of 6/30/03) of investment managers pre-approved for exemption under 840 CMR 19.01 in international equity, international fixed income, real estate, and alternative investment asset classes; managers appearing on the list do not require boards to separately apply for an exemption. Boards must still submit a competitive process letter, Vendor Certification Form, and Disclosure Form for any hire (whether or not the manager is on the list) and obtain PERAC acknowledgement before transferring funds; no exemption is needed at all for domestic equity/fixed income managers. No action is required regarding the list itself beyond noting it for future manager selections, and boards may still request exemptions for managers not included.

This memo (25/2003) provides guidance on the local option Early Retirement Incentive (ERI) Program established under Section 116 of Chapter 46 of the Acts of 2003, outlining acceptance procedures (requiring both Legislative and Executive Authority approval by November 1, 2003), the deadline mechanics for towns, and employee eligibility criteria. Boards are not required to formally accept the Section themselves for it to take effect, but they must be prepared to administer the program once a governmental unit adopts it, may issue supplemental regulations as needed, and should forward the memo to the Legislative and Executive Authorities within their system.

This memo describes the Municipal Local Option Unfunded Liability Pension Holiday enacted under Section 128 of Chapter 46 of the Acts of 2003, which allows governmental units to reduce their FY2004 and FY2005 unfunded liability pension appropriations below the current funding schedule, subject to specified limitations (e.g., not below normal cost, tied to local aid reductions, no available emergency reserve, and use solely for member/retiree benefit). Boards must forward this memo to their units' Executive and Legislative Authorities, and if a unit accepts the pension holiday (acceptance needed by 12/15/2003), the board must notify the Legislative Authority within 15 days of acceptance with a summary of the existing funding schedule and the estimated impact of the reduced appropriation; PERAC will assist boards with impact estimates and drafting these notices upon request.

PERAC has issued revised Investment Forms—including updated Exemption Applications, a new Hedge Fund/Fund-of-Funds form, a Competitive Process Notification Form, and separate, expanded Disclosure Forms for consultants and investment managers—effective September 15, 2003, after which the old forms will no longer be accepted. Boards must distribute the new Disclosure Forms to all existing vendors for completion and filing, and should use this transition to review and correct their RFP language, ensuring it does not imply that PERAC pre-approves or maintains a list of eligible managers (no such approval process or "Form 10-1" exists). New forms will be posted on PERAC's website, with questions directed to Investment Director Robert Dennis.

This memo transmits an updated Tobacco Company List (dated October 1, 2003), which supersedes all prior lists and identifies companies deriving more than 15% of revenue from tobacco sales, in which retirement systems are barred from making new investments under Chapter 119 of the Acts of 1997. Boards must forward the list to their investment advisors (or direct them to PERAC's website) and ensure post-January 13, 1998 purchases comply with the restriction—including pooled funds assessed at the pool level—divesting prudently and consulting PERAC before taking any corrective action if non-compliance is found during audit.

This memo requests data needed to calculate each board's FY04 appropriation under G.L. c.32, §22D or §22(6A)(b), with a revised questionnaire format (no benefit payment data, combined compensation figures). Boards must complete and return the questionnaire—preferably via PERAC's website—by October 31, 2003, and should contact PERAC if they have not submitted an updated funding schedule within the past three years, as one is required at least triennially.

This memo addresses two CRAB decisions holding that the value of personal use of an employer-supplied motor vehicle is not regular compensation for retirement purposes, contrary to PERAC's prior position. Boards must immediately stop collecting contributions on such vehicle-use value and stop paying any portion of retirement allowances attributable to it, recalculating allowances as needed—but should not attempt to collect prior overpayments or refund prior contributions until litigation is finally resolved.

This memo transmits PERAC's quarterly-updated list (as of 9/30/03) of pre-approved investment managers/funds in international equity, international fixed income, real estate, and alternative investments who are exempt from the 840 CMR 19.01 application process. Boards hiring a manager already on the list need not seek a separate exemption, but must still submit the Competitive Process Notification Form, Vendor Certification Form, and Disclosure Form and receive PERAC acknowledgement before transferring funds; boards remain free to request exemptions for managers not on the list, and no exemption is needed at all for domestic equity/fixed income hires.

In light of the Putnam Investments allegations, this memo directs retirement boards to expand due diligence on investment managers beyond performance and style to include ethical practices—specifically firm codes of ethics, personal trading restrictions, market timing policies, special client trading privileges, gift acceptance policies, best-execution practices, and soft dollar usage. Boards should contact their client service officers immediately to obtain assurances on these matters if not already addressed, for both retail and institutional fund/separate account relationships.

PERAC Memo #42/2003 alerts boards that the mutual fund trading-abuse investigations have expanded beyond Putnam to include Invesco, Alliance Capital, and MFS, though PERAC believes no board assets were invested in the affected retail funds and no institutional clients have terminated relationships with these firms. Boards with current or prospective investments with these managers should proactively discuss the allegations with their consultants and the firms' client service officers, using the due diligence criteria outlined in Memo #38/2003 as a guide. No mandatory divestment or reporting action is required at this time.

PERAC Memorandum #2/2002 establishes the "regular interest" rate for 2002 at 1.4%, as determined under G.L. c. 32, §22(6)(b) based on average rates from a sample of financial institutions. Boards must apply this 1.4% rate to accumulated total deductions and interest (for deductions made on or after January 1, 1946) when crediting interest for refunds and retirements processed during 2002, and on outstanding balances as of December 31, 2001, credited as of December 31, 2002.

PERAC Memo #4/2002 addresses the Commission's review of "hedge fund" and absolute return investing by public retirement boards, following growing national interest and one board's request for regulatory action. Citing unresolved concerns about manager risk, transparency, and the expertise needed to properly select and monitor such investments, the Commission declined to approve any exemptions or supplementary regulations permitting hedge fund investments at this time—meaning **no board may currently invest in such strategies**. The matter has been referred to PERAC's Investment Sub-Committee for further study, and boards may submit comments to Investment Director Bob Dennis.

PERAC Memorandum #6/2002 provides a supplemental buyback worksheet, to be used alongside the worksheet issued in Memo #5/2002, specifically for calculating the cost of purchasing prior creditable service for which no contributions were ever made. Boards should use this additional form when processing such buybacks for calendar year 2002; no other action is required, and questions can be directed to Jim Lamenzo at PERAC.

This memo transmits PERAC's updated (quarterly) list of investment managers holding approved exemptions under 840 CMR 19.01 whose products remain open to new investment, so boards do not need to separately request a waiver when selecting a manager already on the list for the relevant asset class. For managers selected to invest in U.S. fixed income or equities (no exemption required under 840 CMR 19.02(5)), or any manager not already exempted, boards must still: (1) notify PERAC in writing that selection followed a competitive process compliant with Chapter 32 and regulations, including manager name, address, asset class, and pooled fund name if applicable; (2) submit the manager's Vendor Certification (840 CMR 16.08); and (3) submit the manager's/consultant's Disclosure Statement of compensation arrangements (840 CMR 17.04(8)).

PERAC Memo #11/2002 requests that boards assist in compiling data for the 2001 Annual Report by verifying three items: current board contact/meeting information (with board member/administrator names as of 12/31/2001), the accuracy of the attached manager/custodian/consultant list (noting any name discrepancies, terminations, or liquidations), and the board's calculated Target Investment Rate of Return. Action required: Boards must review, annotate/correct, and return the data sheet and manager list, along with their Target Investment Rate of Return, to Lindsay Deaver at PERAC by March 1, 2002; any terminated managers or liquidated funds must be reported in a separate letter to the Investment Unit.

This memo transmits PERAC's Guidelines for Retirement Board Travel Supplemental Regulations, covering required elements such as travel authorization, documentation, reimbursement procedures, third-party payments, and penalties for violations, in order to ensure fiduciary and ethical compliance in Board Member and staff travel. Boards must draft (or, if previously approved, revise) supplemental travel regulations consistent with these Guidelines and submit them to PERAC for review under G.L. c. 7, §50 and G.L. c. 32, §21(4) within 60 days of the memo's issuance, consulting legal counsel as needed.

This memo transmits an updated Tobacco Company List (dated April 1, 2002), which replaces all prior versions and is effective immediately upon receipt, identifying companies prohibited under Chapter 119 of the Acts of 1997 (those deriving more than 15% of revenue from tobacco sales), including affected pooled funds. Boards must forward this list to their investment advisors, ensure no new investments are made in listed companies, and, if a portfolio audit reveals non-compliant holdings acquired after January 13, 1998, prudently divest—but must consult with PERAC before taking any divestment action.

This memo transmits PERAC's updated (as of 3/31/02) list of investment managers holding approved 840 CMR 19.01 exemptions, noting boards need not seek separate waivers to retain managers already on the list within the approved asset class, and confirming no exemption is required for managers investing in U.S. fixed income or equities. Boards selecting managers for these non-exempt asset classes must still comply with competitive selection requirements and submit to PERAC a notification letter (with manager name, address, and asset class), the manager's Vendor Certification, and the required Disclosure Statement regarding compensation arrangements. This list is updated quarterly and posted on PERAC's website, and administrators should note it is distinct from PERAC's general list of Investment Managers, Consultants, and Custodians.

This memo explains Chapter 116 of the Acts of 2002, which allows cities, towns, counties, authorities, and districts to locally adopt an Early Retirement Incentive (ERI) Program, and outlines the acceptance process (requiring approval by both Legislative and Executive Authorities by November 1, 2002) as well as employee eligibility criteria. Retirement boards are not required to formally accept the Act themselves, but must be prepared to administer the ERI—including adopting supplemental regulations as needed—once a governmental unit within their system accepts it, and should share this guidance with local officials.

PERAC has developed an Excel spreadsheet to help boards estimate ERI costs by calculating a member's regular retirement benefit versus the maximum enhanced benefit under various age/service credit combinations (for up to 50 members). The tool does not calculate present value or amortization schedules needed for funding purposes. No action is required unless a board wants to use the tool, in which case it should email James Lamenzo to request a copy.

This memo addresses implementation of the Chapter 116 (2002) local option Early Retirement Incentive (ERI) program and PERAC's need to track acceptances and outcomes for a required legislative report due by December 31, 2003. Boards must promptly notify PERAC (via Lindsay Deaver) when any governmental unit accepts the ERI, including acceptance date, any age/service or participant limitations, and the retirement date; boards must also submit detailed member-level data (name, SSN, DOB, service, compensation, ERI-added age/service, allowance, etc.) for each retiree under the program, preferably in Excel format, as soon as it becomes available.

This memo transmits an updated Tobacco Company List (dated July 1, 2002), which supersedes prior lists and identifies companies prohibited from new investment under Chapter 119 of the Acts of 1997 (companies deriving more than 15% of revenue from tobacco sales, including pooled funds meeting this threshold). Boards must share this list with their investment advisors, ensure no new prohibited investments are made, and—if PERAC's audit finds a portfolio non-compliant—divest in a prudent manner only after consulting with PERAC beforehand.

This memo transmits PERAC's updated (quarterly) list of investment managers holding approved 840 CMR 19.01 exemptions/waivers in asset classes for which such exemptions are required, noting that boards need not seek a separate waiver to retain managers already on this list. Boards using a manager for U.S. fixed income or equities don't need an exemption at all, but for any manager selection, boards must still: (1) send PERAC a letter confirming a competitive selection process compliant with Chapter 32 and regulations, with manager name/address/asset class and pooled fund details if applicable; (2) submit the selected manager's Vendor Certification (840 CMR 16.08); and (3) obtain and forward the manager's/consultant's Disclosure Statement of compensation arrangements (840 CMR 17.04(8)). Boards should note this exemption list is separate from PERAC's general roster of managers, consultants, and custodians.

This memo requests retirement boards complete and return the annual Appropriation Data Questionnaire—covering FY03/FY04 appropriation amounts, Section 3(8)(c) reimbursements, COLA reimbursements, benefit payments, and any 90A/90C/90D acceptances—by October 31, 2002, so PERAC can calculate the FY04 appropriation under G.L. c. 32, §22D or §22(6A)(b). Boards may submit the questionnaire via PERAC's website and are reminded that funding schedules must be resubmitted for approval at least every three years, with boards lacking a recent schedule asked to contact PERAC.

This memo provides retirement boards with the updated (as of 9/30/02) PERAC list of investment managers pre-approved for exemption under 840 CMR 19.01 in the international equity, international fixed income, real estate, and alternative investment asset classes; only open funds are included, and the list will be updated quarterly on PERAC's website. Boards hiring a manager from this list do not need to separately apply for an exemption, but must still submit a competitive process letter, Vendor Certification Form, and Disclosure Form and receive PERAC acknowledgement before transferring funds; boards may also seek exemptions for managers not on the list, and no exemption is needed at all for domestic equity/fixed income managers.

This memo transmits an updated Tobacco Company List (dated October 1, 2002), which supersedes all prior versions and identifies companies/pooled funds deriving more than 15% of revenue from tobacco sales, prohibited investments under Chapter 119 of the Acts of 1997. Boards must ensure their portfolios comply with this list effective immediately, forward it to investment advisors, and—if any non-compliant holdings are found during PERAC's audit—consult with PERAC before prudently divesting.

This memo advises that, per tax counsel's opinion, IRC §415(c) prohibits retirement boards from accepting any post-retirement contributions, since retirees have no compensation to which contributions can be tied—an issue that arose from questions about taxing personal use of employer-supplied vehicles as regular compensation. Boards must immediately stop accepting contributions from retirees and refund (without interest) any post-retirement contributions collected for personal vehicle use, while still crediting the appropriate regular compensation and recalculating retirement allowances accordingly. For active members, boards must work with employers to identify personal vehicle use, value it using the PERAC lease table, and collect any required make-up contributions (which cannot be waived, though interest applies only if paid in installments).

This memo announces PERAC's newly approved guidelines governing hedge fund investments by Massachusetts local retirement boards, establishing a more rigorous regulatory process than for traditional asset classes. Boards considering hedge fund investments must demonstrate a well-conceived, prudently structured strategy, conduct intensive due diligence with their investment consultant, and meet PERAC's heightened standards on manager credentials and selection process—PERAC will deny authorization if these requirements are not met. No immediate action is required unless a board is pursuing or considering hedge fund investments, in which case it must follow the new guidelines and can direct questions to Investment Director Robert Dennis.

This memo addresses the forfeiture provisions of G.L. c. 32, § 15, which strip members/retirees of retirement allowances or accumulated deductions upon conviction of misappropriation or related offenses, as upheld in MacLean v. State Board of Retirement. Boards must immediately comply with the enclosed Temporary Order to Protect the Systems by reviewing § 15's varying effective dates and requirements, initiating forfeiture proceedings under §§ 15(2) and 16(1) whenever a member or retiree is identified as potentially subject to forfeiture (regardless of retirement status or the source of the information), and consulting legal counsel before acting on retirement or withdrawal applications for anyone facing related charges or convictions.

This memo updates boards on Chapter 46 of the Acts of 2002, which brings the Massachusetts Retirement Law into compliance with IRC Sections 401(a)(17) (compensation limits) and 415 (benefit limits), affecting only the highest-paid members and retirees. Boards with any active members or retirees meeting the specified compensation/benefit thresholds must compile detailed member data and contact PERAC actuary Jim Lamenzo, and should consider voting to accept Section 7's provisions establishing separate "make whole" funds for affected members hired before February 28, 2002. Boards with no members meeting these thresholds need take no action, though PERAC notes that failure to comply where applicable could have significant tax and plan consequences.

**Summary:** This memo follows up on Chapter 116 of the Acts of 2002 (the local Early Retirement Incentive program), asking boards whose governmental units accepted the ERI to submit acceptance details (date, limits on age/service credit, participation caps, retirement date) and detailed member-level data for each ERI retiree, since PERAC must complete a cost analysis report for each accepting system by December 31, 2003. **Action required:** Boards must (1) confirm and report which of their governmental units accepted Chapter 116 along with acceptance terms, (2) submit member-specific retirement data (via Excel) for each ERI participant as soon as available, (3) notify PERAC's actuary if a private actuary will independently calculate ERI costs, and (4) be prepared to address the resulting funding schedule adjustments.

This memo announces Chapter 394 of the Acts of 2002 (effective 12/5/2002), which amended G.L. c. 32, §4(1)(o) to allow unpaid town moderators first elected by direct popular vote before 1/1/86 to purchase creditable service, joining selectmen, aldermen, city councilors, and school committee members already eligible under this provision. Eligible members must contribute to the annuity savings fund the amount they would have paid had they earned $2,500/year, plus regular interest to the date of payment. Boards should be prepared to process such purchase-of-service requests from qualifying moderators accordingly.

This memo transmits PERAC's updated list of qualified investment managers under 840 CMR 19.01, noting that boards need not obtain a separate exemption/waiver to retain managers already on the list (provided the board has a waiver for that asset class) or to hire managers investing in U.S. fixed income/equities. Boards must still comply with other regulatory requirements when selecting any manager: submit a letter confirming a competitive selection process consistent with Chapter 32, provide manager details (including pooled fund names if applicable), and file the required Vendor Certification (840 CMR 16.08) and Disclosure Statement (840 CMR 17.04(8)) for the selected manager.

This memo reports that the Social Security COLA is 3.5%, meaning retirement systems that have accepted Chapter 17 (Acts of 1997) and adopted a funding schedule may grant a COLA effective July 1, 2001 of up to 3.0% on the first $12,000 of a retirement allowance, per Chapter 32, §103(c). Only boards that have accepted Chapter 17 may act on this; each such board must notify PERAC within 30 days of its decision whether to grant the COLA.

PERAC Memo #6/2001 provides several clarifications on investment procedures: it confirms there is no formal "emergency" exception for terminating managers without competitive process (though PERAC will expedite review of such situations if notified), clarifies that Guideline 99-2 covers only minor mandate/name changes while Guideline 99-3 successor-partnership provisions do not apply to real estate, and reminds boards that PERAC's "Qualified Manager" approval/waiver process applies only to international, real estate, and alternative investment managers—not domestic equity/fixed income managers. Boards should update outdated performance benchmarks to reflect actual/target asset allocations, ensure RFP language to prospective managers is accurate regarding PERAC approval requirements, and apply competitive process requirements to all investment-related service providers (e.g., commission recapture dealers, distribution managers), not just managers, consultants, and custodians.

PERAC Memo #7/2001 announces that the "regular interest" rate under G.L. c. 32, §22(6)(b) for calendar year 2001 has been set at 1.9%, based on average savings account rates from a sample of financial institutions. Boards must apply this rate to accumulated total deductions and interest (for balances dated on or after January 1, 1946) when crediting interest on refunds and retirements processed during 2001, and on outstanding balances as of December 31, 2000, credited December 31, 2001.

This memo corrects the List of Qualified Investment Managers issued January 16, 2001 (PERAC Memo #4/2001), removing the Brazil Emerging Growth Timberland Investment Fund as of December 31, 2000. Boards should update their copy of the list accordingly; any board wishing to invest in this fund going forward must submit the full exemption request and obtain PERAC's written approval before investing.

PERAC Memo #13/2001 reminds retirement boards of their fiduciary obligations regarding investment activities, emphasizing compliance with 840 CMR 17.01–17.04 governing ethics, conflicts of interest, and standards of conduct for fiduciaries, investment managers, and consultants. It highlights that managers/consultants who violate Chapter 32 §23 or these regulations can be held liable for losses and barred from serving any Massachusetts retirement board. Boards should ensure they and their vendors fully understand and adhere to these standards, as PERAC intends to pursue aggressive enforcement going forward.

This memo asks retirement boards to verify PERAC's records of investment managers, custodian, and consultant retained as of December 31, 2000, for use in the PERAC 2000 Annual Report—note that pooled funds (mutual funds, commingled funds, etc.) count as investment managers for this purpose. Boards must notify PERAC in writing of any discrepancies (including name differences) and report any liquidations or terminations with dates; if no response is received by February 12, 2001, PERAC will treat its records as accurate.

This memo reminds retirement boards that, per State Ethics Commission Advisory Opinion EC-COI-00-2, board members and staff are municipal employees subject to the conflict of interest law (M.G.L. c. 268A), building on earlier guidance regarding pension fund misconduct and travel-related issues. PERAC encloses Ethics Commission conflict-of-interest guidance materials and has arranged joint PERAC/Ethics Commission training seminars (including evening sessions) in April. Boards are strongly urged to have trustees and staff attend these sessions to ensure compliance with fiduciary and ethics obligations.

PERAC Memo #22/2001 requests that each retirement board report both its Actuarial Assumed Rate of Return and its Target Investment Rate of Return (based on current asset allocation and projected asset class returns) for inclusion in PERAC's 2000 Annual Report. Boards should note these figures may differ, since the actuarial rate reflects amortization needs while the target rate reflects asset allocation projections. **Action required:** Complete and return the form via mail or fax to PERAC by April 2, 2001.

PERAC Memo #26/2001 transmits an updated Tobacco Company List (dated April 1, 2001), which replaces all prior versions and is effective immediately upon receipt, identifying companies deriving over 15% of revenue from tobacco sales that boards are prohibited from newly investing in under Chapter 119 of the Acts of 1997. Boards must distribute the list to their investment advisors (or direct them to it on PERAC's website), and any board found non-compliant during PERAC's audit process must divest in a prudent manner after consulting with PERAC beforehand. The memo also clarifies that pooled funds are assessed against the 15% threshold at the aggregate pool level, not by individual underlying holdings.

PERAC Memo #27/2001 provides retirement boards with the updated list of qualified investment managers under 840 CMR 19.01 who have received approved exemptions ("waivers"), noting that boards need not seek a separate waiver to retain managers already on this list (within the applicable asset class) or when selecting managers for U.S. fixed income or equities. Boards must still: (1) notify PERAC in writing that a manager was selected through a competitive process compliant with Chapter 32, including manager name, address, asset class, and pooled fund name if applicable; (2) obtain and submit the manager's Vendor Certification (840 CMR 16.08); and (3) obtain and submit the manager/consultant's Disclosure Statement regarding compensation arrangements (840 CMR 17.04(8)). The list will be updated quarterly and posted on PERAC's website.

PERAC Memo #30/2001 transmits the 2000 Annual Report for the Massachusetts Contributory Retirement Systems, covering system organization/administration, disability retiree return-to-service statistics, and investment managers/consultants by board. It notes that despite market declines in 2000, diversified asset allocation helped systems weather volatility. No specific action is required of boards beyond reviewing the report and directing questions on financial data to Robert Dennis or Jim Lamenzo, or other inquiries to Frank Valeri.

PERAC Memo #32/2001 amends prior guidance (Memo #36/2000) on waiving underpayments/overpayments under G.L. c. 32, §20(5)(c)(3), clarifying that boards may refund amounts repaid by members (via direct payment or allowance reduction) from the date of demand to the date of waiver—but never for periods before July 1, 1995, and without interest. All other guidance from Memo #36/2000 remains unchanged, and boards retain absolute discretion whether to grant such waivers; no mandatory board action is required beyond applying these clarified refund limits if a waiver is granted.

PERAC Memo #33/2001 transmits an updated Tobacco Company List (dated July 1, 2001), which supersedes all prior lists and is effective immediately upon receipt, identifying companies (including qualifying pooled funds) deriving more than 15% of revenue from tobacco sales in which new investments by retirement systems are prohibited under Chapter 119 of the Acts of 1997. Boards must forward the list to their investment advisors (or notify them it is available on PERAC's website), and PERAC will audit portfolios for compliance since January 13, 1998; any board found holding non-compliant investments must divest prudently, but only after consulting with PERAC before taking action.

PERAC Memo #34/2001 transmits the updated (as of 6/30/01) list of qualified investment managers under 840 CMR 19.01 who have received approved exemptions ("waivers"), noting boards need not seek a separate waiver to retain managers already on this list within an approved asset class, and that no waiver is needed for U.S. fixed income/equity managers under 840 CMR 19.02(5). For managers selected under this latter exemption, boards must still: (1) notify PERAC in writing that the manager was selected via a competitive process compliant with c. 32 and regulations, including manager name, address, asset class, and pooled fund name if applicable; (2) submit the selected manager's Vendor Certification (840 CMR 16.08); and (3) ensure the manager/consultant files the required Disclosure Statement on compensation arrangements (840 CMR 17.04(8)). The list will be periodically updated and posted on PERAC's website.

This memo requests data needed to calculate each board's FY03 appropriation under G.L. c.32, §22D or §22(6A)(b). Boards must complete and return the attached questionnaire (or submit via PERAC's website) by October 31, 2001. Boards are also reminded that funding schedules must be resubmitted for PERAC approval at least every three years, or PERAC may impose conservative assumptions resulting in a significantly higher appropriation.

PERAC Memo #38/2001 transmits an updated Tobacco Company List (dated October 1, 2001), superseding all prior lists, identifying companies deriving over 15% of revenue from tobacco sales in which retirement boards are prohibited from making new investments under Chapter 119 of the Acts of 1997. Boards must forward the list to their investment advisors (or direct them to it on PERAC's website) and ensure their portfolios comply, since PERAC will review holdings during audits; any non-compliant investments must be divested prudently and only after consulting with PERAC. Note that for pooled funds, the 15% threshold is applied to the pool as a whole, not individual underlying holdings.

PERAC Memo #40/2001 transmits the updated quarterly list of investment managers pre-approved under 840 CMR 19.01, which boards may retain without a separate exemption/waiver provided the board already holds a waiver for that asset class; managers investing in U.S. equities or fixed income never require a waiver under 840 CMR 19.02(5). When selecting any manager (waivered or not), boards must still: (1) notify PERAC in writing that selection followed a competitive process compliant with Chapter 32, including manager name, address, asset class, and pooled fund name if applicable; (2) submit the selected manager's Vendor Certification (840 CMR 16.08); and (3) obtain and forward the manager's/consultant's Disclosure Statement of compensation arrangements under 840 CMR 17.04(8). No action is required regarding the list itself beyond referencing it, but boards must comply with these documentation requirements whenever hiring a manager.

This memo notifies boards that EGTRRA expanded permissible rollover destinations for member Annuity Savings Account withdrawals (traditional IRAs, qualified employer plans, annuity contracts, and certain governmental deferred compensation plans) and allows rollover of both taxable and non-taxable portions, effective for distributions paid on or after January 1, 2002. Boards must use the attached revised Application for Withdrawal of Accumulated Total Deductions form and Special Tax Notice for all withdrawals/refunds paid on or after that date; note that rollovers into retirement systems for service purchases and pre-tax buy-back withholding are not yet available pending PERAC regulations and an IRS ruling, respectively.

PERAC Memo #2/2000 informs retirement boards of the Connecticut pension fund scandal, in which former State Treasurer Paul Sylvester pleaded guilty to bribery and racketeering involving pension investment selections, and reminds boards that such conduct would violate PERAC's Fiduciary Code of Ethics/Standard of Conduct and Chapter 268A. The memo is informational only, sharing media coverage as a cautionary example, and requires no specific action by boards beyond continued awareness of fiduciary and ethics obligations.

This memo announces that PERAC has set the "regular interest" rate for calendar year 2000 at 2.1%, as determined under Section 22(6)(b) of Chapter 32 in consultation with the Commissioner of Banks. Boards must apply this 2.1% rate to accumulated total deductions and interest (for balances dating back to January 1, 1946), crediting it for refunds and retirements processed during 2000 and on outstanding balances as of December 31, 1999, to be credited December 31, 2000.

PERAC Memo #9/2000 announces expansion of the investment section of PERAC's website (regulations, guidelines, forms, education materials, and RFP postings) and reminds boards to submit year-end portfolio performance reviews from investment managers. Boards must review the enclosed roster of their investment managers/vendors as of 12/31/1999 and report any corrections to PERAC by February 11; no response will be treated as confirmation that the data is accurate.

This memo addresses the final resolution of Cavanaugh v. MTAERS and CRAB, following the Massachusetts Turnpike Authority Employee Retirement Board's withdrawal of its appeal—confirming that Woburn v. Crocker must be applied retroactively to a dual member's original entry date into their first retirement system. Retirement boards must now implement the guidance previously issued in PERAC Memo #33/1999 (which had been placed on hold per Memo #37/1999) and process appropriate member refunds accordingly.

**PERAC Memo #11/2000** provides retirement boards with an updated list of qualified/pre-approved investment managers under 840 CMR 19.01, for whom no separate exemption (waiver) is needed if the board already holds a waiver for that asset class; likewise, no waiver is needed for managers investing in fixed income or equities of U.S. corporations under 840 CMR 19.02(5). **Action required:** Even when using a listed or exempt manager, boards must still notify PERAC in writing that the manager was selected via a competitive process compliant with Chapter 32, provide the manager's name/address/asset class (and pooled fund name if applicable), and submit the required Vendor Certification (840 CMR 16.08) and Disclosure Statement (840 CMR 17.04(8)) for the selected manager/consultant.

PERAC Memo #13/2000 requests that each retirement board report its Actuarial Assumed Rate of Return and its Target Investment Rate of Return (calculated from current asset allocation and historical asset class returns) for inclusion in PERAC's 1999 Annual Report. Boards must complete and return the attached form by mail or fax by February 11, 2000.

This memo clarifies PERAC's guidance on board member and staff attendance at the 2000 NCPERS annual conference, addressing confusion about the appropriate use of retirement funds for related travel expenses. While boards retain discretion to approve conference attendance and expenditures in advance, they must ensure that any personal or extended travel (e.g., through MACRS travel offers) is not paid for with retirement system funds—such costs must be segregated and borne directly by the individual. Boards should communicate this expectation to attending members and staff before approving conference-related expenses.

PERAC Memo #17/2000 reports that the CPI-W-based COLA for FY2000 is 2.4%, applicable only to systems that have accepted Chapter 17 of the Acts of 1997 and established a funding schedule; boards may elect to increase this to up to 3.0% under Chapter 127, Section 51 of the Acts of 1999. Boards must notify PERAC within 30 days of their decision whether or not to grant a COLA.

**PERAC Memo #28/2000** transmits PERAC's list of qualified investment managers under 840 CMR 19.01, noting that boards need not seek a separate exemption/waiver to retain managers already on this list (or when hiring managers solely for U.S. fixed income or equities), provided the board already holds a waiver for that asset class. Boards must still, for any selected manager: (1) submit a letter to PERAC certifying the manager was chosen through a competitive process compliant with Chapter 32 and PERAC regulations, including manager name, address, asset class, and pooled fund name if applicable; (2) file the Vendor Certification (840 CMR 16.08) for the selected manager; and (3) obtain and forward the manager/consultant Disclosure Statement (840 CMR 17.04(8)) covering compensation and referral arrangements. The list will be updated quarterly and posted on PERAC's website, excluding closed funds.

PERAC Memo #2000/33 reports on the success of the DOR/PERAC Child Support Enforcement Initiative, which requires retirement boards to intercept members' retirement allowances and refunds to satisfy delinquent child support obligations under a 1998 amendment to G.L. c. 32. The memo notes that nearly $200,000 was collected statewide in FY2000 through boards' cooperation and commends staff for their efforts. No new action is required—this is an informational update recognizing boards for their ongoing compliance with existing interception procedures.

This memo explains new G.L. c. 32, §20(5)(c) provisions (from FY2001 budget legislation) allowing retirement boards, upon a member/beneficiary's request, to waive repayment of certain overpayments or contribution shortfalls, provided the error persisted over a year, was not caused by member-provided misinformation, and the member had no knowledge/reason to suspect the error. Boards may waive remaining balances on active repayment plans or future annuity reductions, but cannot refund amounts already repaid or completed repayments. No action is required unless a board receives such a waiver request, in which case it must investigate and apply these criteria before voting.

PERAC Memo #39/2000 announces a new electronic submission option, available via PERAC's website, for reporting pooled fund investment performance data (previously submitted manually) used in PERAC's Annual Report investment performance assessments. The memo provides step-by-step instructions for completing the online Pooled Fund Form and includes corresponding accounting entries for purchases, income, fees, sales, and stock distributions. Boards are not required to switch to electronic submission, but should use this new tool—following the outlined data-entry and accounting guidance—to streamline timely reporting of pooled fund activity to PERAC.

PERAC Memo #43/2000 requests that retirement boards submit appropriation data—via the enclosed questionnaire or PERAC's website—needed to calculate each board's FY02 appropriation under G.L. c.32, §22D or §22(6A)(b). Boards must complete and return the questionnaire by October 31, 2000, and should confirm that a funding schedule has been submitted to PERAC for approval within the past three years, as failure to do so may result in conservative assumptions being used that could significantly increase the required appropriation.

PERAC Memo #46/2000 announces a new educational session for retirement board members and administrators, covering investment consultant portfolio review topics (economic conditions, manager performance, and searches) and actuarial valuation concepts (funding levels, asset valuation, and assumption changes). The class will be offered multiple times in November (Somerville) and December (Northampton, Shrewsbury, Plymouth); boards should complete and submit the Class Registration Form early, as seating is limited and assigned on a first-come, first-served basis.

PERAC Memo #47/2000 transmits the updated list of investment managers previously granted exemptions (waivers) under 840 CMR 19.01, and clarifies that boards need not seek a new waiver to retain a manager already on this list, or when hiring a manager for U.S. corporate fixed income or equities under 840 CMR 19.02(5). Boards using such managers must still notify PERAC in writing that the manager was selected through a competitive process compliant with Chapter 32 (identifying name, address, asset class, and pooled fund if applicable), and must submit the manager's Vendor Certification (840 CMR 16.08) and Disclosure Statement (840 CMR 17.04(8)) to PERAC.

This memo clarifies that under G.L. c. 32, § 3(8)(c), a retirement system receiving reimbursement from another governmental unit for pension costs attributable to service in that second unit cannot also seek reimbursement for the COLA portion (under Chapter 17 of the Acts of 1997) attributable to that service. Because each board independently elects to adopt the COLA, the adopting system bears full responsibility for the entire increased COLA cost, regardless of any § 3(8)(c) reimbursement arrangement. Boards need not take specific action but should apply this interpretation when calculating and billing § 3(8)(c) reimbursements.

This memo transmits PERAC's updated list of qualified investment managers under 840 CMR 19.01, noting recent additions and deletions, and clarifies that boards do not need a separate exemption/waiver to retain listed managers if a waiver already exists for that asset class (and no waiver is needed at all for U.S. equity or fixed income managers). Boards selecting a manager under this exemption must still notify PERAC in writing that the selection followed a competitive process compliant with Chapter 32, provide manager/asset class details, submit the manager's Vendor Certification, and ensure disclosure of any compensation arrangements per 840 CMR 17.04(8).

PERAC Memo #5/1999 establishes the "regular interest" rate for 1999 at 2.2%, as determined under Section 22(6)(b) of Chapter 32 based on average savings rates from a sample of financial institutions. Boards must apply this 2.2% rate to accumulated total deductions (post-1/1/1946) for refunds and retirements processed during 1999, and credit it to outstanding balances as of December 31, 1998, on December 31, 1999.

PERAC Memo #13/1999 transmits revised (PERAC-generated only) investment-related forms—including exemption applications for real estate, international/global, and alternative investments, plus the Statement of Investment Objectives, Vendor Certification, Disclosure Statement, and Consultant Exemption Application—now available on PERAC's website. It outlines the step-by-step procedures boards must follow when hiring managers or consultants across asset classes (real estate, international/global, alternative, domestic equity/fixed income), specifying when exemption applications are required versus when boards may proceed directly to certifying competitive selection, obtaining Vendor Certifications, and collecting Disclosure Statements. Boards should use only these updated PERAC forms going forward and follow the applicable step sequence for each investment type to ensure compliance with 840 CMR 19.00 and 26.00.

This memo announces Chapter 456 of the Acts of 1998, effective April 15, 1999, which allows a local option COLA for noncontributory pension recipients (requiring local legislative body acceptance of both Chapter 456 and Chapter 17 of 1997), and a separate local option permitting uncompensated library trustees to purchase creditable service by paying into the annuity savings fund as if compensated at $2,500/year plus interest. No immediate action is required of retirement boards themselves, since acceptance of the COLA provision rests with the local legislative body (Town Meeting, City Council, or County Advisory Council); boards should be prepared to implement the COLA for noncontributory retirees—including the FY1999 retroactive adjustment to July 1, 1998—once local acceptance occurs, and should be aware of the library trustee creditable service option if applicable.

This memo notifies boards that the Social Security Administration's CPI-W determination sets the FY2000 COLA rate at 1.3%, applicable only to systems that have accepted Chapter 17 of the Acts of 1997 and established a funding schedule for COLA costs. Boards eligible to grant this COLA must decide whether to do so and notify PERAC of their decision within 30 days.

This memo clarifies implementation of the library trustee creditable service local-option provision under Chapter 456 of the Acts of 1998: a library trustee purchasing service need not be a member of the system from which the service is being purchased, but must be a member of some retirement system and must be eligible to receive a retirement allowance at the time of purchase. The purchase is made through the trustee's own system, which may then seek reimbursement from the crediting system under G.L. c. 32, §3(8)(c). No board action is required beyond awareness of this clarification, though boards should apply this guidance when processing such purchase-of-service requests from library trustees in municipalities that have accepted the provision.

This memo provides updated contact information (address and phone) for DOR's Retirement Board Payment Intercept Program. Boards must continue to contact this office to check for child support liens before processing any member's request for a return of Annuity Savings Fund contributions, directing questions to Attorney Dolores O'Neill.

This memo transmits the updated Tobacco Company List (effective April 1, 1999), which supersedes all prior lists and identifies companies deriving more than 15% of revenue from tobacco sales—in which boards are statutorily barred from making new investments under Chapter 119 of the Acts of 1997. Boards must forward the list to their investment advisors (or notify them it's available on PERAC's website), and PERAC will audit portfolios for compliance, including pooled funds assessed at the pool level; any noncompliant holdings must be divested prudently and only after consultation with PERAC.

PERAC Memo #32/1999 announces three new investment guidelines aimed at giving retirement boards greater flexibility: (1) an expedited process for subscribing to follow-on offerings from alternative asset managers already used by the system, (2) allowance for modest modifications to an investment manager's existing mandate, and (3) limited use of interest rate futures/options for duration management (up to 25% of portfolio) and equity index futures/options for short-term liquidity purposes (up to 10% of portfolio). Boards wishing to use these guidelines must submit a supplementary regulation request under 840 CMR 21.01 for PERAC approval and update their investment policy statements accordingly; no action is required for boards not seeking to utilize these options.

This memo addresses the Cavanaugh v. MTAERB and CRAB Superior Court ruling, which requires that the correction of contribution rates for dual members (established in Woburn v. Crocker and PERAC Memo #11/1995) be applied retroactively to each member's original enrollment date, rather than only prospectively from February 3, 1995. Boards must review records to identify dual members active before February 3, 1995 who overpaid contributions due to dual membership status—these are the same individuals whose rates were adjusted in 1995—and issue refunds (without interest) for the excess contributions collected between their dual-membership start date and February 3, 1995.

PERAC Memo #35/1999 requests retirement boards to submit appropriation data needed to calculate FY01 appropriation amounts under G.L. c. 32, §22D or §22(6A)(b). Boards must complete the enclosed questionnaire (or submit it online via PERAC's website) by October 31, 1999; boards that have not filed an updated funding schedule within the past three years should note that missing or incomplete data will cause PERAC to apply conservative estimates, potentially resulting in a significantly higher required appropriation.

This memo corrects PERAC Memo #33/1999, clarifying that the Cavanaugh v. MTAERB and CRAB decision is not final, as it has been appealed to the Massachusetts Appeals Court. Retirement boards must not issue any refunds based on this decision until PERAC confirms it is final and provides implementation guidance.

This memo transmits the updated Tobacco Company List (dated July 1, 1999), which supersedes prior lists and, under Chapter 119 of the Acts of 1997, identifies companies deriving more than 15% of revenue from tobacco sales in which retirement boards may not make new investments. Boards must distribute this list to their investment advisors (or notify them it is on PERAC's website), ensure no new prohibited investments are made effective immediately upon receipt, and, since PERAC will audit portfolios for compliance, consult with PERAC before divesting if any non-compliant holdings (including in pooled funds, assessed at the fund level) are found.

**PERAC Memo #43/1999** clarifies the methodology for withholding the additional 2% contribution required under G.L. c. 32, §1 on regular compensation paid at an annual rate exceeding $30,000, applicable to members who joined or rejoined the system on or after January 1, 1979. It explains that the 2% is applied per pay period based on the annualized rate of pay (not actual annual earnings), provides formulas and examples for weekly, biweekly, and monthly payrolls, and addresses treatment of non-recurring payments and retroactive salary adjustments. **Action required:** Boards should forward this memo to all payroll staff and vendors responsible for withholding calculations to ensure the 2% surcharge is applied correctly and consistently based on per-period compensation rates.

PERAC Memo #1/1998 sets the "regular interest" rate for 1998 at 2.4%, as determined under Section 22(6)(b) of Chapter 32 based on average savings account rates from a sample of financial institutions. Boards must apply this 2.4% rate to accumulated total deductions (post-1946) when crediting interest for 1998 refunds and retirements, and on outstanding member balances as of December 31, 1997, with interest credited as of December 31, 1998. No further action beyond correct rate application is required.

PERAC Memo #3/1998 transmits the annual worksheets and interest factor tables retirement boards use to calculate buyback and repayment amounts (for refunded contributions being restored to service credit) for calendar year 1998. It provides the year-by-year interest factors, calculation instructions, and formulas needed to compute amounts owed as of 12/31/97 and repayment totals through 1998. No board action is required beyond using these updated worksheets/factors when processing member buybacks and repayments during 1998; boards may contact Jim Waldman with questions.

PERAC Memo #7/1998 updates the ledger account structure used to classify pooled fund investments, discontinuing several outdated accounts (e.g., real estate, venture capital, international, PRIT Cash, Treasurers' Masters Trust) and replacing them with new, more specific accounts covering short-term, equity, fixed income, alternative, real estate, and balanced fund categories. Boards should begin using the new ledger numbers effective January 1, 1998, and should reference the attached system-specific list to properly reclassify their pooled fund holdings accordingly.

This memo clarifies PERAC's application of the Tobacco Statute (Chapter 119) to pooled fund investments, defining "pooled funds" as commingled vehicles (mutual funds, group trusts, real estate/limited partnership/venture capital funds) as distinct from segregated/separate accounts, which must comply individually. PERAC assesses the 15% tobacco holdings threshold against the entire pool rather than underlying individual holdings, and any pool exceeding this threshold will appear on the PERAC List. No direct action is required of retirement boards, as PERAC has already sent Tobacco Statute Compliance Reports directly to pooled fund managers for completion and submission.

PERAC Memo #9/1998 reminds boards that all investments—whether separately managed or pooled (mutual funds, commingled funds, group trusts, real estate/venture capital funds, etc.)—must comply with G.L. c. 32 and 840 CMR. Boards must submit, or ensure their pooled fund managers submit, a year-end (12/31/97) report for each pooled fund investment detailing underlying assets, portfolio turnover rate, expense ratio, and rate of return (specifying net or gross); a fund's standard annual report typically satisfies this requirement. Boards should also retain a copy of this data to verify manager compliance with regulations, the vendor contract, and the board's Statement of Investment Objectives (Form 18-1).

PERAC Memo #17/1998 notifies all retirement boards that the maximum COLA allowable for FY99 (under systems that have accepted Chapter 17 of the Acts of 1997) is 2.1%, based on the Social Security Administration's announced increase. Boards that have accepted Chapter 17 and wish to grant a COLA must notify PERAC of their decision within 30 days, file certification of the vote, and amend their funding schedules to reflect the COLA's cost impact; boards needing assistance with funding schedule amendments may contact PERAC actuary Jim Lamenzo.

PERAC Memo #18/1998 addresses how retirement boards should handle FY99 appropriations for systems that adopt the COLA legislation before June 30, 1998. PERAC's preference is that the FY99 appropriation immediately reflect the COLA's funding impact via a revised schedule, but boards may instead delay incorporation of the COLA cost until the FY00 appropriation, provided the underlying schedule is based on a valuation dated January 1, 1996 or later. Boards should be aware that choosing to delay will result in higher required appropriations in future years, including FY00, compared to adopting the revised schedule immediately.

This memo announces PERAC's publication (as of December 31, 1997) of a comprehensive listing of investment managers, consultants, and custodians retained by each Massachusetts public retirement system, along with associated waiver/PRIT approval dates, now available on PERAC's website. It is informational only, addressed to investment managers, and requires no action from retirement boards other than awareness that their manager/consultant/custodian relationships are publicly listed.

PERAC Memo #25/1998 revises prior guidance and, citing the Appeals Court decision in Leal v. CRAB, now permits members to file simultaneous applications for Accidental Disability, Ordinary Disability, and Superannuation retirement. Boards should pay benefits under the first approved retirement type until/unless a subsequent application is approved, and must clearly explain to members that offsets (e.g., against Workers' Compensation) upon later approval of a different benefit could result in the member owing a refund to the system.

This memo urges retirement boards to press their local legislators to pass H.5020, which would clarify and formalize the Early Intervention Program before its July 1, 1998 implementation deadline. Without this legislation, boards implementing the program using retirement trust funds could be committing a fiduciary breach, since trust assets cannot be used for active-employee benefits or unrelated activities. Boards are asked to have their members contact legislators urging favorable action, using the talking points provided, given the bill's expected review by the House Ways and Means Committee.

This memo announces PERAC's revised Investment Regulations and highlights immediate compliance obligations for boards. Boards must: (1) execute written contracts with investment managers containing specified terms (objectives, brokerage practices, proxy voting procedures, fees, termination clauses, fiduciary status, and no indemnification provisions) and similarly compliant contracts with consultants (itemized services, fixed-dollar fees only, termination terms, no indemnification); and (2) follow a documented competitive selection process for all investment-related service providers, notifying PERAC prior to retention and maintaining complete selection files. Boards are directed to promptly review and amend existing manager and consultant arrangements to bring them into conformity with these new requirements.

PERAC Memo #31/1998 transmits the initial list of qualified investment managers under 840 CMR 19.01, noting that boards do not need a separate exemption (waiver) to use a listed manager if they already hold a waiver for that asset class, and no waiver is needed at all for managers investing in U.S. fixed income or equities. Boards must still, for any manager selected, submit to PERAC: (1) a letter certifying the manager was chosen through a competitive process consistent with Chapter 32, including manager name, address, asset class, and pooled fund name if applicable; (2) the manager's Vendor Certification (840 CMR 16.08); and (3) disclosure of any compensation/referral arrangements per 840 CMR 17.04(8). This list is distinct from the December 1997 manager/consultant/custodian list issued in May 1998 and will be updated periodically on PERAC's website.

This memo transmits updates (additions/deletions) to the PERAC Tobacco Company List, effective upon receipt, implementing Chapter 119 of the Acts of 1997's ban on new investments in companies deriving more than 15% of revenue from tobacco sales. Boards must forward the updated list to investment advisors (or direct them to the PERAC website), ensure no new prohibited investments are made, and be aware PERAC will audit portfolios for compliance—consulting with PERAC before divesting if any noncompliant holdings are found; the list applies to pooled funds based on the pool's overall tobacco exposure.

This memo simply provides an updated PERAC staff directory with new telephone extensions following the agency's conversion to a new telecommunications system. No action is required by retirement boards other than updating their records with the new contact information for future reference when reaching PERAC staff.

PERAC Memo #38/1998 summarizes Chapter 252 of the Acts of 1998, which revised M.G.L. c. 32, §5B governing Early Intervention Plans for injured public employees. Under the amended law, retirement boards' sole responsibility is to appoint a non-board-member designee to serve on the employer's Early Intervention Team when one is assembled; boards should cooperate in this appointment but should not devote further resources, funding, or administrative support to the organization or operation of these plans, as that responsibility now rests with the employer.

This memo (a follow-up to Memo #38/1998) clarifies implementation of Chapter 252's Early Intervention Plan provisions, effective November 5, 1998. Boards should stop expending resources on early intervention plans since none have been approved, and should forward any completed plans to employers for potential use; note that retirement board members (though not staff) are barred from serving as team designees, employers bear all associated costs, and confidential medical information gathered by the team is restricted from employment-related use (though members may use it to support disability applications). The memo also notes that the mandatory neutral medical doctor requirement under G.L. c. 32, §20(5)(d) has been eliminated, though boards may still designate one if desired.

PERAC Memo #42/1998 requests that all retirement boards complete and return the attached appropriation data questionnaire—covering FY99/FY00 pension appropriations, pension payroll figures, Section 3(8)(c)/7(4)(b) reimbursements, and COLA reimbursement data—so PERAC can calculate each system's required FY00 appropriation under G.L. c. 32, §22D or §22(6A)(b). Boards must submit the completed questionnaire, along with the underlying actuarial report if not previously provided, no later than October 31, 1998. Failure to submit accurate or timely data will result in PERAC using conservative estimated assumptions, potentially causing significant increases in the board's required appropriation.

This memo transmits updates (additions/deletions) to the PERAC Tobacco Company List, effective upon receipt, pursuant to Chapter 119 of the Acts of 1997, which bars new retirement system investments in companies deriving more than 15% of revenue from tobacco sales. Boards must forward the updated list to their investment advisors (or note its availability on PERAC's website), ensure no new prohibited investments are made after January 13, 1998, and consult with PERAC before divesting any non-compliant holdings identified during PERAC's audit review; the same 15% test applies to pooled funds as a whole.

**PERAC Memo #46/1998** distributes the list of investment managers already qualified under 840 CMR 19.01 through approved exemption applications, noting that boards need not separately seek a waiver to retain these managers if the board already holds an exemption for that asset class (and no exemption is needed at all for U.S. fixed income or equity managers per 840 CMR 19.02(5)). **Action required:** When selecting a manager from this list (or a U.S. fixed income/equity manager), boards must still (1) notify PERAC in writing that the manager was selected via competitive process in compliance with Chapter 32, including manager name, address, asset class, and pooled fund name if applicable; (2) submit the Vendor Certification (840 CMR 16.08) for the selected manager; and (3) ensure disclosure of any compensation/referral arrangements under 840 CMR 17.04(8). This manager list is distinct from the December 1997 manager/consultant/custodian listing and will be updated quarterly on PERAC's website.

PERAC Memo #48/1998 revises the accounting instructions for pooled fund investments, introducing new journal entry procedures that allow boards to record investment income and realized/unrealized gains and losses separately, and clarifies the specific PRIT Fund ledger numbers to use (1199 for core fund, 1198 for cash fund, or segment-specific ledgers if individual PRIT segments are held). Boards should update their accounting practices to conform to these new entries and ledger designations going forward, using the enclosed worksheet and examples; PERAC staff are available to assist with fund statements if needed.

PERAC Memo #50/1998 transmits the 13th Annual Report on the Massachusetts Contributory Retirement Systems for calendar year 1997, featuring a redesigned format that presents a broader view of fund administration beyond investment performance alone. No specific board action is mandated, but PERAC provides a model press release that boards may optionally use to publicize their system's 1997 investment returns and funded ratio to local media.

PERAC Memo #52/1998 addresses the CRAB-affirmed decision in Templeton v. Plymouth County Retirement Board, which establishes that a member who took a refund upon leaving service and later returned does not regain prior membership rights, even after buying back that prior creditable service. Consequently, when such a member elects to purchase military service credit under Chapter 71 of the Acts of 1996, boards must calculate the buyback cost using the salary earned when the member most recently re-established membership, not the earlier salary from before the refund. Boards should apply this salary standard going forward in all military buyback calculations involving members who previously took refunds.

This memo follows up on the Templeton decision regarding correct salary calculations for military service buybacks, clarifying that boards must collect additional payments from any member who bought back military service at an incorrect rate—even if the buyback is already complete or the member has since retired. Boards should pursue payment from retirees directly or adjust their allowances to recoup the shortfall, as G.L. c. 32, §20(5)(c) requires correction of such errors. Boards currently have no authority to waive these underpayments, as waiver legislation has not yet been enacted.

This memo introduces retirement boards to NCTR's LIFEPLAN, a free online financial planning resource offering tools such as retirement calculators, investment guidance, and general life-planning topics (credit, home buying, estate planning, etc.). PERAC encourages boards to share this resource with members to promote proactive retirement savings and financial planning, and notes it will add a link to LIFEPLAN on its own website. No formal action is required of boards beyond voluntarily promoting the site to members.

PERAC Memo #60/1998 announces that beginning in December 1998, PERAC audit staff will conduct targeted Contract Audits of all retirement systems, examining contracts and the underlying selection process for money managers, consultants, custodians, actuaries, attorneys, and other vendors, as well as following up on prior audit findings. Boards should proactively review and organize their contract files—including executed contracts, competitive bidding documentation, selection scoring sheets, board minutes reflecting vendor selection discussions, and (for investment managers) required contract provisions such as fiduciary status, fee terms, and termination clauses—to ensure they are readily available for the auditors, who will contact each board to schedule a roughly half-day visit.

This memo introduces a revised, consolidated PERAC Disclosure Statement that merges the former Disclosure Statement and Brokerage Disclosure Statement into a single form with the same questions. Going forward, PERAC will only accept this standardized PERAC-generated form (and its Acknowledgement) — vendor- or third-party-generated versions will not be accepted. Boards must copy the attached forms and distribute them to vendors providing or seeking to provide services, ensuring vendors complete every question (with attachments as needed) and boards complete the corresponding Acknowledgement.

This memo transmits CRAB's final decision in McFarland v. State Board of Retirement, which holds that a member who transfers between retirement systems must have military service purchased under Chapter 71 of the Acts of 1996 based on 10% of the salary earned when the member first entered the initial system, not their current system. Boards must apply this standard going forward for eligible transferred members purchasing military service credit. However, boards should note that members who withdrew their accumulated deductions and later returned to service must base their military service buyback on 10% of compensation at re-entry, even if they also repurchase prior service.

PERAC Memo #3/1997 transmits an outline detailing the new duties assigned to retirement boards and to PERAC under the pension reform legislation (Ch. 306 of 1996, as amended by Ch. 427 of 1996), covering early intervention programs for injured members, designation of neutral medical examiners under §20(5), and rehabilitation evaluation/re-examination requirements for disability retirees under §8. Boards should review the outline to understand their specific responsibilities and deadlines—including establishing early intervention plans by March 15, 1997, and implementing them by July 1, 1997—and prepare to coordinate with PERAC accordingly. No immediate filing is required beyond familiarization, but boards must begin planning for these expanded compliance obligations.

PERAC Memo #4/1997 announces that the "regular interest" rate for calendar year 1997, as determined under Section 22(6)(b) of Chapter 32, has been set at 2.5%. Boards must apply this rate to accumulated total deductions and interest made on or after January 1, 1946, crediting it on refunds and retirements processed during 1997 and on outstanding balances as of December 31, 1996, to be credited on December 31, 1997.

PERAC Memo #5/1997 announces that, per Chapter 306 of the Acts of 1996, retirement system Expense Funds will now be funded through investment income rather than direct governmental appropriations, and outlines corresponding accounting changes (discontinuing accounts #5301, #5302, #5306, and #1511 in favor of #5304, #5305, #5307, and new account #5118, with transfers recorded via journal entry debiting #4820 and crediting #3298). Boards must transfer any FY1997 appropriated Expense Fund monies from the governmental unit to the retirement system, spend those funds only for their original purpose, and file a supplemental Expense Fund budget with the local legislative body at least 30 days before any additional funds are drawn from investment income.

This memo reminds boards that all investments—whether separately managed or held in pooled funds (mutual funds, commingled funds, group trusts, limited partnerships, venture capital funds, etc.)—must comply with G.L. c. 32 and 840 CMR. Boards must submit, or ensure pooled fund managers submit, a year-end (12/31/96) report for each pooled fund investment detailing underlying assets, portfolio turnover rate, expense-to-asset ratio, and rate of return (noting gross or net); this data is typically available in the fund's prospectus or annual report, which may be submitted to satisfy the request. No action is needed for PRIT Fund investments, as PRIM reports that data directly to PERAC.

This memo notifies boards of the settlement of the EEOC's lawsuit challenging G.L. c. 32, §90F (mandatory physical exams for members working past age 70), which was found to violate the ADEA; under the settlement, affected members who paid for such exams between August 22, 1987 and March 30, 1993 are entitled to $35 per exam (or more with proof of higher cost). Boards must identify and compile the names and addresses of members who took the required §90F physical exam or who worked past age 70 during that period, and submit these lists to PERAC by May 5, 1997 so PERAC can forward them to the EEOC by May 13, 1997.

PERAC Memo #14/1997 revises prior guidance on the Chapter 71 (1996) 10% military service buy-back for veterans who took a refund and later re-entered membership. The Commission now holds that members who repurchase their prior service may buy back military service based on 10% of their salary at initial entry into the system, rather than 10% of salary at re-entry, and are entitled to a refund of the difference if they were overcharged. Boards must identify affected members who overpaid under the prior rule and issue refunds, while members who have not yet completed repurchase of prior service must finish that buy-back before qualifying for the earlier-salary military service rate.

This memo clarifies year-end accounting procedures for transferring funds from the Investment Income Account to the Expense Fund, specifying that only one closing entry (debit 4820/credit 4896) should be made annually on December 31st, and only after any prior expense fund balance has been fully spent down. Boards must also ensure Expense Fund budgets and any supplementary budgets are approved at least 30 days before funds are spent, with notification given to the governmental unit's legislative body, per Chapter 306, Section 36. Boards should update their accounting practices accordingly and follow the required approval/notification timeline for expense budgets.

This memo introduces Jim Lamenzo as PERAC's newly appointed Actuary and notes that a priority will be assessing the cost impact of recent COLA legislation on boards' funding schedules. Boards that have obtained or are obtaining independent actuarial cost estimates related to these COLA changes should promptly forward copies of any such reports or letters to PERAC to assist with this analysis.

PERAC Memo #29/1997 reminds boards that a member's contribution rate must be based on the date of actual enrollment in the retirement system, not the date employment began, per the McIntire decision and subsequent DALA/CRAB rulings. Boards are required to verify employer-provided contribution rate data against enrollment dates, correct any errors going forward (collecting make-up contributions without interest for underpayments, refunding overpayments), and treat this verification as an ongoing process for all new hires.

PERAC Memo #31/1997 requests that all retirement boards complete and return the attached appropriation questionnaire by October 31, 1997, providing FY98/FY99 appropriation figures, pension payroll data, reimbursement amounts, and COLA information needed to calculate FY99 appropriations under G.L. c. 32, §22D or §22(6A)(b). Boards must ensure the data is accurate and complete, since PERAC will otherwise use conservative estimates that could result in significantly higher required appropriations. No other action is needed beyond timely, accurate submission of the questionnaire (and the underlying actuarial report, if not already provided).

**PERAC Memo 37/1997** transmits Chapter 119 of the Acts of 1997, which prohibits Massachusetts public retirement systems from making new investments in companies deriving more than 15% of revenue from tobacco products, and requires PRIM to divest all existing tobacco-related holdings within three years, with annual reporting to the Legislature until fully divested. The restriction takes effect January 13, 1998, and PERAC will issue further compliance guidelines. **Action required:** boards must forward this memo and the attached legislation to each of their investment managers, consultants, and custodians.

This memo follows up on Memo #31/1997 regarding the FY1999 Pension Fund Appropriation calculation, requesting that boards break down their FY1998 Expense Fund budgets into administrative expenses versus investment-related expenses (management, consulting, and custodial fees), since only non-investment expenses should be included in the appropriation figure. Boards must complete and return the attached form specifying FY1998 administrative expenses, investment-related expenses, total Expense Fund budget, and whether any investment-related costs were paid from the Expense Fund in FY1997.

PERAC Memo #48/1997 implements Chapter 119 of the Acts of 1997, which bars retirement systems from making new investments (effective January 13, 1998) in companies deriving more than 15% of revenue from tobacco sales, including pooled funds meeting that threshold. Boards must forward the attached PERAC-issued restricted list to their investment advisers, ensure no prohibited purchases occur after the effective date, and—if a portfolio is found non-compliant during PERAC's audit review—consult with PERAC before divesting in a prudent manner to achieve compliance.