Colrain fully funds OPEB liability

Staff Writer
Published: 10/28/2020 4:04:10 PM

COLRAIN — The Selectboard has announced the town’s Other Post-Employment Benefits (OPEB) plan for retired employees is “effectively fully funded,” concluding a process that began in 2017.

According to a press release from the Selectboard, the announcement comes following an OPEB evaluation report completed by Odyssey Advisors of Colchester, Conn. OPEB refer to benefits, other than pension, offered to employees after they leave employment. The most common benefits are medical, dental and life insurance.

The process to fully fund Colrain’s OPEB liability began at the fiscal year 2017 Annual Town Meeting, Town Administrator Kevin Fox said.

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

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

Colrain has placed approximately $50,000 in the trust each year, and Fox explained that the OPEB liability was “effectively fully funded, assuming the trust continues to earn the assumed 6.60 percent rate of return net expenses.” However, the interest rate may fluctuate, based on the stock market. According to Fox the town has roughly $250,000 in the trust to date.

Odyssey Advisors’ report, a 60-page document, takes different factors into account to target a “fully funded” amount, Fox said. Such factors include the number of retiring employees who would receive other post-employment benefits, and the mortality rate of former employees who were beneficiaries.

“It’s always a moving target,” Fox said. “From year to year it’s going to vary a bit. But this is a pretty big milestone. I can’t think of any other towns in Western Massachusetts that are near fully funded.”

As of Jan. 1, 2019, a survey of Odyssey Advisors’ clients shows that 79 percent of the municipalities in Massachusetts are funding their OPEB liability; however, most of them are not materially funded. The survey results indicated that, at the time, 53 percent of the towns and cities were over 1 percent funded, 19 percent were over 10 percent funded, and 11 percent were over 20 percent funded.

Zack DeLuca can be reached at or 413-930-4579.


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