MA Gen L ch 32 § 22 (2021)
2021 Massachusetts General Laws|Part I - Administration of the Government|Title IV - Civil Service, Retirements and Pensions|Chapter 32 - Retirement Systems and Pensions|Section 22 - Methods of Financing

Section 22. All the assets of each system as they exist at the commencement of business on January first, nineteen hundred and forty-six, and all the assets of each system received, acquired or held on or after such date shall, subject to the provisions of sections one to twenty-eight, inclusive, be credited according to the purposes for which they are received, acquired or held to one of the seven following funds in the system: the Annuity Savings Fund, the Annuity Reserve Fund, the Pension Fund, the Special Fund for Military Service Credit, the Expense Fund, the Pension Reserve Fund, and the Commonwealth's Pension Liability Fund. The Boston retirement system shall establish those funds to credit assets received, acquired or held attributable to non-teacher members of that system and shall also establish the funds to credit assets received, acquired or held attributable to teachers who are members of that system. As provided in subdivision (8), all of the assets of the state employees' and teachers' retirement systems and of any other participating system shall be held in the PRIT Fund, as well as such assets of purchasing systems as shall be transferred to the PRIT Fund upon the purchase of shares therein.  (1) Annuity Savings Fund. — (a) The annuity savings fund of each system shall be the fund provided for the accumulation of the regular deductions and additional deductions of the members of the system and into which such deductions shall be paid as they are made and to which regular interest shall be transferred to be credited to the accounts of such members as provided for in subdivision (6) of this section.  (b) The treasurer or other disbursing officer in charge of payroll in any governmental unit to which a system pertains, and the treasurer or other disbursing officer in charge of payrolls in any free public library the employees of which are eligible for membership in a system, shall, upon written notice from the board:  (i) withhold on each pay day 5 per cent of the regular compensation of each employee who is a member in service of the system, which is received on the day by the member on account of service rendered to him on or after January 1, 1946, and not later than the date of his attaining the maximum age for his group, in the case of an employee who entered the service of the commonwealth or a political subdivision thereof before January 1, 1975;  (ii) withhold on each pay day 7 per cent of the regular compensation of each employee who is a member in service of the system, which is received on the day by the member on account of service rendered by him on or after January 1, 1975, and not later than the date of his attaining the maximum age for his group, in the case of an employee who entered the service of the commonwealth or a political subdivision thereof on or after January 1, 1975, but before January 1, 1984;  (iii) withhold on each pay day 8 per cent of the regular compensation of each employee who is a member in service of the system, which is received on the day by the member on account of service rendered by him on or after January 1, 1984, and not later than the date of his attaining the maximum age for his group in the case of an employee who entered the service of the commonwealth or a political subdivision thereof on or after January 1, 1984, but before July 1, 1996;  (iv) withhold on each pay day 9 per cent of the regular compensation of each employee who is a member in service of the system, which is received on the day by the member on account of service rendered by him on or after July 1, 1996, and not later than the date of his attaining the maximum age for his group in the case of an employee who entered the service of the commonwealth or a political subdivision thereof on or after July 1, 1996;  (v) withhold on each pay day 12 per cent of the regular compensation of each employee who is a member of the state police appointed pursuant to section 10 of chapter 22C, and is a member in service of the system, which is received on the day by the member on account of service rendered by the employee on or after July 1, 1996, and not later than the date of his attaining the maximum age for his group in the case of an employee who entered the service of the state police on or after July 1, 1996;  (vi) withhold on each pay day 11 per cent of the regular compensation of each employee who participates in the alternative superannuation retirement benefit program established under subdivision (4) of section 5 on account of such service rendered by him on or after July 1, 2001;  (vii) withhold on each pay day 6 per cent of the regular compensation of each employee in group 1 who is a member in service of the system, in the case of an employee who became a member of a retirement system of the commonwealth or a political subdivision thereof on or after April 2, 2012 and who has least 30 years of creditable service; and  (viii) withhold on each pay day 8 per cent of the regular compensation of each employee who is a member in service of the system and participates in the alternative superannuation retirement benefit program established under subdivision (4) of section 5, in the case of an employee who became a member of a retirement system of the commonwealth or a political subdivision thereof on or after April 2, 2012 and who has least 30 years of creditable service.  In the case of any teacher the withholding shall be made upon written notice from the school committee or board of trustees or other employing authority, to the treasurer or other disbursing officer of the political subdivision by which such teacher is employed.  (b1/2) The provisions of section fifty of chapter three hundred and sixty-seven of the acts of nineteen hundred and seventy-eight shall not apply to any member of the state employees' and state teachers' retirement system, or systems electing to accept the provisions of this paragraph. Any system may accept the provisions of this paragraph by majority vote of the board of each such system, subject to the approval of the legislative body. For purposes of this paragraph ''legislative body'' shall mean a town meeting in a town, the city council in a city, the county retirement board advisory council in a county, and the district members in a district. Acceptance shall be deemed to have occurred upon the filing of a certification of such votes with the commission. Any system electing to accept the provisions of this paragraph shall be required to annually appropriate to the Pension Reserve Fund, in addition to such other amount as might be required by this chapter, an amount equal to the employer's normal cost of removing the restriction provided by said section fifty of said chapter three hundred and sixty-seven, plus such amount as is required to amortize over thirty years the liability created by such removal for such of those employees who entered service on or after January first, nineteen hundred and seventy-nine and prior to January first, nineteen hundred and eighty-eight. For any member of any system accepting the provisions of this paragraph who entered the service of the commonwealth or a political subdivision thereof on or after January first, nineteen hundred and seventy-nine, the treasurer or other disbursing officer in charge of payroll in any governmental unit to which a system pertains, shall withhold on each pay day, in addition to the amounts withheld pursuant to paragraph (b) an additional two per cent of such member's regular compensation over thirty thousand dollars. In any system filing a certificate of acceptance with the commission on or before July first, nineteen hundred and eighty-eight, the treasurer or other disbursing officer in charge of payroll in any governmental unit to which a system pertains shall withhold, from the regular compensation of such member subject to the additional amounts provided for by this paragraph, in such installments as the retirement board shall direct, an amount equal to the additional amount which would have been withheld from such member's regular compensation pursuant to this paragraph between January first, nineteen hundred and eighty-eight and the date the certificate of acceptance is filed. In any system filing a certification of acceptance with the commission after July first, nineteen hundred and eighty-eight, the additional deduction shall start as of the date of filing said application and no deductions shall be made from any regular compensation received between January first, nineteen hundred and eighty-eight and the date said certification is filed; provided, however, that the liability created by removing the restriction provided by said section fifty for the payroll period from January first, nineteen hundred and eighty-eight and the date said certification is filed shall be added to the amount to be amortized over thirty years through the annual appropriation as required by this paragraph; and provided, further, that all service in such system after January first, nineteen hundred and eighty-eight shall be credited as non-section fifty restricted service. Notwithstanding any other provision of this chapter, the calculation of the retirement allowance of any member who entered service after January first, nineteen hundred and seventy-nine where such member has both section fifty restricted service and non-section fifty restricted service, shall be calculated based upon the years of creditable service subject to the restriction and the years of non-section fifty service, as the actuary shall determine. In the state employees' retirement system and the state teachers' system, and in any other system accepting the provisions of this paragraph, the allowance payable to any member, or eligible beneficiary thereof, who entered the service of the commonwealth or a political subdivision thereof on or after January first, nineteen hundred and seventy-nine and who retired from said system prior to the date on which such system accepted this paragraph, shall be recalculated as of the date of such acceptance, and as of said date the provisions of said section fifty of said chapter three hundred and sixty-seven shall not apply to such allowance; provided, however, that the provisions of this sentence shall not be deemed to require any additional contributions to be made by any such member or eligible beneficiary thereof. The state employees' and state teachers' retirement systems shall be deemed to have accepted the provisions of this paragraph as of January first, nineteen hundred and eighty-eight. The additional contributions required under this paragraph shall not apply to any employee who participates in the alternative superannuation retirement benefit program established in subdivision (4) of section 5.  (c) Any such treasurer or other disbursing officer in charge of payrolls, for the purpose of determining the regular compensation and regular deductions of any member in service who is receiving a non-cash maintenance allowance in the form of full or partial boarding and housing, shall add to the amount of the cash payment for the regular services of such member an amount at a rate which shall be determined by the personnel administrator if such member is a member of the state employee's retirement system or of the teachers' retirement system, by the county personnel board if such member is a member of any county system, and by the retirement board if such member is a member of a city or town system. The sum of such amount and the amount of such cash payment shall be the regular compensation upon which regular deductions shall be made on and after January first, nineteen hundred and forty-six. The regular compensation of any such member for any period, for purposes of computing retirement allowances, shall include not only the amount of the cash payment for his regular services but also the amount of any non-cash maintenance allowance at the rate in effect for him for such period under the provisions of this paragraph or under corresponding provisions of earlier laws.  (d) Any member in service of any system, whose regular deductions during any period of his employment were made at a lower rate, or on the basis of a lower maximum limit, than that in effect during such period for a majority of the members of such system, may, before the date any retirement allowance becomes effective for him, pay into the annuity savings fund of the system in one sum, or in instalments over a period not exceeding five years, upon such terms and conditions as the board may prescribe, an amount equal to the difference between the aggregate of the regular deductions which would have been credited to his account in such annuity savings fund had they been made at the rate, and subject to the maximum limit, in effect for a majority of the members of such system during such period and the aggregate of the regular deductions actually credited to his account therein. In addition to the payment of such sum or instalments thereof, such member shall also pay into the annuity savings fund an amount of interest such that at the date of completion of such payments the total value of his regular deductions actually made, including such payments, together with regular interest on all such deductions and payments to such date, shall be equal to the value of what his regular deductions would have been, together with regular interest thereon to such date, had they been made at the rate, and subject to the maximum limit, in effect for a majority of the members of such system throughout the whole period of his employment.  (e) In addition to the regular deductions referred to in paragraphs (b) and (c) of this subdivision, any such treasurer or other disbursing officer in charge of payrolls shall, upon written notice to him by the board, deduct from the regular compensation of any member in service such sums as the board shall designate and upon such terms and conditions as it shall prescribe, as may be required for the purpose of carrying out the provisions of paragraph (d) of this subdivision, or the provisions of subdivision (3), (4), (5), (6) or (8) of section three or of paragraph (2) (c) of section four, or other corresponding applicable provisions of sections one to twenty-eight inclusive. The board may permit a reduction, suspension or termination of any such deductions being made under the provisions of this paragraph if such member shall so request in writing and if it finds that he is unable to continue them without undue hardship, but no withdrawal of the same shall be made except in the manner provided for the withdrawal of other accumulated regular deductions.  (f) The deductions provided for under this subdivision shall be made notwithstanding that the minimum compensation provided by law for any member may be reduced thereby. Each member shall be deemed to consent and agree to the deductions provided for in this subdivision and shall receipt for his full salary or compensation. The payment of his full salary or compensation less such deductions shall be considered a full and complete discharge and acquittance of all claims and demands whatsoever for the services rendered by him during the period covered by such payment, except as to any benefits in the nature of an annuity, pension, retirement allowance or return of accumulated total deductions as provided for in sections one to twenty-eight inclusive.  (g) Any member in service or any member inactive on authorized leave of absence, may, before the date any retirement allowance becomes effective for him, pay into the annuity savings fund of the system in one sum, or in instalments over a period of years, for the purpose of providing an additional annuity, such amount as he shall designate, subject to the limitation hereinafter specified in this paragraph and subject to such terms and conditions as the board may prescribe. Any such member may authorize the board in writing to instruct the treasurer or other disbursing officer in charge of payrolls to withhold for such purpose on each pay day from the regular compensation of such member such amount as he shall designate, subject to such limitation and subject to such terms and conditions as the board may prescribe. All amounts so paid or so withheld shall be considered as additional deductions as defined in section one. The total additional deductions for any such member as of any date shall be so limited that such total, together with regular interest on such additional deductions to such date, shall not exceed the portion of his accumulated regular deductions on such date which is derived from that part of his annual regular compensation not in excess of thirty-six hundred dollars in any year. Such accumulated additional deductions shall be used upon his retirement to provide an additional annuity for him in accordance with the provisions of subdivision (2) of section twelve, or shall be paid as provided for in section eleven upon his prior death or withdrawal from the system. The board shall permit a reduction, suspension or termination of such additional deductions if such member shall so request in writing.  (h) The various amounts withheld under the provisions of this subdivision for deposit in the Annuity Savings Fund of any system shall, subject to the provisions of paragraphs (i), (j) and (k), be transferred forthwith to such system by the treasurer or other disbursing officer in charge of payrolls, accompanied on a prescribed form by a statement or voucher for such deductions. Such amounts shall be credited by the board to the accounts of the respective members for whom such deductions have been made, and shall be paid into and become a part of the Annuity Savings Fund of such system.  (i) In the case of teachers who are members of the teachers' retirement system, the various amounts withheld for any month for deposit in the annuity savings fund of such system shall, together with proper vouchers therefor, be transmitted by the disbursing authorities to the secretary of the teachers' retirement board on or before the tenth day of the next succeeding month. The secretary shall thereupon credit the accounts of such members with their respective deductions and pay all such sums received to the state treasurer for deposit in the annuity savings fund of such system.  (j) In the case of each member of any county system whose regular compensation is paid by the commonwealth, the state treasurer shall make the withholdings for any month required by the provisions of this subdivision and shall transmit them, together with proper vouchers therefor, on or before the tenth day of the next succeeding month to the county treasurer for deposit in the annuity savings fund of such system to the credit of the respective accounts of each such member.  (k) The treasurer or other disbursing officer in charge of payrolls in any free public library the employees of which are eligible for membership in a system, shall transmit forthwith to the city or town treasurer of the city or town in which such library is located, the amounts which he has withheld from the members as provided for in this subdivision, together with proper vouchers therefor. Such city or town treasurer shall thereupon transfer such amounts for deposit in the annuity savings fund of such system to the credit of the respective accounts of such members as provided for in paragraph (h) of this subdivision in the case of other members thereof.  (l) The amount of the accumulated total deductions of any member paid or withdrawn under the provisions of sections one to twenty-eight inclusive, shall be paid from the annuity savings fund of the system and charged to his account therein. Upon the retirement of any member, the amount of his accumulated total deductions shall be transferred from his account in the annuity savings fund of the system to the annuity reserve fund thereof. Amounts shall be transferred to the annuity savings fund from the annuity reserve fund as provided for in paragraph (2) (b) of this section and from the annuity savings fund to the pension fund as provided for in paragraph (6) (d) of this section.  (2) Annuity Reserve Fund. — (a) The annuity reserve fund of each system shall be the fund to which the accumulated total deductions of a member shall be transferred from his account in the annuity savings fund of the system when a retirement allowance becomes effective for him, and to which also shall be transferred at such time from the special fund for military service credit any amounts then standing to the credit of his account therein. The total amounts so transferred on account of any member shall thereby establish the initial annuity reserve for the annuity provided for him under the provisions of subdivision (2) of section twelve. Interest at the annual rate set forth in the definition of actuarial equivalent appearing in section one shall be transferred to the annuity reserve fund as provided for in subdivision (6) of this section. All annuities and all benefits for which such initial annuity reserve was established shall be paid from the annuity reserve fund.  (b) If any member who has been retired for disability is later restored upon recovery to active service before attaining the age sixty-five as provided for in paragraph (b) of subdivision (2) of section eight, an amount equal to the annuity reserve at the date of his restoration with respect to his annuity shall be transferred from the Annuity Reserve Fund of the system to the credit of his account in the Annuity Savings Fund thereof.  (c) If the balance remaining in the annuity reserve fund of any system at the close of business on December thirty-first of any year after the transfer of interest thereto as provided for in clause (ii) of paragraph (a) of subdivision (6), is in excess of the total amount of the annuity reserve determined for such system as of such date in accordance with the provisions of paragraph (b) of subdivision (3) of section twenty-one, the amount of such excess shall be transferred as of the next following September thirtieth from the Annuity Reserve Fund to the Pension Reserve or Commonwealth's Pension Liability Fund of such system. If such balance is less than the total amount of such annuity reserve, an amount equal to such deficiency shall, to the extent not included in any deficiency being made up under the provisions of this paragraph, be similarly transferred as of such next following September thirtieth from the Pension Fund to the Annuity Reserve Fund.  (3) Pension Fund. — (a) The Pension Fund of each system shall be the fund to which shall be credited all amounts appropriated by the governmental unit or transferred from the Pension Reserve Fund or Commonwealth's Pension Liability Fund pursuant to a funding schedule established pursuant to section twenty-two C or twenty-two D for the purpose of providing for the cost of operation of the system exclusive of the expenses of administration, except such amounts as may be appropriated for the special fund for military service credit under the provisions of subdivision (4). Any balance remaining in the investment income account of the system at the close of business on December thirty-first of any year shall be transferred to the Pension Reserve Fund or the Commonwealth's Pension Liability Fund, and any deficit in such account at such time shall be made up by transfer from the pension fund to such account of an amount equal to such deficit as provided for in clause (iii) of paragraph (a) of subdivision (6).  (b) All pensions to members or to beneficiaries and all pensions paid under the provisions of paragraph (c) of subdivision (8) of section three or paragraph (b) of subdivision (4) of section seven shall be paid from the pension fund of the system, and all amounts received under said provisions shall be credited to such fund or to the General Fund as otherwise provided in those sections. Amounts shall be transferred between the Pension Fund or the Commonwealth's Pension Liability Fund, as applicable, and the annuity reserve fund as provided for in paragraph (c) of subdivision (2) and shall be transferred to the Pension Fund or the Commonwealth's Pension Liability Fund, as applicable, from the annuity savings fund as provided for in paragraph (d) of subdivision (6) and from the special fund for military service credit as provided for in paragraph (c) of subdivision (4). Amounts shall also be paid from the Pension Fund or the Commonwealth's Pension Liability Fund, as applicable, of one system and transferred to the special fund for military service credit of a second system as provided for in paragraph (d) of said subdivision (4). The board shall, with the approval of the actuary, make any other transfer between the Pension Fund or the Commonwealth's Pension Liability Fund, as applicable, and any other fund of the system which may be necessary to effectuate the purposes of sections one to twenty-eight, inclusive; provided, however, that no such transfers shall be made from the Commonwealth's Pension Liability Fund except pursuant to schedules submitted in advance by the commissioner of administration to the house and senate committees on ways and means.  (c) Any profit realized on the sale or maturity of any investment of any system, due to the amount received therefor being in excess of its book value on the date of its sale or maturity, shall be credited to the Pension Reserve Fund of the system or recognized over a period of years as prescribed by the commissioner of public employee retirement. Any loss sustained on the sale or maturity of any investment, due to the amount received therefor being less than its book value on the date of its sale or maturity, shall be charged to said Pension Reserve Fund or amortized over a period of years as prescribed by said commissioner. Any investment which is required to be valued at its market value under the provisions of paragraph (b) of subdivision (1) of section twenty-one, shall be included in the assets of the system on the date of any valuation thereof at its market value on such date as determined in accordance with said provisions. Any excess of such market value over the value at which such investment was included in the assets of the system on the date of the last previous valuation thereof, shall be credited forthwith to said Pension Reserve Fund or recognized over a period of years as prescribed by said commissioner, and any amount by which such market value is less than the value at which such investment was included in such assets, shall be charged forthwith to such fund or amortized over a period of years as prescribed by said commissioner.  In prescribing the period of years for amortization of gains and losses the public employee retirement administration commission shall act in a manner consistent with the periods prescribed by the government accounting standards board or allowed by the Employee Retirement Income Security Act.  Notwithstanding the foregoing provisions or any other general or special law to the contrary, the commonwealth shall assume the cost to any retirement system participating in the Pension Reserves Investment Trust Fund for the charge to the pension fund of such system for the amortization of any loss sustained on the transfer of such system's assets to the Pension Reserves Investment Trust Fund due to the value of the units in said fund upon such transfer being less than the book value of the system assets transferred to said fund on the date of transfer; provided, however, that the commonwealth shall assume only the cost of such system for a loss in an amount equal to or less than twenty per cent of the book value of the system's total portfolio on said date of transfer; provided, further, that the commonwealth shall assume only the costs for such losses to participating systems transferring their assets to the Pension Reserves Investment Trust Fund on or before July first, nineteen hundred and eighty-six; and provided further, that such assumable losses shall not be included in the determination of required appropriations set forth in subparagraph (iii) of paragraph (d). Such losses incurred by participating systems upon the transfer of their assets to the Pension Reserves Investment Fund shall be amortized over the average time to maturity of the entering system's fixed income securities transferred or ten years, whichever is less.  (d) The amount to be appropriated for any fiscal year for the pension fund of any system, as provided for in subdivision (7) of this section, shall be equal to the excess of the sum of the charges in clauses (i) to (iv) inclusive of this paragraph over the sum of the credits in clauses (v) to (vii), inclusive:  Charges. — (i) The total amount, as estimated by the actuary from data furnished by the board, of the pension payments to be paid from the pension fund of the system during the fiscal year for which such appropriation is being made;  (ii) The amount of that part of the deficiency, if any, in the annuity reserve fund of the system as of January first, nineteen hundred and forty-six, to be made up during such fiscal year under the provisions of paragraph (2) (c) of this section;  (iii) The amount of the deficiency, if any, in the pension fund at the close of business on the September thirtieth immediately preceding such fiscal year, after the transfers provided for in paragraph (2) (d) of this section have been made as of such date and after the credits and charges to such fund have been made as of such date following the valuation provided for in paragraph (c) of this subdivision; and  (iv) The amount, if any, by which the total yearly amount of the pensions payable from the system with respect to all retired members and beneficiaries who are receiving pensions therefrom at the close of business on the September thirtieth immediately preceding such fiscal year, exceed any balance in the pension fund remaining at the close of business on such date after the transfers, credits and charges referred to in clause (iii) of this paragraph applicable for such fiscal year have been made; provided, that the amount of the charge to be made under the provision of this clause shall not be greater than twenty per cent of such total.  Credits. — (v) The sum of the amounts, if any, received and credited to the pension fund under the provisions of paragraph (8) (c) of section three and paragraph (4) (b) of section seven during the twelve-month period ending on the September thirtieth immediately preceding such fiscal year, and the amounts, if any, transferred from the special fund for military service credit to the pension fund under the provisions of paragraph (4) (c) of this section during such period; provided, that the amount of the credit to be allowed under the provisions of this clause shall not be greater than the amount by which any balance in the pension fund remaining at the close of business on such date after the transfers, credits and charges referred to in clause (iii) of this paragraph applicable for such fiscal year have been made, exceeds five per cent of the ledger assets of the system as of such date after the valuation referred to in said clause (iii) has been made, nor greater than the amount by which such balance exceeds the total yearly amount of the pensions payable from the system with respect to all retired members and beneficiaries who are receiving pensions therefrom at the close of business on such date; and  (vi) The amount, if any, by which the charge determined under the provisions of clause (i) of this paragraph applicable for such fiscal year, exceeds the largest of the corresponding charges included in such appropriations for the system for the first three full fiscal years of its operation after December thirty-first, nineteen hundred and forty-five; provided, that the amount of the credit to be allowed under the provisions of this clause shall not be greater than twenty per cent of such charge for such fiscal year, nor greater than the amount by which any balance in the pension fund remaining at the close of business on the September thirtieth immediately preceding such fiscal year after the transfers, credits and charges referred to in clause (iii) of this paragraph applicable for such fiscal year have been made, exceeds the sum of the amount of any credits allowed under the provisions of clause (v) of this paragraph applicable for such fiscal year and five per cent of the ledger assets of the system as of such date after the valuation referred to in said clause (iii) has been made, nor greater than the amount by which such balance exceeds the sum of the amount of any credits allowed under the provisions of clause (v) of this paragraph applicable for such fiscal year and the total yearly amount of the pensions payable from the system with respect to all retired members and beneficiaries who are receiving pensions therefrom at the close of business on such date.  (vii) The amount, if any, transferred to such pension fund from the pension reserve fund of the system pursuant to subdivision (6A).  (4) Special Fund for Military Service Credit. — (a) The special fund for military service credit shall be the fund provided in each system under the provisions of sections nine and nine A of chapter seven hundred and eight of the acts of nineteen hundred and forty-one, as amended by chapter four hundred and nineteen of the acts of nineteen hundred and forty-three and as may be further amended, to which shall be credited the amount appropriated for any fiscal year, as provided for in subdivision (7) of this section, for the purpose of establishing the amounts which would have been paid into such system as regular deductions by members thereof on military leave of absence from the governmental unit by which they were employed had such members remained in the active service of such governmental unit. Regular interest shall be transferred to the special fund for military service credit as provided for in subdivision (6) of this section.  If a city or town notifies the teachers' retirement board that all teachers referred to in section one of chapter seven hundred and eight of the acts of nineteen hundred and forty-one, as amended, have either returned to the public school service of Massachusetts, or that the period has expired during which they were permitted to return and have military assessments credited to their accounts, and that there are no other members who were formerly employed by the city or town who will be entitled to have military assessments credited to their accounts, the said board shall, during the month of January following the receipt of such notice, refund to the city or town any amount standing to its credit in the special fund for military service credit provided for in this section.  (b) In the event of the retirement of any member, or in the event a member-survivor benefit under the provisions of option (d) of subdivision (2) of section twelve becomes effective on account of any member whose last discharge or release from military service as set forth in said chapter seven hundred and eight of the acts of nineteen hundred and forty-one, as amended, and as may be further amended, was under honorable conditions as defined in defense department regulations, for whom a liability has been established in the special fund for military service credit, an amount equal to the value of the regular deductions credited to his account under the provisions of sections nine and nine A of said chapter seven hundred and eight for the period of his military leave of absence, together with regular interest thereon to the date his retirement allowance becomes effective, shall be transferred from his account in such fund to the annuity reserve fund of such system and shall be added to and merged with the amount of his accumulated regular deductions being transferred as of such date from the annuity savings fund of such system to the annuity reserve fund thereof. The total of such amounts transferred on his account shall be used in determining the amount of the regular annuity provided for him under the provisions of subdivision (2) of section twelve, and the aggregate of his regular deductions, including the amount thereof transferred from the special fund for military service credit, shall be used in determining the normal yearly amount of his retirement allowance to the extent such allowance is dependent upon the amount of his regular deductions.  (c) In the event of the withdrawal from the system of any member, whose last discharge or release from military service as set forth in said chapter seven hundred and eight, as amended, and as may be further amended, was under honorable conditions as defined in defense department regulations, for whom a liability has been established in the special fund for military service credit, or in the event of his death before any retirement allowance becomes effective for him, and without a member-survivor benefit under the provisions of option (d) of subdivision (2) of section twelve or payment of allowances under the provisions of section twelve B becoming effective on account of the death of such member, any amount being held to the credit of his account in the special fund for military service credit shall be released and shall be used to reduce the amount of the next appropriation for the pension fund of the governmental unit or units which paid to establish the military service credit for him, in the proportions originally paid by each unit for that purpose; provided, that if such member shall later be reinstated in the system or become a member of another retirement system, and shall deposit in full the amount he withdrew with accumulated interest, said governmental unit or units shall add the amount of such reduction, with regular interest, to the amount of its or their next appropriation for the special fund for military service credit; and further provided, that if the person is a member of the teachers' retirement system, the whole or portion of the said amount, as the case may be, which was paid by a city or town shall be returned to the city or town with accumulated interest, and the portion, if any, of the said amount which was paid by the commonwealth shall be transferred to the pension fund of said system. If a former member of said system, on whose account such an adjustment has been made, is later reinstated a member of said system, and returns in full the amount he withdrew with accumulated interest, the city or town which received the refund as provided above shall be notified, and it shall pay to the special fund for military service credit of said system the amount it received from said fund, with accumulated interest at three per cent to the date of payment to said fund, and the portion, if any, which was transferred to the pension fund of said system shall be transferred from said pension fund with three per cent accumulated interest to the said special fund for military service credit, and these amounts shall again be held for the credit of the member, to be used only for retirement purposes.  (d) If any member, whose last discharge or release from military service as set forth in said chapter seven hundred and eight, as amended, and as may be further amended, was under honorable conditions as defined in defense department regulations, for whom a liability had previously been established in the special fund for military service credit of one system for any period of his military leave of absence while a member of such system, is retired while a member of a second system, or in the event a member survivor benefit under the provisions of option (d) of subdivision (2) of section twelve, or payment of allowances under the provisions of section twelve B becomes effective on account of his death while a member of a second system, an amount equal to the value of the regular deductions with which he was credited under the provisions of sections nine and nine A of said chapter seven hundred and eight for such period of his military leave of absence, together with regular interest thereon to the date his retirement allowance, member survivor benefit, or allowances provided for under the provisions of section twelve B becomes effective, shall be paid from the pension fund of the first system at the date on which said retirement, member survivor benefit, or allowances under the provisions of section twelve B becomes effective and transferred to the special fund for military service credit of the second system to be credited to his account therein, and thereafter such account shall be handled in the manner set forth in paragraph (b) of this subdivision; provided, that such transfer shall be made and credit for such period of his military leave of absence allowed only if he has transferred his membership from the first system to the second system as provided for in paragraph (8) (a) of section three, or only if and only to the extent he has re-established credit for his former membership by paying into the annuity savings fund of the second system the make-up payments provided for in paragraph (8) (b) of such section.  (5) Expense Fund. — The expense fund of each system shall be the fund to which shall be credited the amount appropriated for any fiscal year, as provided for in subdivision (7) of this section, for the purpose of providing for the payment of all expenses of administration of the system for such year, and from which all such expenses shall be paid; provided, however, that each retirement board shall adopt an annual budget and supplemental budgets as deemed necessary by said board. Said budgets shall be funded solely from the investment income account of each system and without any further appropriation from the municipality, county or other governmental unit the current or former employees of which are served by said board. Notwithstanding the foregoing, at least thirty days prior to the adoption of said budgets, the boards shall file said budgets with the appropriate legislative body of the governmental unit the current or former employees of which are served by said board. Said governmental unit at its option may, but shall not be required to, appropriate additional monies for use by the retirement board in carrying out the purposes of section five B.  (6) Investment Income Account and Regular Interest. — (a) All income in each system derived from the interest and dividends earned on the invested funds of the system during any calendar year shall be credited to an investment income account. Upon the payment or transfer of funds from any member's account during any year, the amount of any regular interest to be credited for such year to his account in the annuity savings fund of the system upon his withdrawal, death or retirement, and the amount of any regular interest to be credited for such year to his account, if any, in the special fund for military service credit upon his retirement, shall be transferred to such accounts from such investment income account. Any balance remaining in such investment income account at the close of business on December thirty-first of such year shall be transferred to the several funds of the system as follows:  (i) Amounts equal to the amounts of regular interest to be credited for such year to the accounts in the annuity savings fund and in the special fund for military service credit of all members for whom accounts exist therein as of the end of such year, shall be transferred to such funds and credited to the accounts of such members;  (ii) An amount of interest computed at the annual rate set forth in the definition of actuarial equivalent appearing in section one shall be determined on the basis of the average of the balances outstanding in the annuity reserve fund on the first day of each month during such year and shall be transferred to such fund; and  (iii) Any balance remaining in the investment income account after the transfers heretofore provided for in this paragraph have been made, shall be transferred to the Pension Reserve Fund, and any amount by which such balance is insufficient to carry out the preceding provisions of this paragraph shall be charged to the pension fund and credited to the investment income account for the purpose of making up the deficit.  (iv) Prior to making the transfers provided for in clause (iii) the state employees' retirement system shall transfer from its investment income account to the General Fund an amount equal to the amount set forth in the state budget for the administration of said system and the state teachers' retirement system shall transfer from its investment income account to the General Fund an amount equal to the amount set forth in the state budget for the administration of said system.  (v) Prior to making the transfers provided for in clause (iii) the state employees' retirement system shall transfer to the General Fund an amount equal to the estimated amount, as certified to the secretary of administration and finance by the office of the treasurer, for those retirement-related costs incurred by the office of the treasurer on behalf of the state employees' retirement system; and the state teachers' retirement system shall transfer to the General Fund an amount equal to the estimated amount, as certified to the secretary of administration and finance by the office of the treasurer, for those retirement-related costs incurred by the office of the treasurer on behalf of the state teachers' retirement system.  (b) The phrase ''regular interest'' as used in sections one to twenty-eight, inclusive, shall mean the interest credited to any member's account in the Annuity Savings Fund of any system during the period of his membership therein or to his account in the special fund for military service credit during such period. As applied to such interest for any period prior to January first, nineteen hundred and forty-six, ''regular interest'' shall mean interest at the rate in effect and allowed in such system from time to time during such period. As applied to such interest on balances outstanding in any such accounts as of the commencement of business on January first, nineteen hundred and forty-six, or as applied to such interest credited on regular deductions made on or after such date in the nature of make-up payments, or otherwise, on account of service rendered by any member prior to such date, ''regular interest'' shall mean interest credited at the rate of three per cent per annum. As applied to such interest credited on all other regular deductions and on all additional deductions made on or after January first, nineteen hundred and forty-six, and on all amounts thereafter transferred from any member's account in the Annuity Savings Fund or from his account in the special fund for military service credit in any contributory retirement system established under the provisions of a special law to his account in the corresponding fund of a system maintained under the provisions of sections one to twenty-eight, inclusive, ''regular interest'' for the calendar years nineteen hundred and forty-six and nineteen hundred and forty-seven shall mean interest credited at the rate of three per cent per annum. For any calendar year subsequent to nineteen hundred and forty-seven and prior to nineteen hundred and eighty-four, ''regular interest'' shall mean interest credited at the average earned rate which shall be determined by the actuary from the investment earnings of all systems maintained under the provisions of said sections and which shall be calculated on the basis of data contained in the annual statements of such latter systems filed in the office of the commissioner of insurance for the second calendar year preceding that for which such rate is to be applied. Such average earned rate shall be taken to the nearest tenth of one per cent and shall be obtained from the ratio which the total income derived from the interest and dividends earned on the invested funds of all such systems during the calendar year covered by such annual statements bears to the mean of the total ledger assets of all such systems at the beginning and end of such year. For any calendar year beginning subsequent to December thirty-first, nineteen hundred and eighty-three, ''regular interest'' shall mean interest credited at a rate established by the commission, in consultation with the commissioner of banks. The rate established by the commission shall be taken to the nearest tenth of one per cent and shall be obtained from the average rates paid on individual savings accounts by a representative sample of financial institutions; provided, that said commission shall sample no less than ten such financial institutions.  (c) Regular interest credited on or after January first, nineteen hundred and forty-six, shall be compounded annually on December thirty-first of each year, and subject to the provisions of paragraph (d) of this subdivision shall be allowed upon the balance outstanding in each member's account as of the immediately preceding December thirty-first. No interest shall be allowed on regular deductions or on additional deductions for the year in which they are made; except, that in the case of any make-up payment of regular deductions paid in full in one sum for deposit in any member's account in the annuity savings fund of any system, or in the case of any amount transferred from his account in the annuity savings fund or in the special fund for military service credit of one system for deposit in his account in the corresponding fund of another system, regular interest shall be allowed upon such sum or amount from the date of deposit if such date is the first day of a month, otherwise regular interest shall be allowed from the first day of the month immediately following such date of deposit. Upon the payment or transfer during any year of funds from any member's account in the annuity savings fund of any system, or upon the transfer during any year of funds from his account in the special fund for military service credit, regular interest shall, subject to the provisions of paragraph (d) of this subdivision, be allowed upon the balance outstanding in his account as of the immediately preceding December thirty-first, and also upon any deposit made for him during any year under the provisions set forth in the exception appearing in the preceding sentence of this paragraph, for the number of completed months which have elapsed between such December thirty-first or the date of such deposit, as the case may be, and the date of the payment or transfer of the funds from his account.  (d) Anything in this subdivision to the contrary notwithstanding, regular interest in the case of any member inactive whose service was terminated prior to January first, nineteen hundred and forty-six, shall be allowed upon any balance outstanding in his account on such date only in accordance with and to the extent permitted under the provisions of the law applicable to him and in effect on the date of his termination of service. In the case of any member whose service is terminated on or after January first, nineteen hundred and forty-six, regular interest shall continue to accrue on any balance in his account, but no regular interest shall be included in the amount of any accumulated total deductions which are to be paid to the member under the provisions of subdivision (1) of section eleven for any period after the expiration of two years from the end of the month immediately preceding the date of his termination of service. Upon the payment to the member of the amount of his accumulated total deductions, any regular interest already credited to his account which is not to be included in such amount under the provisions of this paragraph, shall thereupon be transferred from his account in the annuity savings fund of the system to the pension fund thereof.  (6A) Pension Reserve Fund. — (a) The Pension Reserve Fund of each system shall be credited all amounts set aside by a system for the purpose of establishing a reserve to meet future pension liabilities, including such amounts as may be set aside pursuant to a funding schedule established in accordance with section twenty-two C or twenty-two D. Such amounts shall include without limitation the annual balance in the investment income account as provided for in clause (iii) of paragraph (a) of subdivision (6) the undistributed accumulated total deductions as provided for in section eleven and all monies recovered for the cost of fringe benefits from federal grants. From time to time, a system may credit to the Pension Reserve Fund other amounts appropriated to it or otherwise made available by the governmental unit. The Pension Reserve Fund for the state employees' and teachers' retirement systems shall be the Commonwealth's Pension Liability Fund.  (b) Amounts may be transferred to the Pension Fund for the purpose of meeting present pension liabilities in accordance with a schedule developed by the board of each system and approved by the actuary to amortize unfunded pension liabilities. Such schedule of payments shall be designed to maintain a funding schedule which pays the normal cost of benefits for the system and amortizes any unfunded actuarial liability either as a fixed ratio of payroll or in accordance with the funding schedules provided for in section twenty-two C or twenty-two D, as applicable; provided, however, that any such amounts transferred from the Pension Reserve Funds of the state employees' and state teachers' systems shall be detailed by the commissioner of administration in a written report submitted in advance to the house and senate committees on ways and means. Such schedule shall be adjusted in accordance with any state contributions provided from the PRIT Fund to meet the unfunded pension liability of the system.  (7) Appropriations. — In order to effectuate the provisions of sections one to twenty-eight, inclusive, and to provide for each system the amounts required for the Commonwealth's Pension Liability Fund, the Pension Fund, the special fund for military service credit and the expense fund described in subdivisions (3), (4), (5), and (8), respectively, of this section, the following provisions are hereby made:  (a) Expense Funds of the State Employees' Retirement System and the Teachers' Retirement System. — The state board of retirement and the teachers' retirement board shall each adopt annual budgets and supplemental budgets as deemed necessary by the boards. Said budgets shall include all salaries for personnel employed by the state board of retirement and the teachers' retirement board and said budgets shall be funded from the investment income of each system without further appropriation. Said budgets shall not exceed 103 per cent of the prior year operating expenditures; provided, however, that for fiscal year 1998 said budgets shall not exceed 134 per cent of the fiscal year 1997 operating expenditures. In the event that said boards determine that said 103 per cent is not sufficient to fund said operations, said boards shall submit spending plans detailing all expenditures to the house and senate committees on ways and means for review 45 days prior to adopting a budget in excess of 103 per cent of the prior year expenditure. At least thirty days prior to the adoption of said budgets the boards shall file said budgets with the house and senate committees on ways and means and the joint committee on public service.  (b) Pension funds of the state employees' retirement system, the teachers' retirement system and the Boston retirement system. — The state board of retirement, the teachers' retirement board and the Boston retirement system for the purpose of funding their teacher retirement benefits, on or before October fifteenth in each year, shall furnish the actuary with such information as he may require to enable him to determine the amount to be distributed from the Commonwealth's Pension Liability Fund to the pension funds of said systems, for the fiscal year commencing on the next following July first. The actuary shall, on or before December fifteenth immediately preceding such fiscal year, determine such amount and specify in a written notice to said boards the amounts so required. Upon the receipt of such notice, said board shall certify forthwith to the PRIM board the amounts necessary to be distributed and paid for such fiscal year for the Pension Fund and the special fund for military service credit of the respective system. The amounts necessary to be appropriated and paid for such fiscal year by the commonwealth for said Commonwealth's Pension Liability Fund shall be determined in accordance with the funding schedule adopted by the commissioner of administration pursuant to section twenty-two C, and items of appropriation for such amounts shall be included in the appropriations for such fiscal year for the PRIM board or such department as the commissioner of administration shall determine to be allocated to the Commonwealth's Pension Liability Fund.  (c) Systems for Counties, Cities and Towns. — (i) The retirement board of each county, city or town contributory retirement system maintained under the provisions of sections one to twenty-eight inclusive, shall, on or before October fifteenth in each year, furnish the actuary with such information as he may require to enable him to determine the amount to be paid for the pension fund thereof for the fiscal year commencing on the next following July first. The actuary shall, on or before the December fifteenth immediately preceding such fiscal year, determine such amount and specify in a written notice to said board the amount so required to be paid; provided, however, that any community which has a valid and current actuarial report shall only appropriate the amount specified in their actuarial report and the actuary shall not require a larger amount to be appropriated. In addition to the foregoing, the Boston retirement system shall furnish to the actuary any information that the actuary requires to determine the amount payable on account of the employment of teachers in the city of Boston. The actuary shall determine the amount payable on account of the employment of such teachers and a separate amount payable as a result of the employment of all other members of the Boston retirement system. The actuary shall specify in a written notice to the Boston retirement system the specific amounts payable as a result of the employment of teachers in the city of Boston and of all members of the Boston retirement system other than teachers. The amounts to be paid for the three aforesaid funds of any such system for any such fiscal year, shall be allocated to each governmental unit the employees of which are members of any such system, in the proportion that the aggregate of the annual rates of regular compensation of all members in service of such system who are employees of any such government unit at the close of business on the September thirtieth immediately preceding such fiscal year, bears to the total of such aggregates for all members in service of such system on such date.  (ii) The board of each such county contributory retirement system shall, on or before the January first next following the receipt of such notice from the actuary, certify to the county commissioners of any such county the amounts necessary to be paid for such fiscal year for the three aforesaid funds of any such system by each governmental unit the employees of which are members thereof. Items of appropriation providing for any such amounts allocated to such county shall be included in the appropriations for such fiscal year for such county for the several funds of such system. Any such amounts allocated to any hospital district the employees of which are members of such system, shall be assessed by such county commissioners in the following May, with the assessments for maintenance of such hospital district made in accordance with section eighty-five of chapter one hundred and eleven, and shall be collected in the same manner as therein provided and paid to the treasurer-custodian of such system to be credited to the several funds thereof. Such county commissioners shall, upon the receipt of such certification from such county retirement board, certify forthwith to the board of selectmen of each town and to the treasurer or other disbursing officer of each district the employees of which in either case are members of such system, the amounts which have been allocated to such town or district and the amounts so certified shall be appropriated and paid thereby to the treasurer-custodian of such system to be credited to the several funds thereof. Payments by towns and districts hereunder shall be made one half on the first day of July next following and the remainder on the first day of the following January.  (iii) The board of each such city or town contributory retirement system shall, on or before the January first next following the receipt of such notice from the actuary, certify to the mayor in a city or to the board of selectmen in a town, as the case may be, and to the treasurer or other disbursing officer of each district the employees of which are members of any such system, the amounts necessary to be paid for such fiscal year for the three aforesaid funds of such system which have been allocated to such city, town or district, and the amounts so certified shall be appropriated and paid thereby to the treasurer-custodian of such system to be credited to the several funds thereof. Such amounts as the actuary deems necessary to cover the requirements of any such system for the period prior to the date when the first regular annual appropriation is due from any governmental unit the employees of which become eligible for membership in such system, shall be paid into the several funds thereof by special appropriations of such governmental unit.  (iv) If any governmental unit fails to include any amounts so certified in its appropriations for such fiscal year, the assessors or other taxing authorities shall nevertheless include such amounts in the next tax levy. All amounts so certified shall be a legal obligation of any such governmental unit and may be recovered in an action of contract by the retirement board of any such contributory retirement system.  (d) Such amounts as are necessary to cover the requirements or meet any deficiencies of any fund of any system prior to the date when an appropriation or assessment is available, shall be paid from any available funds in the treasury of the governmental unit obligated by law to support such system and charged against the next regular appropriation or assessment, as the case may be.  [There is no paragraph (e).]  (f) Massachusetts Bay Transportation Authority Police Retirement System. — The retirement board of the Massachusetts Bay Transportation Authority police retirement system shall on or before October fifteenth in each year, furnish the actuary with such information as he may require to enable him to determine the amount to be paid for the pension fund of such system by the authority for the fiscal year commencing on the next following January first. The actuary shall, on or before the December fifteenth immediately preceding such fiscal year, determine such amount and specify in a written notice to said board the amount so required to be paid. The board shall, at least ten days before the January first next following the receipt of such notice from the actuary, certify to the authority the amounts necessary to be paid for such fiscal year for the three aforesaid funds of such system and the amounts so certified shall be included by appropriate terms in the authority's budget for such fiscal year and shall be paid by the authority to the treasurer-custodian of such system to be credited to the several funds thereof. Such amounts as the actuary deems necessary to cover the requirements of the retirement system for the period prior to the date when the first regular annual payment is due from the authority shall be paid into the several funds thereof by special payments of the authority.  (g) Massachusetts Housing Finance Agency Employees' Retirement System. — The retirement board of the Massachusetts Housing Finance Agency employees' retirement system shall, on or before October fifteenth in each year, furnish the actuary with such information as he may require to enable him to determine the amount to be paid for the pension fund of such system by the agency for the fiscal year commencing on the next following January first. The actuary shall, on or before the December fifteenth immediately preceding such fiscal year, determine such amount and specify in a written notice to said board the amount so required to be paid. The board shall, at least ten days before the January first next following the receipt of such notice from the actuary, certify to the agency the amounts necessary to be paid for such fiscal year for the three aforesaid funds of such system and the amounts so certified shall be included by appropriate items in the agency's budgets for such fiscal year and shall be paid by the agency to the treasurer-custodian of such system to be credited to the several funds thereof. Such amounts as the actuary deems necessary to cover the requirements of the retirement system for the period prior to the date when the first regular annual payment is due from the agency shall be paid into the several funds thereof by special payments of the agency.  (h) The retirement board of the Massachusetts Port Authority employees' retirement system shall, on or before October fifteenth in each year, furnish the actuary with such information as he may require to enable him to determine the amount to be paid for the pension fund of said system by the Authority for the fiscal year commencing on the next following July first. The actuary shall, on or before the December fifteenth immediately preceding such fiscal year, determine such amount and specify in a written notice to said board the amount so required to be paid. The board shall, at least ten days before the January first next following the receipt of such notice from the actuary, certify to the Authority the amount necessary to be paid for such fiscal year for the three aforesaid funds of said system and the amount so certified shall be included by appropriate items in the Authority's budgets for such fiscal year and shall be paid by the Authority to the treasurer-custodian of said system in twelve equal monthly installments to be credited to the several funds thereof. Such amounts as the actuary deems necessary to cover the requirements of the retirement system for the fiscal year prior to the beginning of the next fiscal year after this section shall become effective shall be paid into the several funds thereof in equal monthly installments by special payments of the Authority.  (i) The retirement board of the Greater Lawrence Sanitary District employees' retirement system shall, on or before October fifteenth in each year, furnish the actuary with such information as he may require to enable him to determine the amount to be paid for the pension fund of said system by the Greater Lawrence Sanitary District for the fiscal year commencing on the next following January first. The actuary shall, on or before the December fifteenth immediately preceding such fiscal year, determine such amount and specify in a written notice to said board the amount so required to be paid. The board shall, at least ten days before the January first next following the receipt of such notice from the actuary, certify to the district the amount necessary to be paid for such fiscal year for the three aforesaid funds of said system and the amount so certified shall be included by appropriate items in the district budgets for such fiscal year and shall be paid by the district to the treasurer-custodian of said system in twelve equal monthly installments to be credited to the several funds thereof. Such amounts as the actuary deems necessary to cover the requirements of the retirement system for the fiscal year prior to the beginning of the next fiscal year after this section shall become effective shall be paid into the several funds thereof in equal monthly installments by special payments of the Authority.  (j) The Blue Hills Regional Vocational School employees' retirement system. The retirement board of the Blue Hills Regional Vocational School employees' retirement system shall, on or before October fifteenth in each year, furnish the actuary with such information as he may require to enable him to determine the amount to be paid for the pension fund of such system by the Authority for the fiscal year commencing on the next following July first. The actuary shall, on or before the December fifteenth immediately preceding such fiscal year, determine such amount and specify in a written notice to said board the amount so required to be paid. The Board shall, at least ten days before the January first next following the receipt of such notice from the actuary, certify to the Authority the amount necessary to be paid for such fiscal year for the three aforesaid funds of such System and the amount so specified shall be included by appropriate items in the Authority's budgets for such fiscal year and shall be paid by the school system to the treasurer-custodian of such system in twelve equal monthly installments to be credited to the several funds thereof. Such amounts as the actuary deems necessary to cover the requirements of the retirement system for the fiscal year prior to the beginning of the next fiscal year after this section shall become effective shall be paid into the several funds thereof in equal monthly installments by special payments of the school system.  (k) The retirement board of the Minuteman Regional Vocational Technical School District employees' retirement system shall, on or before October fifteenth in each year, furnish the actuary with such information as he may require to enable him to determine the amount to be paid for the pension fund of said system by the school district for the fiscal year commencing on the next following July first. The actuary shall, on or before the December fifteenth immediately preceding such fiscal year, determine such amount and specify in a written notice to said board the amount so required to be paid. The board shall, at least ten days before the January first next following the receipt of such notice from the actuary, certify to the school district the amount necessary to be paid for such fiscal year for the three aforesaid funds of said system and the amount so certified shall be included by appropriate items in the school district's budgets for such fiscal year and shall be paid by the school district to the treasurer-custodian of said system in twelve equal monthly installments to be credited to the several funds thereof. Such amounts as the actuary deems necessary to cover the requirements of the retirement system for the fiscal year prior to the beginning of the next fiscal year after this section shall become effective shall be paid into the several funds thereof in equal monthly installments by special payments of the school district.  (8) PRIT Fund — (a) There shall be a Pension Reserves Investment Trust Fund administered by the PRIM board established in section twenty-three for the purpose of depositing, investing and disbursing amounts set aside to meet further liabilities of the various systems. The assets of the state employees' retirement system, the teachers' retirement system and assets of the Boston retirement system attributable to teachers who are members of that system shall be held in the PRIT Fund.  (b) All amounts which the state may appropriate each year subsequent to January first, nineteen hundred and eighty-four pursuant to section twenty-two B to meet unfunded pension liabilities shall be deposited in the PRIT Fund and credited to the account of the state employees' retirement system, the teachers' retirement system and other participating systems as follows: the amount determined for each system shall be proportionate to the amount of assets of each system participating in the PRIT Fund as of July first for each fiscal year beginning on such date; provided, however, that for the purposes of this paragraph the amount of the combined assets of the state employees' and teachers' retirement systems shall be deemed not to exceed eighty percent of the total amount of the assets in the PRIT Fund as of June thirtieth, nineteen hundred and eighty-seven; and provided further, that a system participating in the PRIT Fund after January first, nineteen hundred and eighty-eight shall receive the greater of either the system's share of the state appropriation pursuant to section twenty-two B or the amount the system would receive in an annual pension funding grant pursuant to section twenty-two D. Systems which elected to participate in the PRIT Fund on or before January first, nineteen hundred and eighty-eight and which are eligible to receive an annual pension funding grant from the commonwealth pursuant to section twenty-two D shall receive an amount equal to such system's share of the state appropriation pursuant to section twenty-two B in addition to the amount such system would receive in an annual pension funding grant pursuant to section twenty-two D. The amounts so determined for each participating system and an amount equal to the regular interest on assets in the PRIT Fund shall be credited to the several retirement systems.  (c) Upon notification by the chief executive officer and legislative body of a governmental unit of a decision to participate, systems shall transfer ownership and control of all the assets of the system to the PRIM board. The PRIM board shall hold such assets in trust for the participating systems. The PRIM board shall credit assets and earnings on such assets to the individual systems. The PRIM board shall calculate regular interest as defined in subdivision (6) to allocate earnings among the various funds of each system. The board of each system shall continue to administer the system in accordance with sections one to twenty-eight, inclusive, including the maintenance of accounts in accordance with the funds provided for in this section. The PRIM board shall transfer monies to the various funds of the participating systems to allow them to carry out their duties under this chapter. The board of each participating system shall notify the PRIM board of the amounts needed for the various funds for the next fiscal year no later than ninety days before the start of the next fiscal year. The PRIM board shall develop a schedule of transfers to be made to said systems during the next fiscal year and notify the systems of that schedule no later than thirty days prior to the start of the next fiscal year. The PRIM board shall transfer such amounts in accordance with said schedule during the course of said fiscal year. From time to time such boards may make supplemental requests of the PRIM board if the initial request is found to be insufficient. Within thirty days of such request, the PRIM board shall approve or deny such request. Any denial of such a request must be accompanied by a written statement of the reasons therefor.  The procedure for determining participation shall occur as follows: on or before January first of each year, the PRIM board shall notify each system in writing of their option to participate in the PRIT Fund. Such notice shall be accompanied by a financial report and a description of the rights and duties of the PRIM board if a system elects to participate. The decision to participate shall be made by the board of each system, subject to the approval of the legislative body and the chief executive officer of each governmental unit. The decision of the board shall be deemed to have been approved unless the legislative body and the chief executive officer act to disapprove such decision by July first of the year in which the decision of such board is made. The board of each system shall notify the PRIM board and the appropriate legislative body and chief executive officer by May first of each year of its decision.  For any system which is receiving an annual pension funding grant from the commonwealth pursuant to the provisions of section twenty-two D in which the annualized time-weighed-rate of return is less than the assumption for investment rate of return approved by the actuary in the most recent actuarial valuation for the system, over any five year cycle, and said time-weighed-rate of return is less than the annualized time-weighed-rate of return for the pension reserve investment trust fund, over any five year cycle, the commission shall notify the PRIM board and the appropriate legislative body, chief executive officer, and the board of said system shall be deemed to have voted to participate.  After the decision of a board of a system to participate has been approved, the decision to participate may not be revoked for five years. Such revocation shall become effective six months after the PRIM board receives notification of such decision by such board. For purposes of this section, ''legislative body'' shall mean a town meeting in a town, the city council in a city, the county advisory board in a county, the district members in a district, and the members of an authority in an authority. For purposes of this section, ''chief executive officer'' shall mean the board of selectmen in a town, the mayor in a city, except in a city with plan D or plan E form of government it shall mean the city manager, municipality with a council form of government, the town manager and the county commissioners in a county. In a district or in an authority, ''chief executive officer'' shall mean the members of such district or authority. A system may purchase offerings of the PRIT Fund in accordance with paragraph (b) of subdivision (2) of section twenty-three without becoming a participating system for purposes of this section.  (c1/2) The commission shall annually review the investment performance and funded ratio of all systems using data compiled as of January 1 of the year in which the review occurs. If on or before July 1 the funded ratio data as of January 1 is not available, the most recent data shall be used. A system found by the commission to have a funded ratio of less than 65 per cent and an average rate of return during the previous 10 years that is at least 2 percentage points less than that of the PRIT Fund rate of return over the same period shall be declared underperforming by the commission. The commission shall notify, in writing, any system deemed to be underperforming pursuant to this paragraph that it shall transfer ownership and control of all of its assets to the PRIM board. The notice shall include, without limitation: (i) a financial report on the specific underperforming system; (ii) a description of the rights and duties of the PRIM board; and (iii) a schedule for the transfer of ownership and control of a system's assets to the PRIM board pursuant to this paragraph. A transfer of the ownership and control of a system's assets pursuant to this paragraph shall be in perpetuity.  The PRIM board shall hold assets in trust for the participating systems. The PRIM board shall credit assets and earnings on the assets to the individual systems. The PRIM board shall calculate regular interest as defined in subdivision (6) to allocate earnings among the various funds of each system. The board of each system shall continue to administer the system in accordance with sections 1 to 28, inclusive, including the maintenance of accounts in accordance with the funds provided for in this section. The PRIM board shall transfer monies to the various funds of the participating systems to allow them to carry out their duties pursuant to this chapter. The board of each participating system shall notify the PRIM board of the amounts needed for the various funds for the next fiscal year not later than 90 days before the start of the next fiscal year. The PRIM board shall develop a schedule of transfers to be made to the systems during the next fiscal year and notify the systems of that schedule not later than 30 days before the start of the next fiscal year. The PRIM board shall transfer those amounts in accordance with the schedule during the course of the fiscal year. From time to time, the boards may make supplemental requests of the PRIM board if the initial request is found to be insufficient. Within 30 days after the request, the PRIM board shall approve or deny it, but a denial shall be accompanied by a written statement of the reasons therefor.  A system ordered by the commission to transfer its assets under this paragraph may appeal for an exemption to a 4–member review board which shall consist of the executive director of the PRIM board or his designee, the secretary of administration and finance or his designee, a member selected by the state treasurer from a list of 3 names submitted by the Massachusetts Association of Contributory Retirement Systems and 1 member of a municipal employee union to be appointed by the governor. The system shall file written notice of its appeal with the secretary of administration and finance not later than 30 days after receiving the commission's order to transfer its assets. The review board may establish rules for its own procedure and the rules shall not be subject to chapter 30A. The review board may grant an exemption from the transfer requirement of this paragraph if its rate of return has exceeded the PRIT Fund rate of return for the previous 2 years or if the system's rate of return was affected by other extenuating circumstances. The review board may also consider the system's management costs, its risk return ratio and any other factors it deems appropriate. The grant of an exemption shall require the concurrence of at least 3 of the 4 members or their designees. A system may seek judicial review of the review board's decision to deny an exemption in the manner provided in section 14 of chapter 30A. An exemption granted by the review board pursuant to this paragraph shall take effect only upon the approval of a majority of the local governing body as follows: in a county, by the county commissioners, in a city having a Plan D or Plan E charter, by the city council and the manager, in any other city the city council and the mayor, in a town shall, by the board of selectmen, in a regional retirement system by the regional retirement board advisory council and in all other districts, by the governing board. The local governing body shall vote whether or not to approve the review board's grant of exemption within 30 days after the review boards' decision to provide an exemption.  (d) The amounts in the PRIT Fund shall be invested and managed in accordance with the authority of the PRIM board as created in section twenty-three. Amounts in the PRIT Fund shall be transferred back to each system for withdrawal or payment to members as otherwise provided by sections one to twenty-eight, inclusive.  All other amounts shall be distributed to each system during such calendar years as the actuary shall determine pursuant to subdivision (6A). Such distributions shall be transferred to the pension fund of each system for such year. On March first, nineteen hundred and eighty-four and each subsequent calendar year, the public employee retirement administration commission shall publish a report of the projected schedule of distribution of amounts from the PRIT Fund, as developed by the actuary, and file such report with each system, with the commissioner of administration, and with the house and senate committees on ways and means.  (e) There shall be a Commonwealth's Pension Liability Fund which shall be within the PRIT Fund and to which shall be credited all assets of the state employees' and teachers' retirement systems, other than assets credited to the systems' Annuity Savings Funds, Annuity Reserve Funds and expense funds. Except for transfers to and from the Annuity Savings Funds, Annuity Reserve Funds and expense funds of such systems in accordance with the provisions of sections one to twenty-eight, inclusive, all transfers of funds to or from such systems shall be made to or from the Commonwealth's Pension Liability Fund as provided herein. All amounts required by the pension funds and special funds for military service credit of such systems and all amounts required by the separate funds for such systems established by section 104, excluding any employee contributions paid into the fund established by paragraph (a) of section 104, shall be provided by distribution of such amounts from the Commonwealth's Pension Liability Fund. Any such distribution shall be detailed in a written report by the commissioner of administration and filed in advance with the house and senate committees on ways and means. Except as otherwise provided in this subdivision or section 104, and subject to the provisions of the operating trust agreement adopted by the PRIM board pursuant to subdivision (2A) of section 23, any such distribution shall be made pursuant to sections 1 to 28, inclusive.  Amounts in the Commonwealth's Pension Liability Fund shall include, but not be limited to, the following:  (i) all amounts appropriated by the commonwealth to meet its pension liabilities, including amounts appropriated pursuant to clause (a) of the third paragraph of section twenty-one of chapter one hundred and thirty-eight, the state share of amounts appropriated pursuant to section twenty-two B and amounts appropriated pursuant to section twenty-two C; provided, however, that the state treasurer may act as agent of the PRIM board to disburse benefit payments pursuant to any such appropriation;  (ii) all monies transferred from the annuity reserve funds of the state employees' retirement system and the teachers' retirement system pursuant to paragraph (c) of subdivision (2) or from the investment accounts of such systems pursuant to clause (iii) of paragraph (a) of subdivision (6);  (iii) all undistributed accumulated total deductions for the state employees' retirement system and the teachers' retirement system transferred pursuant to subdivision (3) of section 11; and  (iv) all assets of the state employees' retirement system and the teachers' retirement system except assets credited to such systems' expense funds, annuity savings funds and annuity reserve funds.  (9) In order to offset the anticipated costs for funding a county contributory retirement system, any governmental unit participating in the system may appropriate in any year an amount not exceeding five per cent of the amount raised in the preceding year by assessment under clause (i) of paragraph (c) of subdivision (7). Any interest shall be added to and become part of such special fund.  Such special fund shall be separate and distinct from any pension financing requirements of this chapter and all sums in such special fund shall be appropriated and used only for the purpose of offsetting the anticipated future cost of funding the contributory retirement system.  The treasurer of the governmental unit making the appropriation shall be the custodian of all funds deposited pursuant to this subdivision. Such funds may be invested in the same manner as retirement system funds pursuant to subdivision (2) of section twenty-three.  Such funds may be utilized in accordance with the provisions of subdivision (6A), or, subject to the approval of the actuary, in accordance with the provisions of paragraph (c) of subdivision (7), or subdivision (3) of section twenty-two D.  (10) Each governmental unit to which a system pertains and any free public library the employees of which are eligible for membership in a system, pursuant to the provisions of section four hundred and fourteen (h) (2) of the United States Internal Revenue Code, shall assume and pay the contributions which would be payable by the employees as members under paragraph (b) of subdivision (1). Such contributions, although designated as employee contributions, will be paid by the applicable governmental unit or free public library employing the employee in lieu of contributions by the employee. No employee will have the option of choosing to receive such contributed amounts directly instead of having them paid by the employing governmental unit or free public library to the applicable system. The contributions so assumed shall be treated as employer contributions in determining tax treatment under the United States Internal Revenue Code. The contributions so assumed shall be treated and identified, without limitation, as member contributions for all purposes of the retirement system, except as specifically provided to the contrary in this subdivision, and for all purposes of chapter sixty-two.  Employee contributions assumed pursuant to this subdivision shall be paid from the same source of funds used for the payment of compensation to an employee. A deduction shall be made from an employee's compensation equal to the amounts of the employee's contributions assumed by the employer. This deduction, however, shall not reduce the employee's compensation for purposes of computing benefits under the retirement system pursuant to this chapter or for purposes of determining any other employee benefits. Assumed contributions shall be transferred to the retirement system of which the employee is a member in accordance with the provisions of paragraph (h) of subdivision (1) and shall be credited to a separate fund within the employee's account in the Annuity Savings Fund of such system in order that the amounts contributed prior to the effective date for the assumption of employee contributions may be distinguished from the amounts contributed on or after the date on which the governmental employer is required by law to assume the employee's contributions.