In 2025, Massachusetts paid out a staggering $6.63 billion in pension payments, raising concerns about the sustainability of the state's pension system. This issue is a hot topic, especially when considering the eye-catching pensions received by some former top earners.
Charlie Chieppo, a senior fellow at the Pioneer Institute, highlights the dilemma. While acknowledging the financial strain, he also points out the state's apparent patience with the current system. "The reality is that the state pension should have changed years ago to become more sustainable," Chieppo says, emphasizing the need for reform to ensure the funded level remains stable and less volatile.
Last year, the highest-paid beneficiary was Thomas D. Manning, a former deputy chancellor at UMass Chan Medical School, who received $349,905. Manning's retirement package is just one example of the generous pensions enjoyed by some former state employees. The next two highest-paid retirees were also affiliated with UMass Chan, with Vivian Budnik and Joyce Murphy collecting $341,804 and $341,061, respectively.
However, it's important to note that these high-profile cases are not representative of the average pension payment. Shawn Duhamel, chief executive of the Mass. Retirees Association, points out that the average annual pension is significantly lower, at around $48,700. For Massachusetts teachers, the average pension is approximately $51,800, and for other state employees, it's roughly $45,600.
Massachusetts is unique in that it does not participate in Social Security for its public workforce. Duhamel explains that even public retirees who qualify for Social Security often rely on their public pension as the primary source of retirement income. "The success of the pension system is critical to someone's retirement security and peace of mind," he emphasizes.
To be eligible for state benefits, employees must have completed at least 10 years of service. To officially retire and start collecting benefits, they must be older than 55 (or 60 in some cases) or have completed 20 years of service. The amount they receive depends on their length of service and their highest annual salaries over three consecutive years (or five years, in some cases), with annual pension payments capped at 80% of their average salary over this period.
David Holway, president of the National Association of Government Employees, sheds light on the majority of state employees, who are rank-and-file administrators and blue-collar workers. "I'm talking about the average person who works for the state every day under tough circumstances," he says. These employees generally pay off most, if not all, of their retirement benefits through salary contributions.
While academic, administrative, and medical professionals received the highest pension payments, the state agency with the most benefits overall was the Department of Corrections. Last year, the state paid roughly $220.8 million to around 4,400 DOC beneficiaries. The Massachusetts State Police came next, with beneficiaries receiving $204.5 million. The average benefit for State Police was $83,810, the highest for any state agency with over 1,000 recipients.
Certain quasi-public state agencies, such as the MBTA and the City of Boston, operate their own retirement systems and are excluded from the state's pension system. The Boston Retirement System, for example, paid $760.6 million in benefits to approximately 15,000 beneficiaries in 2024.
The state pension system provided benefits to 135,820 people last year, an increase of about 5% from 2020 and 14% from 2015. Massachusetts' pension fund has seen record balances in the past two quarters, reaching $121.1 billion in the first quarter of 2026. The fund has also outperformed its net return target, with a 9.6% yearly return in fiscal year 2025.
Despite these positive financial indicators, there is uncertainty surrounding state pension plans across the country. A recent report by Equable found that most public pension plans are still distressed or fragile, although the percentage of funded plans improved slightly. "Public pension funds are surviving, but they are not thriving," the report states.
Chieppo suggests that changes to the pension system could offer more flexibility to workers and reduce the financial burden on the state. However, he acknowledges the challenges of implementing such reforms. "It's awfully hard to make any of that happen," he says.
In comparison to other public retirement funds, such as the troubled MBTA Retirement Fund, Chieppo describes the state pension system as "looking like Fidelity."
Union president Holway emphasizes the importance of pension plans in attracting employees to the public sector. "If you didn't have a pension system, health insurance, or vacation, why would you work for the state?" he asks. "State employees are paid less than their private sector counterparts, so you have to give them a reason to take the job."
This article raises important questions about the sustainability and fairness of state pension systems. What are your thoughts on the matter? Do you think the current system is adequate, or do you believe reforms are necessary? Feel free to share your opinions in the comments below!
