The PRIT Fund is a professionally managed pooled investment fund consisting of the assets of the State Employees’ and Teachers’ Retirement Systems as well as the assets of local participating and purchasing retirement systems.

The nine-member PRIM Board was created by Chapter 661 of the Acts of 1983 and is responsible for the management of the PRIT Fund. The PRIM Board acts as Trustee for each retirement system that invests in the PRIT Fund and is responsible for the control and management of the Fund. The Treasurer & Receiver-General of the Commonwealth is a member ex officio and serves as the Chair. The Treasurer appoints one member who is a private citizen with an investment/business background. The Governor, or his designee, is also an ex officio member and appoints two members of the Board: one is a non-state official or employee and one is a representative of a public safety union. The State Teachers’ Retirement System has two representatives on the Board: the members of that Retirement System elect one and one is an Elected Member of the Massachusetts Teachers’ Retirement Board. The State Employees’ Retirement System also has two representatives on the Board: the members of that Retirement System elect one and one is an Elected Member of the State Employees’ Retirement Board.

The PRIM Board employs a professional staff to manage the day-to-day operations of the PRIT Fund. The Executive Director, with the assistance of staff, has the responsibility and authority to assist the Board and its advisory committees in establishing investment and administrative policy; to implement the policies and programs established by the Board; and to report to the Board on the status of the Fund and the operations of PRIM. PRIM’s staff is comprised of individuals with strong backgrounds in financial management and pension fund administration, as well as legal, accounting, and client servicing expertise.

The Board, in carrying out its duties, has established three standing committees: Investment, Real Estate, Administration and Audit. The role of each committee is to make recommendations to the Board within its stated area of responsibility.

No. The PRIM Board employs professional investment managers and gives them discretion, consistent with specified objectives and guidelines, to manage the PRIT Fund’s assets. Each investment manager operates under a formal contract that delineates its responsibilities and performance expectations, and that includes a formal set of investment guidelines and administrative requirements for management of each portfolio.

Retirement systems may elect to invest in the PRIT Fund in the following manner: A "Participating System" transfers all of its assets to PRIM. Following an affirmative vote to join the PRIT Fund, the local retirement board must notify the Chief Executive Officer and Legislative Body having jurisdiction over the retirement system of its decision on or before May 1 of each calendar year. The decision is deemed to be approved unless both the Chief Executive Officer and the Legislative Body act to disapprove the decision by July 1. A system may not revoke its decision for five years. Participating systems are also eligible to receive any money appropriated by the state for the purpose of reducing unfunded pension liabilities (M.G.L., c.32 § 22B).

A "Purchasing System" may invest all or a portion of its assets in the PRIT Fund simply by an affirmative vote of the retirement board. A purchasing system may make additional payments to or withdrawals from the Fund at any time, and is not bound by the five-year participation requirement. The retirement board must provide thirty (30) days notice to the PRIM Board of its intention to withdraw funds from the PRIT Fund. A purchasing system is not eligible for the state appropriation.

Each fiscal year the Governor is required to recommend a minimum dollar amount equal to 1.3% of the permanent state payroll, subject to legislative approval, to assist local retirement systems in reducing their unfunded pension liabilities (M.G.L., c.32 § 22B).

The percent share each fully participating system receives is based upon the value of the system’s assets in relation to the total PRIT Fund.

Chapter 697 of the Acts of 1987 capped the combined assets of the State Employees’ and Teachers’ Retirement Systems at 80% of the total PRIT Fund as of June 30, 1987, for the purposes of calculating the local participating systems’ share of the 1.3% of payroll.

Yes. Any system that elects to join PRIM as a "participating system" is eligible to receive its share of the annual state appropriation irrespective of its funded ratio.

The local retirement board continues to administer its retirement system. However, a board must determine the amount of money it requires each month to pay benefits and cover expenses. This money is wired to a destination on a pre-established date determined by the retirement board. Additionally, all on-going cash flow to the retirement board (i.e., employee contributions, pension appropriations) must be transferred to the PRIT Fund upon receipt.

Investing in PRIT greatly simplifies accounting procedures. A few journal entries are all that is needed on a monthly basis. Furthermore, only a few entries relative to investments are necessary on the annual statement to PERAC.

The retirement board receives a monthly statement indicating its net asset value as well as any activity (contributions, withdrawals, investment income, realized and unrealized gains/losses, and expenses). The statement is "PERAC compliant" in that the statement contains information required by PERAC with respect to pooled fund accounting. A retirement board will always know the value of its portfolio.

The PRIT Core is comprised of each investment portfolio of PRIT Fund, with the exception of the State Employees’ and Teachers’ Separate Cash Account. The Core, also referred to as the General Allocation Account, consists of the following portfolios: Global Equity (Domestic Equity, International Equity, Emerging Markets), Core Fixed Income, Value-Added Fixed Income, Real Estate, Private Equity, Private Equity Vintage Year, Hedge Funds, and Timber/Natural Resources.

Chapter 84 of the Acts of 1996 established segmentation. That law explicitly confirms a retirement board’s authority to invest in individual asset classes of the PRIT Core as an alternative to investing in the total Core fund. This "segmentation" of the investment options gives a local retirement board the flexibility to pick and choose specific asset classes in whatever proportions it believes are best suited to its retirement system’s needs.

Segmented systems may invest in one or more of the following portfolios: Domestic Equity, International Equity, Core Fixed Income, Emerging Markets, Real Estate, Hedge Funds, and Private Equity Vintage Year.

The Board typically issues Request for Proposals ("RFPs") for consultant, custodian, and auditing services every three years. The Board issues RFPs for investment management services as needed (e.g., following termination of an existing manager). PRIM’s investment services selection process is open, competitive, objective and designed to insure that the Board has access to a broad array of the highest quality service providers that have the experience and capabilities to provide investment services to PRIM.

To procure investment services, PRIM staff, in conjunction with a consultant where appropriate, drafts and issues an RFP. The RFP provides background information on PRIM, outlines the proposal specifications and selection process, and requests detailed information on all topics relevant to the services sought. The RFP is advertised in industry publications, local publications, or both.

A Search Committee (typically comprised of staff, consultant where appropriate, and representatives of the Board and its pertinent Committee) reviews the proposals received, making objective judgments based solely on the selection criteria outlined in the RFP. The Search Committee may interview finalists, undertake site visits, and conduct such other due diligence as is prudent under the circumstances. The Search Committee’s recommendation is presented to the pertinent Committee for review. If approved, the Committee brings that recommendation to the Board, which may vote to accept or reject the recommendation. If accepted, the Board delegates to the Executive Director the authority to carry out the recommendation. Staff then takes the steps necessary to hire the service provider, including negotiation of contract terms.

PRIM began requesting external audits of PRIM’s controls over the procurement of investment and related services for the period from January 1, 1994 to November 30, 2000.  The auditors were favorably impressed with PRIM’s procurement process.  PRIM staff has taken the steps necessary to ensure that a comprehensive SAS 70 (Statement of Auditing Standards #70) audit of PRIM’s procurement processes is completed every year as part of the annual audits of the PRIT Fund and the PRIM Board.