$80 million penalty; Underperforming fund costly to taxpayers, employees.

• Position: EDITORIAL - Editorial

COLUMN: IN OUR OPINION

It has been obvious for some time that taxpayers and public employees are paying a major pension performance penalty to maintain an independent Worcester Regional Retirement System. Even so, the size of the penalty came as a shock.

Ken Arden, an economics professor at Salem State College who has studied the state pension system, calculated that the regional system's subpar performance has cost members at least $80 million over the past decade - a figure he says is actually on the low side because it does not factor in the compounding effect of forgone earnings over the years.

The Worcester regional system is run by $133,500-a-year CEO Michael J. Donoghue, currently on extended paid sick leave. The system invests about $400 million it holds in pension contributions from public employees in 50 area towns and 46 school districts, authorities and other public entities.

The return on that investment has been chronically low. The 8.42 percent return over the past 10 years is more than 2 percentage points below the 10.51 percent return achieved by the state's $48 billion Public Retirement Investment Trust fund.

It even falls short of the regional board's less-than-ambitious 8.5 percent target.

Performance has been even worse in the short term. The average 6.74 percent return for regional employees in the last five years was almost 5 percentage points less than the 11.61 percent return for PRIT...