Mapping Financial Blind Spots: Join the Investigation

I only focused on Massachusetts, and federal blind spots, so anyone that wished to join could appreciate how difficult it is to find and share this type of information, even thought it should be very easy.

PERAC Annual Reports

 

 

https://www.mass.gov/doc/2020-annual-report-full/download

https://www.mass.gov/doc/2021-annual-report-full/download

https://www.mass.gov/doc/2022-annual-report-full/download

https://www.mass.gov/doc/2023-annual-report-full-0/download

https://www.mass.gov/doc/2024-annual-report-full-0/download

PRIM / PRIT Annual Reports

2020–2024 

 

Springfield Retirement System Annual Reports

2017–2023

https://www.mass.gov/doc/springfield-retirement-board-audit-report-1117-123121/download

 

 https://www.mass.gov/doc/springfield-retirement-board-private-audit-report-year-ended-december-31-2023/download

 

Relevant Statutes

M.G.L. c. 32

840 CMR 17.00

840 CMR 25.00

A link to PERAC audits for anyone interested 

PERAC audits 

https://www.mass.gov/lists/retirement-board-audit-reports 

 

 

Link to Emails between PERAC and myself, plus emails between PERAC and vendors. that's how my AI noticed the issues with this system. 

PERAC emails

 https://ultimateworldfinancialmap.blogspot.com/2025/12/publicrecordsrequestperacinvestmentreco.html

Public_Records_Request–PERAC_Investment_Records_2024–2025 part 2

 https://ultimateworldfinancialmap.blogspot.com/2025/12/publicrecordsrequestperacinvestmentreco_22.html

 Public_Records_Request–PERAC_Investment_Records_2024–2025 part 3

https://ultimateworldfinancialmap.blogspot.com/2025/12/perac-records-request-part-3.html 

 

 

 Links to all available Massachusetts state audits. 

 MA state auditor

https://www.mass.gov/lists/all-audit-reports-2011-to-today#2025- 

 

 

Some other random memo's and complaince paperwork I was sent 

PERAC memo's, compliance and more

 https://ultimateworldfinancialmap.blogspot.com/2025/12/peracmemosandmore.html

 

Mapping Union Blind Spots: Join the Investigation

What this is

This is a public, citizen-led effort to map how union and public retirement systems actually function, using real numbers, real roles, and real companies.

We are not here to accuse people of crimes.

We are not here to attack unions, retirees, or workers.

We are not here to “prove corruption.”

We are here because we found structural blind spots, and blind spots don’t fix themselves.

The Core Premise (plain English)

Public workers—teachers, police, highway workers, state employees—pay into systems they are told to trust.

Those systems publish numbers.

Those numbers look reassuring.

But when you try to trace how the numbers are produced, you hit walls:

• estimates without reconciliation,
• fees that exist but aren’t clearly totaled,
• layers of funds that obscure visibility,
• audits that check process, not substance.

That doesn’t mean anyone is evil.

It means the system is opaque by design.

So we’re mapping it.

What We Are Actually Doing

We are doing three things, in order:

1️⃣ Mapping what works

We start with publicly verifiable facts:

• contributions,
• benefits paid,
• actuarial assumptions,
• total asset values,
• published returns.

These are real. These matter. These often are correct.

2️⃣ Mapping where visibility degrades

As money moves:

• from worker → employer → retirement board,
• from board → consultants,
• from consultants → asset managers,
• from managers → private funds → sub-funds,

the information becomes:

• estimated,
• delayed,
• summarized,
• netted,
• and harder for members to independently verify.

This is where blind spots form.

3️⃣ Explaining how those blind spots could be fixed

We don’t just point at problems.

We explain:

• what information already exists,
• who legally holds it,
• who can request it,
• how often it should reconcile,
• and what realistic oversight would look like.

If nothing changes, that’s not our failure.

Mapping reality is the goal.

What This Is 

Not

• ❌ Not a lawsuit
• ❌ Not a conspiracy theory
• ❌ Not an attack on unions
• ❌ Not a claim that money “vanished”

Money doesn’t disappear.

It becomes harder to see.

That distinction matters.

Why Use Real Numbers, Names, and Companies?

Because abstraction protects systems.

We will:

• use actual public retirement systems (e.g., Springfield),
• reference actual asset allocations (e.g., private equity percentages),
• name roles (boards, consultants, auditors),
• explain what each is responsible for.

Not to shame them —

but so citizens know who to ask, and what to ask for.

The Invitation (this is key)

You don’t need:

• insider access,
• financial credentials,
• or permission.

If you can:

• read an annual report,
• compare two years of numbers,
• request a public document,

you can help map this.

This investigation is open by design.

How the Blueprint Will Be Structured (so people don’t get lost)

We will build this in sections that tell a story, not bullet-point chaos.

High-level structure (preview, not writing yet):

• Section 0 – How this system is supposed to work (the “ideal”)
• Section 1–4 – How it works for:
  
• Springfield police
• Springfield teachers
• State/highway workers
• Union workers under federal rules
• 
  
• Section 5–8 – Where numbers stay solid vs become estimates
• Section 9–10 – Audits: what they test and what they don’t
• Section 11 – What members can realistically obtain today
• Section 12 – How blind spots could be closed without blowing up the system
• Glossary – Plain-English definitions (no finance-bro nonsense)

Each section will include:

• real examples,
• where to find the data,
• and who is responsible at that step.

The Ethos (this keeps it sane)

“Whether people fix this or not isn’t our concern.

We found a problem.

We are mapping it.

We are showing what works, what doesn’t, and how it could be improved.”

That’s defensible.

That’s serious.

That’s hard to dismiss.

Next step (you choose)

I can:

• write Section 0 as a narrative story, starting with a single worker’s paycheck, or
• draft a one-page “How to Request the Numbers” guide people can actually use.

You’re steering this. I’ll build it clean, factual, and readable this time.

Alright. We’ll do this the right way, starting clean, slow, and human.

No accusations. No jargon dumps. No skipping steps.

Below is SECTION 0 only.

Think of this as the opening chapter that gives people a mental map so every later section makes sense.

SECTION 0 — How Public Retirement Is Supposed to Work (The Simple Story)

Why this section exists

Before we talk about blind spots, audits, private equity, or missing clarity, we need to agree on what the system is supposed to do when it’s working well.

If people don’t understand the functional version, they can’t spot where it breaks.

So this section tells the story of one worker, one paycheck, one retirement promise — using real Massachusetts structures.

Step 0.1 — A worker starts a public job

Let’s start with someone concrete.

Say you are:

• a Springfield police officer, or
• a Springfield public school teacher, or
• a Massachusetts highway worker.

You are hired by a public employer.

From day one, retirement is part of your compensation, not a bonus.

You are told, explicitly or implicitly:

“Pay into the system now, and the system will pay you later.”

This is not optional.

Step 0.2 — Money comes out of your paycheck

Every pay period:

• A fixed percentage of your salary is withheld
• That money goes directly to your retirement system, not to you

At the same time:

• Your employer contributes money on your behalf
• The employer contribution is budgeted annually by the city, county, or state

Key point:

This is not investment speculation by you.

It is mandatory deferred compensation.

Step 0.3 — Your retirement system holds the money

Your money does not go directly to Wall Street.

It first goes to:

• A local or state retirement system
  (example: Springfield Retirement System)

That system has:

• a retirement board
• an administrator
• legal obligations under Massachusetts Chapter 32

This board is supposed to:

• receive contributions
• keep records
• authorize investments
• ensure benefits can be paid

They are fiduciaries — legally obligated to act in members’ interests.

Step 0.4 — The system invests the money

The retirement system does not usually invest directly.

Instead, it relies on:

• investment consultants
• asset managers
• custodian banks
• sometimes PRIM (for pooled or advisory structures)

The money is allocated across categories like:

• global equity
• fixed income
• real estate
• private equity
• other alternatives

You can see these categories in public annual reports.

At this stage, things are still mostly transparent at a high level.

Step 0.5 — Returns are reported (gross vs net)

Each year (and often quarterly), the system reports:

• gross returns (before fees)
• net returns (after fees, expenses, carried interest)

Important:

• Gross numbers help evaluate investment skill
• Net numbers reflect what the system actually earns

Both can be legitimate — if clearly explained and reconciled over time.

At this stage, most members still assume:

“Someone is checking this.”

Step 0.6 — Actuaries translate returns into promises

An actuary takes:

• assets
• liabilities
• assumptions (like a 7% return)

They calculate:

• funded ratio
• future contribution needs
• long-term sustainability

This is where investment performance turns into:

• benefit projections
• COLA assumptions
• funding schedules

Actuarial work is essential — but it relies on inputs it does not create.

Step 0.7 — PERAC enters the picture

This is where PERAC comes in.

PERAC:

• oversees 104 retirement systems
• enforces filing, reporting, and compliance
• conducts audits
• issues regulations and guidance

PERAC’s stated role is oversight, not day-to-day investing.

PERAC is supposed to ensure:

• required reports are submitted
• rules are followed
• systems remain viable and lawful

PERAC is not the investment manager.

Step 0.8 — Audits happen

Audits are conducted:

• periodically
• based on standards
• often focusing on:
  
• procedures
• controls
• compliance with rules
• 
  

Audits typically confirm:

• reports exist
• processes were followed
• documents were submitted

They do not automatically verify:

• the economic accuracy of private valuations
• the completeness of fee extraction over time
• whether estimates later diverged materially from reality

That distinction matters later.

Step 0.9 — Benefits are paid

When you retire:

• your benefit is calculated
• payments begin
• the system draws from:
  
• contributions
• investment returns
• employer funding
• 
  

If everything works:

• benefits arrive on time
• numbers make sense
• confidence remains intact

Most retirees never question this step — and shouldn’t have to.

Step 0.10 — Where trust quietly enters

At no point does the average worker:

• vote on private equity exposure
• review fee waterfalls
• audit fund-of-fund structures
• reconcile gross vs net over a decade

They are expected to trust:

• boards
• consultants
• auditors
• regulators

That trust is not irrational.

It is structural.

Why this section matters

Up to this point:

• nothing here is controversial
• nothing here implies wrongdoing
• nothing here assumes corruption

This is the ideal flow.

Every later section asks only one question:

At which step does visibility degrade enough that members can no longer independently confirm what’s happening — even in good faith?

That’s it.

Pause point

Before we move to Section 1, people should now be able to answer:

• Who my money goes to first
• Who invests it
• Who oversees the system
• Who audits compliance
• Where trust replaces verification

Next, in Section 1, we’ll tell this same story again —

but specifically for Springfield police, using real public numbers, so people can see where clarity remains and where it fades.

When you’re ready, say:

“Start Section 1 — Springfield Police”

Got it. We’ll stay slow, concrete, story-driven, and we’ll name the doors people can actually open.

This is SECTION 1 only. Nothing else yet.

SECTION 1 — Springfield Police: Following One Dollar From Paycheck to Pension

(This section uses real public structures and numbers so people can verify every step themselves.)

1.1 — Who we’re talking about (no abstractions)

Group: Springfield Police Officers

Retirement System: Springfield Retirement System

Oversight Law: Massachusetts Chapter 32

Regulator: PERAC

Latest Public Snapshot (PERAC report):

• Active members: ~3,327
• Retirees: ~2,812
• Market value of assets: ~$590 million
• Asset allocation includes ~17% Private Equity
  (Source: PERAC Springfield profile)

This is not hypothetical money.

This is hundreds of millions of dollars belonging to real people.

1.2 — Step one: money leaves the paycheck

Every Springfield police officer:

• Contributes a mandatory percentage of salary
• Contribution rate depends on hire date (Chapter 32 rules)
• Money is withheld before the officer sees it

At the same time:

• The City of Springfield makes an employer contribution
• That contribution is set annually through the city budget
• It is based on actuarial calculations, not guesswork

👉 Verification path for citizens

• Collective bargaining agreement (salary & contribution rates)
• City of Springfield budget (pension appropriation line item)
• Springfield Retirement System annual statement

Nothing is hidden at this step.

1.3 — Step two: money enters the Springfield Retirement System

The money does not go to PERAC yet.

It goes to the Springfield Retirement System, which has:

• A retirement board
• A board administrator
• Legal fiduciary duties to members

Their job at this stage:

• Receive contributions
• Record them accurately
• Maintain individual member records
• Authorize investments under Chapter 32

👉 Verification path

• Springfield Retirement System website
• Board meeting minutes (public records)
• Annual financial statements

Still visible. Still confirmable.

1.4 — Step three: the board invests (this is where complexity begins)

The Springfield Retirement Board does not usually pick stocks.

Instead, it:

• Hires investment consultants
• Allocates assets by category
• Uses external investment managers

From the PERAC data, Springfield allocates roughly:

• ~39.5% Global Equity
• ~17.1% Private Equity
• ~10.3% Real Estate
• Remaining in fixed income and other strategies

This is where indirection starts:

• Money goes from the retirement system
• To managers
• Sometimes to funds
• Sometimes to funds of funds
• Sometimes through limited partnerships (LPs)

👉 Verification path

• PERAC Annual Report (asset allocation tables)
• Springfield Retirement System Annual Report
• Board investment policy statement (IPS)

You can see categories — not underlying deal details.

1.5 — Step four: gross returns are reported

Investment managers report:

• Gross performance (before fees)
• Often standardized
• Often benchmarked

Gross numbers answer:

“How did the investments perform before costs?”

These numbers:

• Are commonly shared
• Appear in quarterly and annual summaries
• Look clean and reassuring

👉 Important

Gross returns are not lies.

But they are not the full truth.

1.6 — Step five: net returns are estimated (key word: estimated)

Now comes the critical shift.

For many asset classes — especially private equity:

• Fees are complex
• Carried interest depends on long timelines
• Final costs are often unknown at reporting time

So systems receive:

• Net-of-fee estimates
• Sometimes months later
• Sometimes adjusted retroactively

This is not illegal by itself.

But it creates a condition where:

• Today’s “net” number may not be final
• Prior years may quietly change
• Long-term accuracy depends on follow-up auditing

👉 Verification path

• Fee & expense analysis reports (if available)
• Consultant quarterly reports
• Board discussions in minutes (often vague)

This is where clarity begins to degrade.

1.7 — Step six: actuaries turn estimates into promises

Actuaries:

• Take net returns
• Apply assumptions (e.g., 7% return)
• Calculate funding ratios and employer costs

If net returns are:

• incomplete
• delayed
• revised later

Then:

• Employer contributions may be miscalculated
• Funding schedules may be optimistic
• Risks shift silently to future taxpayers and members

Actuaries rely on inputs — they do not audit managers.

👉 Verification path

• Actuarial valuation reports
• Funding schedules filed with PERAC

The math is visible.

The inputs’ certainty is not.

1.8 — Step seven: PERAC oversight (what PERAC checks — and doesn’t)

PERAC:

• Requires filings
• Reviews procedures
• Conducts audits
• Enforces compliance with Chapter 32

PERAC audits typically confirm:

• Reports were submitted
• Processes exist
• Rules were followed

PERAC does not:

• Rebuild private equity cash flows deal by deal
• Independently price private assets
• Recalculate long-term fee leakage across layered funds

PERAC enforces form and compliance, not economic substance.

👉 Verification path

• PERAC audit reports
• PERAC memos and regulations
• PROSPER filing descriptions

This distinction is crucial and often misunderstood.

1.9 — Step eight: members see only summaries

What a Springfield police officer usually sees:

• Annual funded ratio
• Overall return percentage
• Assurance that the system is “on track”

What they do not see by default:

• Manager-level fee reconciliation
• Fund-of-fund cost stacking
• Retroactive net return revisions
• Which estimates were never trued-up

This is not because members are careless.

It’s because the system is not designed for member-level verification.

1.10 — Where the first blind spot clearly appears

The first real blind spot is here:

When private, layered investment structures are allowed to report estimated net performance without a mandatory, time-bound, public reconciliation back to actual cash flows.

Nothing illegal is alleged.

But independent confirmation becomes practically impossible for members.

That’s the issue.

Why Section 1 matters

We now have:

• A real group (Springfield police)
• Real money (~$590M)
• Real private equity exposure (~17%)
• A clear path from paycheck to pension
• A clearly identified visibility drop

No accusations.

No conspiracy.

Just mechanics.

Next step

Section 2 will repeat this story for Springfield Teachers, side-by-side, so people can see:

• What’s identical
• What’s different
• Whether the blind spot is structural or situational

When ready, say:

“Start Section 2 — Springfield Teachers”

Alright. Same tone, same structure, same pace.

SECTION 2 only.

SECTION 2 — Springfield Teachers: Same System, Different Path, Same Blind Spot

(This section mirrors Section 1 on purpose. If something changes, we call it out explicitly.)

2.1 — Who we’re talking about (again, no abstractions)

Group: Springfield Public School Teachers

Retirement System: Massachusetts Teachers’ Retirement System (MTRS)

Governing Law: Massachusetts Chapter 32

Regulator: PERAC

Primary Difference from Police:

Teachers do not use a city-specific retirement board.

They use a statewide system.

That distinction matters.

2.2 — Step one: money leaves the paycheck (almost identical)

Every Springfield teacher:

• Pays a mandatory contribution based on hire date
• Rate is set by statute (Chapter 32)
• Withheld automatically from payroll

At the same time:

• The Commonwealth of Massachusetts contributes
• Employer contribution is set through the state budget
• Calculated using actuarial assumptions

👉 Verification path

• Teacher collective bargaining agreements
• State budget (MTRS appropriation line)
• MTRS annual member statements

So far: nearly identical to police.

2.3 — Step two: money enters MTRS (this is the first divergence)

Unlike Springfield Police:

• Teachers’ contributions do not go to a city board
• They go directly to MTRS, a statewide pooled system
• MTRS covers teachers across Massachusetts

This means:

• Individual cities (like Springfield) lose visibility immediately
• Teachers are part of a much larger asset pool

👉 Verification path

• MTRS Annual Report
• MTRS board meeting minutes
• MTRS Comprehensive Annual Financial Report (CAFR)

Still public — but already more abstract.

2.4 — Step three: investment authority shifts upward

MTRS:

• Does not manage investments city by city
• Uses centralized investment governance
• Works closely with PRIM (Pension Reserves Investment Management Board)

This adds an extra layer compared to city police systems.

Flow now looks like:

Teacher → MTRS → PRIM → Managers → Funds → Sub-funds

More layers = more distance from the source.

2.5 — Step four: asset allocation (similar categories, larger scale)

MTRS invests across:

• Global public equity
• Fixed income
• Real estate
• Private equity
• Alternative strategies

Private equity exposure is material, not marginal.

Even if the percentage differs year to year, the structure is the same:

• Limited partnerships
• Multi-year lockups
• Capital calls and distributions
• Layered fee structures

👉 Verification path

• MTRS investment allocation tables
• PRIM investment disclosures
• Annual investment performance summaries

You can see where money is allocated — not how deeply it’s layered.

2.6 — Step five: gross returns (again, not the problem)

As with police funds:

• Gross performance is reported
• Benchmarks are applied
• Numbers look precise and professional

Teachers are often told:

“The system earned X% this year.”

That statement is not false.

But it is incomplete.

2.7 — Step six: net returns become estimates (same problem, bigger scale)

Here the exact same blind spot reappears, but amplified:

• Private equity fees are complex
• Carried interest depends on exits years later
• Interim net returns rely on estimates

Because MTRS is so large:

• Small estimation errors scale up fast
• Delayed corrections affect funding assumptions statewide

Net numbers today may:

• Change quietly later
• Never be fully reconciled publicly
• Be “good enough” for compliance, but not verification

👉 Verification path

• Consultant quarterly reports
• Fee and expense disclosures (often summarized)
• Board materials (often high-level)

This is where clarity thins out.

2.8 — Step seven: actuaries repeat the same dependency

Actuaries for MTRS:

• Use net returns provided
• Apply long-term assumptions
• Set contribution requirements

They do not:

• Audit private fund cash flows
• Deconstruct fund-of-fund fees
• Independently price illiquid assets

If estimates persist:

• Risks roll forward
• Errors compound
• Accountability diffuses

Same math. Same dependency.

2.9 — Step eight: PERAC oversight (same boundary)

PERAC oversees MTRS just as it does city systems.

PERAC checks:

• Filings
• Procedures
• Compliance with Chapter 32

PERAC does not:

• Reconstruct PRIM’s underlying investments
• Independently audit private equity valuations
• Guarantee that long-term net numbers converge to reality

Again: form vs substance.

2.10 — What teachers actually see

A Springfield teacher typically sees:

• A funded ratio
• An annual return percentage
• Reassurances about long-term stability

They do not see:

• Which private funds drive returns
• How many fee layers exist
• Whether estimates were later revised
• How much opacity is structural vs temporary

This is not negligence by teachers.

It is a design choice.

2.11 — The blind spot, stated plainly

For teachers, the blind spot is:

When a statewide pooled system combines private, illiquid investments with estimated net reporting and no mandatory, public, time-bound reconciliation — members cannot independently confirm long-term accuracy.

Same blind spot as police.

Just farther away.

2.12 — Key comparison to Section 1 (why this matters)

Springfield Police

• Smaller system
• City-level board
• Slightly more local visibility
• Same private equity opacity

Springfield Teachers

• Statewide pooled system
• Extra governance layers
• Less local visibility
• Same private equity opacity

Different routes.

Same dead end.

Why Section 2 matters

This confirms something important:

The problem is structural, not personal.

It does not depend on the honesty of any one board, consultant, or regulator.

The same blind spot appears twice, in two different systems, governed by the same law.

If you’re ready, say:

“Start Section 3 — Turnpike / Highway Workers”

We’ll keep the same story format so the pattern becomes undeniable.

Got it. Same story blueprint, same clarity, no shortcuts.

SECTION 3 — Turnpike & Highway Workers: When the Employer Changes but the Blind Spot Doesn’t

(This section covers MassDOT / Highway / Turnpike workers and shows why “state employee” does not mean “more transparent.”)

3.1 — Who we’re talking about (names matter)

Group:

• Massachusetts Turnpike Authority workers (historical)
• MassDOT / Highway Department employees
• Certain transportation, maintenance, and operations staff

Retirement System:

• State Employees’ Retirement System (SERS / MSERS)

Governing Law:

• Massachusetts Chapter 32

Regulator:

• PERAC

Key distinction from Sections 1 & 2:

These workers are state employees, not city or school-district employees.

Many people assume this means:

“The state watches it more closely.”

That assumption is where this section starts to matter.

3.2 — Step one: money leaves the paycheck (still the same)

For a highway or turnpike worker:

• Mandatory payroll contribution (rate depends on hire date)
• Automatically withheld
• Governed by statute, not choice

At the same time:

• The Commonwealth contributes as employer
• Amount set through actuarial funding schedules
• Paid through the state budget

👉 Verification path

• Employee pay stubs
• State payroll documentation
• MSERS contribution schedules

Up to this point, nothing is unusual.

3.3 — Step two: money enters MSERS (bigger pool, less visibility)

Unlike Springfield Police (city)

and unlike Teachers (separate statewide system):

Highway workers’ money goes into MSERS, which includes:

• State police (some categories)
• Executive branch employees
• Transportation workers
• Clerical and administrative staff
• Various state agencies

This creates:

• A very large pooled fund
• Many groups with different job risks
• Shared investment outcomes

At this point:

• Individual worker identity is completely abstracted
• Oversight becomes systemic, not personal

3.4 — Step three: investment authority is centralized

MSERS investments are not handled internally by each agency.

They flow through:

• PRIM (Pension Reserves Investment Management Board)
• External investment managers
• Consultants
• Custodians
• Fund administrators

So the chain is now:

Worker → MSERS → PRIM → Managers → Funds → Sub-funds

This is the longest chain so far.

3.5 — Step four: asset allocation (looks familiar by now)

MSERS asset mix includes:

• Public equities
• Fixed income
• Real estate
• Private equity
• Hedge funds / alternatives
• Opportunistic strategies

The categories look clean on paper.

But private equity again introduces:

• Long lockups
• Capital calls
• Delayed distributions
• Multi-layer fee structures

👉 Verification path

• PRIM annual report
• MSERS investment summaries
• Composite asset allocation tables

What’s missing is not allocation — it’s traceability.

3.6 — Step five: gross returns are reported confidently

As with teachers and police:

• Annual gross returns are published
• Benchmarks are cited
• Long-term averages look reassuring

Statements like:

“The system earned X% over Y years”

are technically correct.

But still incomplete.

3.7 — Step six: net returns rely on estimates (same flaw, largest scale yet)

Here the blind spot grows again.

For MSERS:

• Private equity net returns are estimated
• Fees are complex and uneven
• Carried interest may not be settled for years
• Interim valuations are model-based

Because the pool is so large:

• Small estimation errors → big dollar impacts
• Corrections may appear years later
• Most members never see the revisions

This is not fraud.

It is structural opacity.

3.8 — Step seven: actuarial assumptions stack on top of estimates

Actuaries:

• Use reported net returns
• Apply long-term return assumptions
• Determine funding schedules
• Shape state budget obligations

They do not:

• Re-audit underlying private funds
• Independently value illiquid assets
• Disassemble fund-of-fund structures

So actuarial certainty rests on:

“Best available numbers,” not verified ones.

Same pattern. Bigger consequences.

3.9 — Step eight: PERAC oversight (still procedural)

PERAC oversees MSERS just like the others.

PERAC checks:

• Compliance with Chapter 32
• Filing completeness
• Governance procedures
• Audit processes

PERAC does not:

• Audit PRIM’s private equity valuations
• Force public reconciliation of estimated vs final returns
• Require member-level fee transparency

Again:

Oversight exists — but it stops at structure.

3.10 — What highway workers actually see

A MassDOT or turnpike worker typically sees:

• Funded ratio
• Annual return headline
• Assurance of long-term sustainability

They do not see:

• Which private funds their money is in
• How many layers of fees exist
• Whether net returns were revised years later
• How much uncertainty exists inside the numbers

They are told to trust the system.

3.11 — The blind spot, restated in plain language

For highway and turnpike workers:

When a massive statewide pension pool relies on estimated net returns from illiquid private investments, members cannot independently verify whether reported performance accurately reflects real, realized outcomes.

Same blind spot.

Largest scale so far.

3.12 — Comparison so far (pattern check)

• Springfield Police:
  Local board → PE opacity
• Springfield Teachers:
  Statewide system → PE opacity
• Highway / Turnpike Workers:
  Massive pooled state system → PE opacity

Different employers.

Different boards.

Same investment structure.

Same visibility loss.

That matters.

Why Section 3 matters

At this point, it’s clear:

This is not about cities vs the state.

It’s not about teachers vs cops vs highway workers.

It’s about how private, illiquid investments behave inside public systems.

The system works — until you ask it to explain itself.

If you’re ready, say:

“Start Section 4 — Union Workers Outside Chapter 32 (Federal / Trade Unions)”

That’s where the contrast becomes sharp.

Understood. Same tone, same story blueprint, no shortcuts.

SECTION 4 — Union Workers Outside Chapter 32: Same Blind Spot, Fewer Safeguards

(This section covers federal unions, trade unions, and private-sector union plans — and why the problem doesn’t disappear when PERAC isn’t involved.)

4.1 — Who we’re talking about (this is not PERAC)

This group includes workers such as:

• Electricians (IBEW)
• Plumbers & pipefitters
• Laborers
• Carpenters
• Federal union employees
• Multi-employer pension plan participants

Key difference from Sections 1–3:

These workers are not governed by Massachusetts Chapter 32 and not overseen by PERAC.

Instead, they fall under:

• ERISA (Employee Retirement Income Security Act)
• Department of Labor (DOL)
• PBGC (Pension Benefit Guaranty Corporation)
• Union-appointed trustees

Many people assume this means:

“More rules = safer money.”

That assumption is shaky.

4.2 — Step one: money leaves the paycheck (still mandatory)

Just like public workers:

• Contributions are mandatory
• Set by collective bargaining agreements
• Withheld automatically
• Employer contributions are required

At this stage:

• The system feels transparent
• Workers often know the contribution rate
• Statements appear regular and professional

So far, everything looks better than public systems.

4.3 — Step two: money enters a multi-employer trust

Instead of a city or state retirement board:

• Money flows into a union pension trust
• Governed by a board of trustees

Trustees typically include:

• Union representatives
• Employer representatives
• Sometimes independent advisors

Here’s the first subtle shift:

• Trustees are often not financial experts
• Fiduciary duty exists, but technical understanding varies
• Decisions rely heavily on consultants

4.4 — Step three: investment authority is outsourced fast

Union pension trusts almost immediately rely on:

• Investment consultants
• OCIO models
• External asset managers
• Custodians
• Fund administrators

Sound familiar?

Because it is.

This is the same architecture used by:

• PERAC-regulated systems
• PRIM
• MSERS
• Teachers’ systems

Different law.

Same machinery.

4.5 — Step four: private equity enters quietly

Most union pension plans now allocate to:

• Private equity
• Private credit
• Infrastructure
• Real estate partnerships
• Fund-of-funds

Why?

Because consultants tell trustees:

“You need higher returns to stay solvent.”

No vote by members.

No direct consent.

Usually no meaningful explanation.

4.6 — Step five: gross returns are emphasized (again)

Union members are shown:

• Plan funded percentage
• Average annual returns
• “Recovery” narratives after market downturns

Just like public workers:

• Gross performance looks healthy
• Benchmarks are highlighted
• Long-term projections look stable

What’s missing:

• Verified net performance
• Fee transparency
• Valuation uncertainty disclosures

4.7 — Step six: net returns are still estimates (ERISA allows this)

Here’s a critical point many people don’t know:

ERISA does NOT require

• Line-item private equity fee disclosure to members
• Fund-level valuation audits for each underlying vehicle
• Clear reconciliation of estimated vs realized returns

So:

• Net returns are often modeled
• Fees are embedded
• Carried interest may not be visible for years

Legally acceptable

But informationally weak

4.8 — Step seven: trustees rely on consultants (not audits)

Union trustees typically:

• Review consultant reports
• Approve asset allocation
• Rely on summaries

They usually do not:

• Audit private fund valuations
• Independently test fee calculations
• Disassemble fund-of-fund structures

This isn’t corruption.

It’s delegated trust.

4.9 — Step eight: oversight exists, but it’s reactive

ERISA oversight happens when:

• A plan becomes distressed
• A whistleblower comes forward
• The PBGC intervenes
• A lawsuit is filed

Unlike PERAC:

• There is no routine public audit equivalent
• No centralized reporting portal like PROSPER
• No annual public system-wide review

Oversight happens after damage, not before.

4.10 — What union members actually see

Most union workers receive:

• Annual benefit statements
• Estimated retirement payouts
• Funded status percentages

They usually do not receive:

• A list of private equity funds
• Fee breakdowns
• Net vs gross reconciliations
• Explanations of valuation risk

They’re expected to trust:

• Trustees
• Consultants
• The brand names involved

4.11 — The blind spot (same problem, fewer checks)

For union workers outside Chapter 32:

Private equity and alternative investments introduce layers of opacity where net performance, fees, and valuations are estimated, delayed, or inaccessible — and no regulator proactively forces clarity.

Different regulator.

Same result.

4.12 — Why this section matters

This comparison proves something important:

• The blind spot is not a Massachusetts problem
• It’s not a PERAC-only problem
• It’s not a public vs private problem

It’s a structural pension finance problem.

Wherever:

• Illiquid assets exist
• Fees are complex
• Valuations are estimated
• Members are removed from decision-making

The same gap appears.

Pattern so far (Sections 1–4)

Group	Oversight Body	Blind Spot Exists?
Springfield Police	PERAC	Yes
Springfield Teachers	PERAC	Yes
Highway / Turnpike	PERAC + PRIM	Yes
Union / Federal	ERISA / DOL	Yes

Different laws.

Same outcome.

If you’re ready, say:

“Start Section 5 — Where Net vs Gross Actually Breaks the System”

That’s where we stop describing who and start explaining why this keeps happening.

Got it. Continuing the story blueprint, no shortcuts.

SECTION 5 — Where Net vs. Gross Actually Breaks the System

(This is the section where everything that “looks fine” on paper quietly stops being true.)

5.1 — Start with the simple version people are told

Most workers—police, teachers, highway workers, union members—are taught this mental model:

• Gross return = how well investments performed
• Net return = what’s left after fees
• Fees matter, but “professionals handle that”
• Long-term averages smooth everything out

This sounds reasonable.

It’s also incomplete.

5.2 — What gross returns really measure (and don’t)

Gross performance answers one narrow question:

“How did the assets perform before costs, friction, and reality?”

Gross returns:

• Are easy to calculate
• Are comparable across funds
• Are favored by consultants
• Look great in presentations

Gross returns do not tell you:

• What investors actually earned
• Whether fees are compounding against you
• Whether returns are realizable or theoretical
• Whether valuations reflect market reality

Gross ≠ money in your pocket.

5.3 — Why net returns matter more than anyone admits

Net returns are what fund beneficiaries live on.

But net returns:

• Depend on fee accuracy
• Depend on timing
• Depend on valuation assumptions
• Change years later

In public and union systems:

• Net returns are often estimated
• Fees are embedded, not itemized
• Carry is invisible until exit
• Revisions happen quietly

So when someone says:

“The fund returned 8% annualized”

The honest follow-up is:

“When measured, verified, and for whom?”

5.4 — Private equity changes the math completely

Once private equity enters the picture:

• Assets are illiquid
• Valuations are not market-based
• Fees are layered
• Returns are backdated
• Performance is “smoothed”

This is not illegal.

But it breaks intuitive accounting.

5.5 — The valuation lag problem (the hidden gap)

Private funds:

• Report values quarterly or annually
• Use internal models
• Adjust past numbers later

That means:

• 2021 numbers may change in 2023
• 2023 numbers may change in 2026
• “Strong performance” can reverse

By the time reality shows up:

• Trustees have moved on
• Members already trusted the figures
• Decisions are locked in

5.6 — Why “estimated net returns” are dangerous long-term

Short-term estimates are fine if:

• They’re flagged clearly
• They’re reconciled later
• Errors are corrected publicly

The problem:

• Estimates become permanent
• Corrections are buried
• No one reconciles the full lifecycle

Over 10–20 years:

• Small estimation errors compound
• Fees quietly erode value
• Funding assumptions drift

No single scandal.

Just slow damage.

5.7 — Fee stacking: how money leaks without anyone stealing

In private equity and alternatives, fees stack like this:

1. Fund-level management fees
2. Performance fees (carry)
3. Fund-of-funds fees
4. Advisor fees
5. Custodial and admin costs

Each layer may be “reasonable.”

Together, they’re opaque.

Most members never see:

• Total effective fee rate
• Lifetime fee impact
• Fee drag vs public markets

They’re told:

“This is necessary for diversification.”

5.8 — Why audits don’t catch this easily

Audits typically verify:

• Whether reports were filed
• Whether processes exist
• Whether rules were followed procedurally

They usually do not:

• Recalculate private valuations
• Independently verify carry
• Stress-test assumptions
• Reconstruct net performance over decades

So audits can be “clean”

while the numbers are still wrong.

5.9 — Consultants unintentionally reinforce the problem

Consultants:

• Recommend asset allocation
• Select managers
• Provide performance summaries

They rarely:

• Audit fees
• Verify valuations independently
• Take responsibility for net accuracy

Why?

Because that’s not their contracted role.

Everyone is doing their job—

just not the missing job.

5.10 — What members think net vs gross means (and why it’s wrong)

Most members believe:

• Net = exact
• Gross = marketing
• Audits ensure accuracy

Reality:

• Net is often provisional
• Gross dominates decisions
• Audits ensure compliance, not truth

This mismatch is the core blind spot.

5.11 — The breaking point: assumptions become policy

Once assumptions are baked into:

• Funding schedules
• COLA decisions
• Contribution rates
• Political budgets

Correcting errors becomes painful.

So systems prefer:

• Stability over accuracy
• Delay over correction
• Silence over revision

Again: not malicious—structural.

5.12 — Why this section matters

This is where the system stops being:

“Hard to understand”

And becomes:

“Impossible to verify without help”

If net numbers can’t be reconstructed:

• Members can’t self-audit
• Trustees can’t truly oversee
• Regulators can’t see long-term drift

And trust replaces verification.

What we now know (Sections 1–5)

• Money starts transparently
• Oversight exists
• Professionals are involved
• Reports are produced
• Audits occur

And yet:

• Net truth degrades over time
• Fees blur reality
• Valuations lag
• Corrections disappear

That’s the break.

When you’re ready, say:

“Start Section 6 — Who Is Supposed to Catch This (and Why They Don’t)”

That’s where responsibility—not blame—comes into focus.

Understood. Continuing the story blueprint, same tone, no accusations, just mechanics and responsibility.

SECTION 6 — Who Is Supposed to Catch This (and Why They Usually Don’t)

(This is the section where people expect a villain—and instead find a gap.)

6.1 — The question everyone asks

When something feels off, people instinctively ask:

“Isn’t someone supposed to be watching this?”

The uncomfortable answer is: yes — but not in the way people think.

Oversight exists.

Accountability exists.

What’s missing is end-to-end responsibility.

6.2 — The retirement board (local level)

Who they are

For Springfield police, teachers, city workers, etc., the local retirement board is the front door.

They typically include:

• Member representatives (workers or retirees)
• Employer representatives (city or department)
• An appointed chair
• An administrator/executive director

What they are responsible for

• Hiring consultants
• Approving investment strategy
• Reviewing reports
• Voting on managers
• Submitting filings

What they are 

not

 equipped to do

• Recalculate private equity fees
• Audit fund-level valuations
• Reverse-engineer net performance
• Forensically test assumptions

They rely on others by design.

6.3 — Investment consultants (the guides, not the police)

What consultants do

• Recommend asset allocation
• Select managers
• Produce performance reports
• Compare peers
• Explain markets to boards

They are influential.

They are smart.

They are not auditors.

What consultants explicitly do 

not

 do

• Verify fee accuracy
• Independently audit valuations
• Certify net performance
• Guarantee long-term correctness

Most contracts say this plainly.

They guide decisions — they don’t certify truth.

6.4 — Investment managers (the source of the data)

Private equity, real estate, hedge funds, and alternatives:

• Generate their own valuations
• Report performance internally
• Provide estimates before exits
• Revise numbers later

They are bound by:

• Accounting standards
• Disclosure rules
• Contracts

They are not required to:

• Mark to market daily
• Reveal proprietary models
• Disclose full internal fee mechanics publicly

This is legal.

It’s also opaque.

6.5 — Auditors (compliance, not reconstruction)

What auditors actually check

• Were reports submitted?
• Were procedures followed?
• Are records consistent internally?
• Are controls documented?

What auditors usually do 

not

 do

• Reprice private assets
• Recalculate carried interest
• Rebuild 10–20 years of net returns
• Test alternative assumptions

Audits confirm process integrity, not outcome accuracy.

So an audit can pass

even if the numbers are soft.

6.6 — PERAC (the regulator)

PERAC:

• Oversees 104 retirement systems
• Enforces Chapter 32 compliance
• Requires filings
• Conducts audits
• Issues guidance and memos

PERAC ensures:

• Rules are followed
• Systems file on time
• Governance exists

PERAC does not:

• Manage money
• Select investments
• Recalculate fund valuations
• Reconstruct fee history

Oversight ≠ ownership.

6.7 — Actuaries (the long-range modelers)

Actuaries:

• Use reported data
• Project liabilities
• Set funding schedules
• Model future assumptions

They rely on:

• Reported returns
• Accepted valuations
• Assumed rates

They don’t investigate whether inputs were perfect.

They assume reasonable accuracy.

If inputs drift, outputs drift.

6.8 — Unions (advocates, not auditors)

Unions:

• Negotiate benefits
• Defend members’ rights
• Appoint board members
• Advocate politically

They typically do not:

• Audit investments
• Verify fees
• Analyze private equity mechanics

They trust the system like members do —

unless something obviously breaks.

6.9 — State auditors & inspectors

These offices:

• Investigate fraud
• Examine compliance
• Audit agencies

They are usually reactive, not continuous.

They look for:

• Misconduct
• Waste
• Abuse

They are not designed to:

• Continuously monitor investment accuracy
• Rebuild historical performance
• Police valuation models

6.10 — The missing role: lifecycle verifier

Here’s the core issue:

No single entity is responsible for verifying net truth across the full lifecycle of investments.

Everyone touches a piece.

No one owns the whole.

So:

• Errors don’t trigger alarms
• Estimates harden into fact
• Corrections fade into footnotes

6.11 — Why this persists without conspiracy

This isn’t about people being bad.

It’s about systems being fragmented.

Each role says, truthfully:

“That’s not our scope.”

And they’re right.

But the result is:

• No one confirms the final answer
• Members assume someone did
• Confidence replaces verification

6.12 — Why members feel powerless

Members:

• Don’t have direct access
• Don’t know who to ask
• Are told “it’s complicated”
• Are shown summaries, not sources

So when something feels wrong, there’s nowhere obvious to go.

That’s the blind spot.

Where we stand after Section 6

We now know:

• Oversight exists
• Professionals are involved
• Rules are followed
• Reports are produced

And yet:

• No one certifies long-term net accuracy
• No one reconstructs the full picture
• No one owns the blind spot

That’s not corruption.

That’s a design gap.

When you’re ready, say:

“Start Section 7 — Where the Money Becomes Hard to See”

That’s where opacity turns structural.

Got it. Continuing the story blueprint, steady and factual.

SECTION 7 — Where the Money Becomes Hard to See

(This is where transparency slowly fades—not all at once, but step by step.)

7.1 — The moment clarity starts to blur

Up to this point, most money is still visible:

• Contributions are clear
• Payroll deductions are clear
• Employer payments are clear
• Cash entering the system is clear

The blur begins after the money leaves the local system and enters layered investment structures.

Not because anyone is hiding it —

but because of how modern investing works.

7.2 — The first visibility drop: pooled investing

Most retirement systems don’t invest alone.

They pool money into:

• Commingled funds
• Limited partnerships
• Fund-of-funds
• Collective investment trusts

Why?

• Cost efficiency
• Access to opportunities
• Risk diversification

But pooling means:

• Your dollars are mixed with others
• Ownership becomes proportional, not discrete
• Reporting becomes averaged

From here on out, you’re seeing shares of outcomes, not line-item receipts.

7.3 — The second drop: private assets vs public markets

Public market assets

• Stocks, bonds, ETFs
• Daily pricing
• Transparent markets
• Immediate exits

Private assets

• Private equity
• Venture capital
• Private real estate
• Infrastructure
• Private credit

Private assets:

• Don’t trade daily
• Aren’t priced by open markets
• Use internal valuation models
• Update quarterly (sometimes slower)

This isn’t illegal.

It’s standard.

But it means:

• Prices are estimates
• Lag is normal
• Adjustments happen later

7.4 — The third drop: valuation modeling

Private asset values are based on:

• Comparable transactions
• Discounted cash flow models
• Assumptions about growth, exit timing, and multiples

These models:

• Are reviewed
• Are governed by accounting standards
• Are not independently recalculated by every investor

So when a report says:

“Net IRR: 12.4%”

That number depends on:

• Assumptions
• Timing
• Fees
• Exit expectations

It’s a best estimate, not a bank balance.

7.5 — The fourth drop: net vs gross reporting

This is where confusion accelerates.

Gross performance

• Before fees
• Before carried interest
• Before fund expenses

Net performance

• After management fees
• After performance fees
• After expenses
• After carried interest (eventually)

Private funds often:

• Report gross early
• Estimate net
• True-up net years later

If exits haven’t happened yet:

• Carried interest isn’t finalized
• Net returns are provisional

So:

• Numbers change
• History gets revised
• Comparisons get messy

7.6 — The fifth drop: timing mismatches

Different parts of the system move on different clocks:

• Payroll: biweekly
• Contributions: monthly
• Public assets: daily
• Private assets: quarterly
• Actuarial valuations: annually
• Audits: periodic

This means:

• Reports don’t line up cleanly
• One report may use older data than another
• Corrections arrive after decisions were made

Nothing breaks — but precision erodes.

7.7 — The sixth drop: layered fees

Fees don’t appear as one line.

They stack:

1. Management fees (fund level)
2. Performance fees / carry
3. Fund-of-fund fees
4. Administrative fees
5. Custodial and reporting fees

Some are:

• Netted from returns
• Not itemized
• Estimated
• Disclosed separately
• Disclosed later

So members ask:

“How much did fees cost me?”

And the honest answer is:

“It depends on time, structure, and realization.”

That’s not comforting — but it’s accurate.

7.8 — The seventh drop: revisions after the fact

Private investments can revise past numbers when:

• Assets are sold
• Audits occur
• Accounting standards update
• Errors are corrected

This means:

• Old reports may no longer be “wrong”
• But they are no longer “right” either

Without a full restatement trail, members can’t see:

• What changed
• When
• Why
• By how much

The past becomes fuzzy.

7.9 — Why this doesn’t trigger alarms

Nothing in this process is automatically alarming because:

• Each step is allowed
• Each role is following standards
• Each report is defensible on its own

The problem isn’t a red flag.

It’s cumulative opacity.

7.10 — Where members lose the thread

By the time money reaches:

• Private equity
• Fund-of-funds
• Long-duration vehicles

Members can no longer:

• Trace dollars
• Match fees to outcomes
• Verify net accuracy independently
• Understand revisions without expert help

They’re asked to trust the chain.

7.11 — The door metaphor

Think of it like this:

Every step adds a door:

• The first door has glass
• The next has frosted glass
• The next is wood
• The last is locked, but labeled “audited”

Nothing behind the door is necessarily wrong.

But you can’t see it anymore.

7.12 — Why this matters 

before

 failure

This isn’t about collapse.

It’s about understanding exposure.

If returns are good:

• Blind spots feel harmless

If returns drop:

• Blind spots become critical

You don’t want to discover opacity after stress hits.

Where we stand after Section 7

We now understand:

• Exactly where visibility fades
• Why it fades
• That fading is legal and normal
• How it compounds over time

Next, we look at the real tension point:

What happens when estimates are treated as facts.

Say when ready:

“Start Section 8 — When Estimates Become Truth”

That’s where decisions start drifting.

Understood. Continuing the story blueprint, same tone, same structure.

SECTION 8 — When Estimates Quietly Become “Truth”

(This is not fraud. This is drift.)

8.1 — The dangerous transition

Nothing breaks when estimates exist.

The problem begins when estimates are repeated long enough that people stop remembering they’re estimates.

At this point in the system:

• Numbers are technically correct
• Reports are technically compliant
• Everyone is acting in good faith

And yet — the meaning of the numbers changes.

8.2 — How an estimate becomes accepted reality

Here’s how it happens, step by step:

1. A private fund reports a quarterly estimated value
2. That value flows into a consultant report
3. The consultant aggregates it into portfolio performance
4. The retirement board reviews the report
5. PERAC receives the filings
6. The number appears again in the annual report
7. Media, unions, and members repeat it
8. The number is now treated as the value

At no point did anyone lie.

But the context fell away.

8.3 — Why repetition is more powerful than accuracy

People trust:

• Numbers they’ve seen before
• Numbers that are consistent across reports
• Numbers that come from official documents

Once an estimate is repeated across:

• Quarterly reports
• Annual reports
• Actuarial valuations
• Public summaries

It becomes psychologically “real,” even if it’s still provisional.

8.4 — Net numbers make this worse (and better)

Net performance is usually the right number to focus on.

But net performance in private assets:

• May exclude unrealized carry
• May include estimated expenses
• May change materially at exit
• May be restated years later

So when someone says:

“Our private equity returned 12% net”

The honest translation is:

“Based on current assumptions, before final realization.”

That nuance is rarely carried forward.

8.5 — The audit illusion

Here’s where people misunderstand audits.

Audits typically confirm:

• Reports were prepared correctly
• Standards were followed
• Inputs match records
• Controls exist

Audits do not usually:

• Recalculate private valuations
• Challenge market assumptions
• Reprice assets independently
• Forecast exit outcomes

So “audited” does not mean “verified value.”

It means “process-compliant.”

8.6 — Actuarial reliance amplifies the issue

Actuaries must use:

• The best available asset values
• At a fixed point in time
• For long-term projections

They assume:

• Values are reasonable
• Trends normalize
• Errors average out

If estimates are optimistic:

• Contributions may be understated
• Risk may be understated
• Funding ratios may look stronger than reality

No one cheats.

But the system leans on soft ground.

8.7 — Why boards rarely challenge this

Board members:

• Are fiduciaries, not valuation experts
• Rely on consultants by design
• Meet infrequently
• Manage broad policy, not line items

They see:

• Clean reports
• Professional presentations
• Strong historical averages

Challenging assumptions requires:

• Technical expertise
• Time
• Political capital
• Willingness to be “the problem”

Most boards don’t have incentives to push here unless something breaks.

8.8 — Why PERAC doesn’t correct estimates

PERAC’s role is:

• Oversight
• Compliance
• Consistency
• Process enforcement

PERAC does not:

• Revalue investments
• Replace consultants
• Second-guess actuarial assumptions
• Audit private funds directly

If filings are timely and formatted correctly, PERAC’s mandate is satisfied.

8.9 — The quiet consequence for members

Members see:

• Good returns
• Improving funded ratios
• Positive headlines

But they don’t see:

• How sensitive those numbers are
• How much depends on future exits
• How much is reversible
• How much is untested by stress

Confidence grows — without understanding.

8.10 — Why this matters before a downturn

When markets rise:

• Estimates look conservative
• Nobody complains

When markets stall or fall:

• Estimates lag reality
• Corrections arrive late
• Trust collapses fast

The shock isn’t the loss.

It’s discovering how little visibility existed.

8.11 — This is not a scandal — it’s a design risk

This system was built for:

• Long-term growth
• Institutional trust
• Professional delegation

It was not built for individual verification.

That’s the blind spot.

8.12 — The key takeaway from Section 8

Nothing here implies:

• Criminal behavior
• Intentional deception
• Hidden theft

It shows:

• How estimates harden into facts
• How governance relies on repetition
• How accountability becomes diffuse
• Why members struggle to ask precise questions

This sets up the next section:

Who is actually responsible for catching drift before it becomes damage?

When ready, say:

“Start Section 9 — Responsibility Without Ownership”

That’s where the system’s weakest link lives.

Alright. Continuing the story blueprint, same voice, no accusations, just structure and reality.

SECTION 9 — Responsibility Without Ownership

(Everyone is responsible. No one is accountable.)

9.1 — The central paradox

In this system, every role has responsibility —

but no role fully owns the outcome.

That’s not corruption.

That’s architecture.

And architecture determines behavior.

9.2 — Let’s name the players again (briefly, on purpose)

At this stage of the story, money is already invested.

Now the question is: who is supposed to notice when things drift?

Here are the actors who could catch problems:

• Retirement Board Members
• Investment Consultants
• Investment Managers
• Actuaries
• Auditors
• PERAC
• PRIM (where applicable)
• Unions
• Employers
• Members themselves

That’s a lot of eyes.

So why does so much go unquestioned?

9.3 — Board members: fiduciaries with limited tools

Board members are legally responsible for:

• Prudence
• Loyalty
• Process
• Oversight

But practically:

• They meet periodically
• They rely on prepared materials
• They don’t control valuations
• They don’t audit managers
• They don’t calculate performance

They can ask questions —

but they don’t generate the data.

Responsibility ✔

Ownership ✖

9.4 — Consultants: influence without custody

Investment consultants:

• Recommend allocations
• Select managers
• Prepare performance reports
• Frame risk narratives

But they:

• Don’t custody assets
• Don’t set valuations
• Don’t control cash
• Don’t guarantee outcomes

Their contracts typically limit liability to:

• Gross negligence
• Process failures

They advise.

They do not own results.

9.5 — Managers: control without transparency

Investment managers:

• Control capital deployment
• Report valuations
• Set fee mechanics
• Decide when assets exit

But:

• Reporting is periodic
• Valuations are subjective
• Disclosure is limited
• Audits are fund-level, not investor-level

They own decisions —

but not the communication downstream.

9.6 — Auditors: assurance without revaluation

Auditors confirm:

• Financial statements align with standards
• Controls exist
• Documentation supports reporting

They usually do not:

• Reprice illiquid assets
• Challenge assumptions aggressively
• Predict outcomes
• Track long-term fee drag

They validate form, not future.

9.7 — Actuaries: precision built on assumptions

Actuaries:

• Project liabilities decades forward
• Use asset values as inputs
• Assume long-term mean reversion

They are explicit about this:

• “Based on available information”
• “Subject to future experience”

If inputs are soft, outputs are still precise —

just not guaranteed.

9.8 — PERAC: enforcement without substance testing

PERAC ensures:

• Filings are submitted
• Reports are complete
• Boards follow Chapter 32
• Procedures are consistent

PERAC does not:

• Recalculate investment values
• Investigate private fund internals
• Certify net vs gross accuracy
• Monitor estimation drift over time

They oversee the system —

not each dollar’s truth.

9.9 — Unions: advocates without access

Unions:

• Defend benefits
• Negotiate contributions
• Monitor policy threats

But they:

• Don’t see portfolio details
• Don’t control investment strategy
• Rely on public summaries
• Often lack technical data rights

They fight for members —

without tools to audit the money.

9.10 — Employers: payers without insight

Cities, towns, and the state:

• Fund the systems
• Follow schedules
• Budget contributions

But:

• They don’t control investments
• They don’t review valuations
• They don’t verify performance

They assume the system works — because it must.

9.11 — Members: owners without visibility

Members:

• Contribute every paycheck
• Carry the risk of underfunding
• Depend on long-term outcomes

But they:

• Can’t see detailed fees
• Can’t challenge valuations
• Can’t access fund-level data
• Are told “the system is sound”

They are the most exposed —

and the least informed.

9.12 — The accountability gap

Here’s the hard truth this section establishes:

When something goes wrong:

• Everyone followed the rules
• Everyone relied on someone else
• Everyone can point sideways
• No single failure exists

That’s why scandals are rare —

and blind spots are persistent.

9.13 — Why this matters before we talk about fixes

You cannot fix a system until you:

• Identify who can act
• Identify who won’t
• Identify who isn’t allowed to
• Identify where responsibility evaporates

This section isn’t about blame.

It’s about why problems survive intact across decades.

9.14 — What Section 9 proves

The system does not fail loudly.

It fails quietly — by diffusion.

And that sets up the next question:

If no one owns the whole picture, where exactly does money become hardest to track?

That’s where the real blind spots live.

When you’re ready, say:

“Start Section 10 — Where the Money Becomes Hard to See”

That section is concrete, visual, and unavoidable.

Got it. Continuing the story blueprint, same grounded tone.

SECTION 10 — Where the Money Becomes Hard to See

(This is not where money vanishes. This is where clarity thins out.)

10.1 — A simple rule to remember

If an asset:

• Trades daily
• Has a public price
• Has transparent fees

…it’s easy to see.

If an asset:

• Trades rarely
• Is privately valued
• Has layered fees

…it becomes harder to track by design, not deception.

This section explains where that shift happens.

10.2 — The first fork in the road: public vs. private assets

Early in the process, money splits into two broad paths:

Path A — Public markets

• Public stocks
• Public bonds
• Index funds
• ETFs

These have:

• Daily pricing
• Public benchmarks
• Clear gross vs. net math
• Minimal discretion

Path B — Private & alternative markets

• Private equity
• Private credit
• Real estate partnerships
• Hedge funds
• Infrastructure
• Timberland
• Fund-of-funds

This second path is where visibility changes.

10.3 — What “private” actually means in practice

“Private” does not mean secret.

It means:

• No daily market price
• Valuations set periodically
• Based on models, assumptions, and inputs
• Reviewed, not continuously tested

Prices are estimated, not discovered.

That’s the first narrowing of visibility.

10.4 — The valuation lag

Private assets are typically valued:

• Quarterly
• Sometimes with a delay
• Sometimes revised later

This creates:

• Time gaps
• Retroactive adjustments
• Smooth-looking returns

You don’t see volatility when it happens.

You see it later — or averaged out.

10.5 — Gross vs. net: where confusion quietly enters

This is a key transition point.

Gross performance

• How the investment performed before fees
• Often easier to model
• Looks better on paper

Net performance

• What remains after all fees and expenses
• What actually accrues to the pension fund

In private markets:

• Fees are complex
• Expenses are layered
• Some fees are not known immediately

So net numbers may be:

• Estimated
• Incomplete
• Revised later

Not wrong — but not final.

10.6 — Fee layering (the “stacking” effect)

This is where tracking becomes genuinely difficult.

A single pension dollar may pass through:

1. The retirement system
2. A consultant-recommended fund
3. A fund-of-funds
4. An underlying private fund
5. Portfolio companies

At each layer:

• Management fees
• Performance fees
• Operating expenses
• Transaction costs

Some are visible.

Some are aggregated.

Some are delayed.

Few are shown together in one place.

10.7 — Why fund-of-funds reduce transparency

Fund-of-funds exist to:

• Diversify risk
• Access hard-to-reach managers
• Reduce selection burden

But they:

• Add another fee layer
• Add another reporting delay
• Abstract underlying holdings

You often see:

• Total allocation
• Aggregate performance

You rarely see:

• Full look-through costs
• Individual deal economics
• Timing of internal cash flows

Visibility narrows again.

10.8 — Reporting compression

By the time data reaches:

• Annual reports
• PERAC summaries
• Board packets

It has been:

• Aggregated
• Averaged
• Standardized
• Simplified

This is intentional — reports must be readable.

But compression hides:

• Dispersion
• Outliers
• Fee drag over time
• Valuation uncertainty

10.9 — Audits don’t reopen the box

Audits typically ask:

• Was this reported correctly?
• Were procedures followed?
• Do documents support the numbers given?

They usually don’t ask:

• Could the asset really be worth less?
• Were assumptions too optimistic?
• Did layering materially distort outcomes?

Audits validate process, not economic truth.

10.10 — The long-term effect: drift, not shock

Because of all this:

• Errors don’t explode
• Problems don’t trigger alarms
• Performance drifts quietly

Over years:

• Fees compound
• Assumptions persist
• Small gaps grow meaningful

No single moment looks wrong.

Only the long arc does.

10.11 — Why members don’t notice

Members see:

• Funded ratios
• Average returns
• Headlines saying “system is stable”

They don’t see:

• Counterfactuals
• What returns could have been
• The cost of opacity

The system still functions — just less efficiently.

10.12 — The key takeaway of Section 10

Money becomes hard to see not because it disappears,

but because:

• It passes through layers
• It relies on estimates
• It’s reported in aggregates
• It’s reviewed after the fact

Transparency fades gradually, not suddenly.

10.13 — Why this matters for the investigation

Now we can ask real questions:

• Which numbers are estimates?
• Which are final?
• Which are revised later?
• Which fees are never fully visible?

And most importantly:

Who can ask for better data — and how?

That’s what Section 11 is about.

When you’re ready, say:

“Start Section 11 — What Can Actually Be Requested (and From Whom)”

Understood. Continuing the story blueprint, no shortcuts, no bullet dumping without context.

SECTION 11 — What Can Actually Be Requested (and From Whom)

(This section answers the question people are afraid to ask: “What am I actually allowed to see?”)

11.1 — The false belief that blocks most people

Most members believe one of two things:

• “I’m not allowed to ask for this.”
• “Someone smarter than me already checked.”

Both beliefs are wrong.

Public retirement systems exist because members and taxpayers are entitled to oversight. What stops people isn’t law — it’s uncertainty about where to ask and how.

11.2 — Three different audiences, three different rights

Before asking for information, people need to know who they are in the system.

Audience A — Individual members (teachers, police, workers)

You are entitled to:

• Plan documents
• Annual financial reports
• Investment allocation summaries
• Board meeting minutes
• Funding schedules
• Actuarial assumptions

You are not entitled to:

• Other members’ personal data
• Deal-level private contracts

Audience B — Board members & administrators

They can request:

• Manager reports
• Consultant analyses
• Fee summaries
• Cash flow schedules
• Valuation memos

They still may not see:

• Full underlying portfolio company data
• Proprietary models

Audience C — Oversight bodies (PERAC, auditors, inspectors)

They can demand:

• Source documentation
• Compliance records
• Internal controls
• Audit workpapers

This blueprint is written mainly for Audience A, but shows how pressure moves upward.

11.3 — What members can realistically obtain without resistance

If someone starts here, they won’t be ignored.

These are normal, expected requests:

• Annual report for their retirement system
• Most recent actuarial valuation
• Current asset allocation breakdown
• Assumed rate of return
• Board membership list
• Meeting agendas and minutes
• Funding schedule (how long until fully funded)

These are public records. No justification required.

11.4 — Where members hit the first wall

Once people ask:

• “What fees are we actually paying?”
• “How are private investments valued?”
• “Why did returns change retroactively?”

They often get:

• Summaries instead of details
• A consultant’s slide deck
• High-level percentages

This isn’t obstruction — it’s how the system is structured.

11.5 — The key distinction: asking for 

process

, not secrets

This is where most people fail.

❌ “Show me every private equity deal.”

✅ “Explain how private assets are valued and reviewed.”

❌ “Give me confidential contracts.”

✅ “Explain what fee categories exist and how totals are calculated.”

❌ “Prove no money is missing.”

✅ “Explain how estimates are later revised and tracked.”

Process questions are legitimate.

They force clarity without demanding protected data.

11.6 — Specific documents members 

can

 ask about

Without triggering refusal, members can ask:

• How often private assets are revalued
• Whether valuations are internal or third-party
• How fee estimates are reconciled annually
• Whether fund-of-funds fees are included in reported net returns
• Whether clawbacks or adjustments occur later
• How delayed valuations affect reported performance

These are explanations — not disclosures.

11.7 — The role of PERAC in these requests

PERAC:

• Requires filings
• Sets reporting standards
• Reviews compliance
• Conducts audits

PERAC does not:

• Recalculate private asset values
• Negotiate investment contracts
• Verify every fee dollar independently

So members should understand:

• PERAC ensures structure
• It does not guarantee precision

That’s not a failure — it’s a boundary.

11.8 — When requests should move beyond the local board

If a local board:

• Can’t answer process questions
• Refers everything to consultants
• Provides inconsistent explanations

Then escalation makes sense:

• PERAC inquiry
• Inspector General (for process failures)
• Auditor’s office (for reporting consistency)

Escalation should be factual, not accusatory.

11.9 — What members should 

not

 expect to get

This is important to say plainly.

Members will not receive:

• Login credentials
• Individual investment account access
• Real-time private asset pricing
• Proprietary valuation models
• Portfolio company financials

Expecting those leads to frustration and dismissal.

11.10 — The blind spot most people miss

Members rarely ask:

• “Which numbers are estimates?”
• “Which numbers are final?”
• “Which numbers are later revised?”

Those questions matter more than the numbers themselves.

A system can look healthy while hiding uncertainty.

11.11 — Why these requests matter even if nothing is “illegal”

Transparency pressure:

• Improves future reporting
• Forces clearer explanations
• Reduces lazy assumptions
• Documents uncertainty instead of hiding it

This isn’t about blame.

It’s about narrowing blind spots.

11.12 — The key takeaway of Section 11

Members:

• Can ask meaningful questions
• Can demand explanations of process
• Can identify where clarity ends
• Can document unanswered gaps

They don’t need permission to understand the system they fund.

11.13 — Where this leads next

Once people know:

• What they can request
• Who must respond
• Where answers stop

The final step becomes obvious:

What would real transparency look like — and how could it be improved without breaking the system?

That’s Section 12.

When ready, say:

“Start Section 12 — What Real Transparency Would Actually Require”

Got it. Final section. Same tone, same story logic, no dumping, no accusations.

SECTION 12 — What Real Transparency Would Actually Require

(This section answers the hardest question: “If the system isn’t criminal, why does it still feel wrong?”)

12.1 — The uncomfortable truth nobody says out loud

Public retirement systems were designed to be:

• Stable
• Long-term
• Politically survivable

They were not designed to be easily understood by the people funding them.

That doesn’t make them corrupt by default.

It makes them opaque by design.

12.2 — Why “full transparency” is a myth

Many people imagine transparency as:

• Seeing every transaction
• Knowing every fee
• Tracking every dollar in real time

That will never happen — and honestly, it shouldn’t.

Private markets do not function with real-time disclosure.

Public systems chose private markets anyway.

That tradeoff is the root of the problem.

12.3 — What transparency 

actually

 means in this system

Real transparency does not mean:

• Exposing confidential deals
• Publishing proprietary models
• Naming villains

It means clearly separating three types of numbers:

1. Final numbers
2. Estimated numbers
3. Revised numbers

Most systems collapse all three into one narrative.

That’s where trust breaks.

12.4 — The single biggest missing document

Every system should publish one simple thing:

A plain-language “Uncertainty Map”

It would answer:

• Which figures are estimates
• How often they change
• Who supplies them
• Who reviews them
• When they become final

This document does not exist.

Not because it’s illegal.

Because no one is required to create it.

12.5 — Why audits don’t fix this

Audits verify:

• Compliance with rules
• Proper procedures
• Document existence

Audits do not:

• Validate valuation assumptions
• Challenge private pricing models
• Reconstruct historical estimates

So when people say “it was audited,” they’re often answering the wrong question.

Audited ≠ certain.

12.6 — The difference between safety and clarity

A fund can be:

• Financially solvent
• Fully funded
• Legally compliant

…and still be unclear.

Clarity is not a legal requirement.

It’s a trust requirement.

12.7 — What would actually improve transparency (without breaking anything)

Here are realistic changes that would not harm the system:

• Explicit labeling of estimated vs final returns
• Annual reconciliation reports explaining revisions
• Fee ranges instead of single-point figures
• Plain-English explanations of fund-of-funds layers
• Clear escalation paths for unanswered questions

None of these expose secrets.

They expose process.

12.8 — Why this hasn’t happened already

Not because of evil.

Because of incentives.

• Consultants aren’t rewarded for simplicity
• Boards aren’t staffed for forensic review
• Regulators enforce filing, not comprehension
• Members aren’t trained to ask the right questions

The system optimizes for continuity, not understanding.

12.9 — Where citizens actually fit into this

Citizens are not supposed to:

• Audit Wall Street
• Reprice assets
• Catch crimes

They are supposed to:

• Understand the structure
• Identify blind spots
• Ask better questions
• Document unclear answers

That alone changes behavior over time.

12.10 — What “fixing it” really means

Fixing this system does not mean:

• Pulling money out
• Ending private investment
• Burning it down

It means:

• Making uncertainty visible
• Making responsibility traceable
• Making explanations consistent

Sunlight doesn’t destroy — it stabilizes.

12.11 — Why this blueprint exists

This blueprint is not a verdict.

It is:

• A map of how money moves
• A guide to where clarity fades
• A toolkit for better questions
• A shared reference point

If nothing changes, it still matters — because now the blind spots are named.

12.12 — The final takeaway

Most people were taught to trust the system blindly.

This blueprint teaches something different:

Trust the system — but verify where trust ends.

That’s not radical.

That’s responsible.

12.13 — What comes next (optional, but powerful)

If people want to act:

• Share this with unions
• Share it with boards
• Share it with journalists
• Share it with auditors

Not as an accusation.

As a question.

“Can you help clarify this part?”

That question alone is how systems evolve.

END OF BLUEPRINT

If you want, next we can:

• Tighten language section by section
• Add real Springfield / PERAC examples inline
• Build a public-facing version
• Or create a one-page “How to Use This” guide

You finally have a complete map.