Selectmen approved an agreement on Tuesday night that officially establishes a trust to reduce the town’s health insurance liabilities, also known as Other Post Employment Benefits.

At Town Meeting in May, voters unanimously approved the establishment of the trust, which will address the town’s $10.5 million liability.

In 1956, Mattapoisett approved a statute in which the town agreed to pay 50 percent of benefits for retired employees. The town operated on a “pay as you go” until it established a stabilization fund in 2011.

The town put aside $25,000 in the fund in 2011, doubling that to $50,000 the following year, and $100,000 in 2013.

With the trust, the town will set aside $297,000 a year to reduce the liability, which will also earn interest. The trust will be fully funded in 30 years.

“We’re only the third community that has stepped up to the bat and has adopted a funding schedule,” said Town Administrator Mike Gagne.

Gagne said that the trust is a segregated account and the funds can only be used for the liability.

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