If the name of the D.C. Retirement Board means nothing to you, wait a month. In October, this new agency will become, overnight, a potent force in the economic life of the District, controlling the investment of billions of dollars in public funds.

The 11-member board will have, by law, "exclusive authority and discretion" to manage pension trust funds for the city's police officers, firefighters, teachers and judges. The funds will be worth about $154 million Oct. 2 and about $6 billion will be pumped into those funds by Congress, the city government and the employes, between now and the year 2004.

However skillfully the board invests this money, it will not defuse the time bomb of escalating pension costs that confronts the District and other cities. bBy the end of the century, retirees will be drawing more money each year than the active work force earns, ensuring that the next generation of District taxpayers will have to pay dearly to finance the retirements of this generation of workers.

Uniformed officers, teachers and judges make up only 12,000 of the city's 36,000 employes -- the others are covered by the federal retirement system, financed by Congress. But even so, by the time Mayor Marion Barry's new baby boy is out of college, the city's annual pension costs will be seven times what they are today.

By the year 2005, that annual expenditure is expected to rise from today's $100 million to $706 million -- or 70 percent of all the tax money the city collects each year at current rates. That projected cost would be higher still if the trust funds and the federal government was not giving them $1.3 billion over the next 24 years.

The actual costs of future pensions will vary as inflation rates fluctuate and may be reduced if the work force is cut substantially over the rest of the century. Dismissal of a junior teacher today, for example, might have about $15,000 out of the current budget, but it saves far more in future years in pension benefits that teacher will not collect.

No amount of investment manipulation by the Retirement Board would bring in enough money to cover all the future obligations. On the contrary, actuarial projections show that because pensions are keyed to inflation, the costs will continue to grow above the increase in the trust fund.

But the board's investment decisions will still be critical because, experienced pension managers say, a quarter-point difference in the return on an investment can change future returnes by many millions of dollars.

In addition, the establishment of a rich repository of investment capital may confront the board with political and economic questions about how to use it.

The federal law that created the trust funds and the Retirement Board imposed some restrictions on how the money can be invested.

Like all pension managers, the board members are required to emphasize security and guaranteed return in selecting investments -- no speculative mining stocks, no fledgling computer companies. Congress prohibited the board from putting the pension money into bonds or securities issued by any public agency in the District, Maryland or Virginia, or into real estate or mortgages in those jurisdicitions. But the board otherwise has broad leeway to make "prudent" investments in stocks, U.S. Treasury securities, real estate and mortgages, outside this area, insurance, or corporate bonds -- and the power to withhold investment from enterprises that it disapproves.

Pension investment decisions have traditionally been based only on financial considerations, but some labor unions have already instructed the managers of their pensions funds to adopt "socially responsible investing." The theory is that pension funds represent the nation's largest pool of nongovernmental investment capital, and should be invested in ways that enhance the living conditions, job opportunities and social objectives of union members.

Nothing in the law that created the Retirement Board, for instance, specifically prohibits it from adopting the same objectives as the city's when it places its bank accounts. The city gives preference to minority-owned banks, and to banks with good records in minority employment and loans to minorities.

"There's nothing that prevents the trustees of any pension fund from taking into account other considerations than just retirement security income if it's consistent with the members' economic interest," said Gerald M. Feder, a Washington lawyer who specializes in pension law. "What kind of influence the Retirement Board decides to exert depends on what kinds of decisions the members make, as long as they're consistent with the purposes of the trust."

The 11 board members are to be chosen over the next month. The mayor will appoint three members, two of whom must have experience in banking, insurance or investment management. Two others will be appointed by the City Council. The workers will elect the remaining six: one each from among the active employes in the police department, the fire department and the school system, and one each from the ranks of the retirees.

Barry has signed regulations for holding those elections, specifying that candidates must apply by Sept. 15. City officials say they expect lively competition for all six seats, and have engaged the American Arbitration Association to supervise the balloting. The board members will choose their own chairman, and the board is authorized to hire its own actuary. c

As soon as the board is seated, it will assume control over the pension accounts. The federal contribution is set at $52 million a year for the next 24 years, but Barry has already asked for more than $5 billion more from the federal government to cover the pension benefits due city workers from the years before home rule was granted.

The creation of the Retirement Board and the trust funds coincides with national economic conditions that have challenged the traditional investment decisions of cautions pension managers. Inflation is pushing up both salaries and pension payments faster than investment returns are rising, and high interest rates have eroded the market values of corporate and municipal bonds that are set at rates that once seemed high but have now been overtaken by inflation.

That is why the existing teachers' retirement fund, which the Retirement Board will take over from the city budget director's office, had a market value of only $41 million at the end of the last fiscal year when it was once worth more than $60 million. The interest income produced by this fund has risen, but not fast enough to keep pace with inflation.

Until home rule, this fund was controlled by the U.S. Treasury and invested mostly in "flower bonds" -- longterm, low-interest federal securities that were prized only by wealthy individuals because they could be purchased at a discount, but used to pay off inheritance taxes at face value.

Since municipalities do not pay inheritance taxes, the city moved quickly to dispose of the flower bonds when it assumed control of the portfolio after home rule. In a series of swaps with investment banking houses, it traded them for corporate bonds paying higher interest.

According to Comer S. Coppie, who was Mayor Walter Washington's budget director, those transactions increased the "yeild to maturity" on the the investments from 7.04 percent to 8.34 percent in one year. Since then, however, inflation and rising interest rates have undercut the value of the investments.

Most of the money is in long-term bonds issued by telephone companies in several states.These pay interest as low as 3.25 percent, but because they were bought at a discount -- or less than face value -- the actual return is higher.

The virtue of those investments lay in their security and guaranteed return -- all were rated in the highest category by New York bond-rating houses. But that was before pensions began being paid out at double-digit inflation rates.

The challange facing the D.C. Retirement Board will be to find investments that will be secure enough to justify their trust and yet yield enough return to create the biggest possible balance by 2005.

That is when the federal contrbutions are scheduled to stop and the District will have to finance on its own whatever differences there is between the income of the trust funds and the amount it has to pay its retirees.