YOU SERVE THE COMMONWEALTH. WE SERVE YOU.

1
YOU SERVE THE COMMONWEALTH. WE SERVE
YOU. SERVE CONTRIBUTE
RETIRE
The Massachusetts State Employees Retirement
System
2

• Governed by M.G.L. c. 32
• 5-Member Board
• Chairman - State Treasurer Timothy P. Cahill

3
DEFINED BENEFIT PLAN (service x age ) x
salary average
4
Membership is Mandatoryuntil Separated from
Service
5
Membership

• Will remain Member-in-Service until separated by
  the State by reason of
• Retirement
• Failure of re-election or re-appointment
• Resignation or removal
• Discharge from position or office held

6
Contributions ...

• Mandatory for all Members-in-Service
• Pre-tax through payroll deductions
• If you joined the system Your rate is
• Prior to January 1, 1975 5
• Jan 1, 1975 to Dec 31, 1983 7
• Jan 1, 1984 to June 30, 1996 8
• July 1, 1996 9
• State Police/ July 1, 1996 12

7
Contributions (continued)

• If your membership began on or after January 1,
  1979, an additional 2 is withheld from that
  portion of your salary that is in excess of
  30,000.00.

8
Contributions

• Contributions and investments are managed by the
  Public Reserves Investment Management (PRIM)
  Board. As of 12/31/07 PRIM Assets are 53.7
  billion and the SERS Assets are 22.5 billion.

9
Creditable Service

• If you are a full-time employee
• 1 year of creditable service for each year
  completed.
• employed on a less than full-time basis
• will earn a pro rata amount of service.

10
Part-Time Service ...

• Madden v. CRAB (2000)
• part-time service prior to January 28, 1993 will
  be credited on a full-time basis provided you
• Paid into the system,
• Did not take a refund, or
• Completed a buy back of such service prior to
  January 28, 1993

11
Buyback of Service . . .

• Re-establish credit for refunded or prior public
  service, or establish service for
  non-contributing service.
• Two Year Rule
• Buyback options
• Lump sum payment
• Extra make-up deductions

12
Contract Service Eligibility Requirements

• Eligibility requirements include
• Must currently be a member in service (not a
  retiree) with at least ten (10) years of state
  service.
• The contract employee service being purchased
  must have immediately preceded membership or
  re-entry into State Employees Retirement System
  (SERS).

13
Contract Service Eligibility Requirements

• Eligibility requirements include
• The contract service being purchased must have
  been service to the Commonwealth, not service to
  another governmental entity.
• Eligible part-time contract service shall be
  credited on a proportional basis.
• The job description of the contract service
  position must have been substantially similar to
  the job description the member held upon becoming
  an employee and a member of the SERS.

14
Buyback of Contract Service

• may purchase up to four (4) years of creditable
  service
• 180 days after the notice by the board to either
  (1) purchase the service via a lump sum payment
  or, (2) enter into an installment payment
  agreement.
• if the 180-day period expires without action by
  the member, the contract service will no longer
  be eligible for purchase.

15
Buyback of Veterans Service

• You may also receive credit for military service
  if you qualify as a veteran
• Veterans are eligible to buyback up to 4 years
  military service
• National Guard 1 year for every 5 years may be
  credited

16
Withdrawals

• Lump Sum Withdrawal - Direct Refund/Rollover
• Direct Refund - 20 Federal Tax and 10 IRS
  Penalty
• Rollover - Pre-tax to Financial Institution,
  After-tax to member
• Two year rule (accrual of interest)
• Involuntary Separation - Regardless of service,
  receives principal plus full interest
• Voluntarily Resign
• 0 - 5 Yrs Contributions 0 Interest
• 5 - 10 Yrs Contributions 1/2 Interest
• 10 Yrs Contributions Full Interest

17

• As of 1/1/2007 the average retirement allowance
  for members of the SERS is approximately
  22,000.00

18
Eligibility for Retirement

• 20 years full-time service at any age
• Age 55 with 10 years full-time service
• lt10 years service never eligible

19
Types of Retirement
Superannuation Accidental Disability Ordinary
Disability Section 10
20
Superannuation Calculations

• Typical retirement based on
• your age
• your length of creditable service,
• your highest 36 consecutive months of regular
  compensation, and
• your group classification
• Allowance may NOT exceed 80 of three-year
  average annual rate of regular compensation
• Veterans Premium - 15 per each year of state
  service up to 20 years (Up to an additional 300
  per year)

21
Group Classifications

• Positions fall within the following groups
• Group One Officials and general employees
• Group Two provide direct care, custody,
  instruction and/or supervision to mentally
  challenged individuals.
• Group Three Limited to State Police officers.
• Group Four includes public safety officers, and
  certain correction officers.

22
Calculating Your Retirement Benefit

• A Group One member retiring with the following
  conditions
• Age / Age Factor 55 / .015
• Years of creditable service 20
• Status Non-Veteran
• High 36 consecutive months average
  
  annual rate of regular compensation
  25,000
• (.015 x 20 .30) x 25,000
• Total Annual Allowance 7,500.00

23
Calculating Your Retirement Benefit

• A Group Two member retiring with the following
  conditions
• Age / Age Factor 55 / .020
• Years of creditable service 20
• Status Veteran
• High 36 consecutive months average
  
  annual rate of regular compensation
  25,000
• (.020 x 20 .40) x 25,000
• Total Annual Allowance 10,300.00As a
  veteran, this individual is entitled to 15.00 a
  year for each of their 20 years of state
  service. (The maximum credit for a veteran is
  300 per year.)

24
Correctional Provisions ("20/50")

• Department of Correction (M.G.L. c.32, s.28M)
• any employee of the Department of Correction,
  classified under group 4, whose major
  responsibilities include the care and custody of
  prisoners, and any transportation officer working
  within the Department of Correction, who has
  performed services in the Department of
  Correction for not less than twenty years
• Approval of benefit is subject to Board review in
  accordance with the Group Classification Policy

25
Correctional Provisions ("20/50")

• County Correction (M.G.L. c.32, s.28N)
• any correctional or jail officer employed by
  county sheriffs offices who has performed
  services in said office for not less than twenty
  years
• Approval of benefit is subject to Board review in
  accordance with the Group Classification Policy

26
Correctional Provisions ("20/50")

• 20/50 bill is 50 for 20 years and an additional
  1 more for every additional year worked
• For example a CO with 22 years 50 252 of
  one year average
• Twelve month average immediately preceding the
  date of retirement.

27
Correctional Provisions ("20/50")

• 20/50 bill is not always the best calculation.
• The SRB will calculate retirement with the 20/50
  bill and a Group 4 calculation (age factor
  multiplied by years of service) and determine
  which is the best calculation for the member

28
Group 3 - State Police

• State Police retiring with 20 years of service
  receive 60 of annual salary average for previous
  12 months. (MDC, Registry, or Capitol Police
  employed prior to 7/1/98 are also eligible)
• Also receive an additional 3 per year for each
  year over 20 (up to maximum 75 at 25 years)
• Any member who was eligible to retire under group
  4 at time of hire may do so if calculation is
  higher. Retirement Board will calculate both
  Group 3 and Group 4 benefit and pay higher
  amount.

29
State Board of Retirement Online Pension
Calculator www.mass.gov/treasury/srb.htm
30
Section 10 Retirement

• Reviewed by Board and PERAC
• Requires either
• 20 years or more full-time creditable service
• Involuntarily separated
• receives 1/3 of three-year salary average plus
  annuity
• OR
• 30 years of creditable service regardless of age
  or nature of separation
• Calculated both ways - member is given highest
  amount

31
Retirement Options

• OPTION A
• Maximum benefit
• Factors last birthday
• All benefits cease on death
• OPTION B
• 1 - 5 reduction in benefit, over age 70 could be
  higher
• Protects annuity
• OPTION C
• Refer to chart in brochure for reduction (Average
  7 - 15)
• If Beneficiary passes away, automatic pop-up to
  Option A
• Factors nearest birthday

32
Application

• Can be filed 120 days in advance or 60 days
  after last day on payroll. If you file 60 days
  after last day on payroll - retirement effective
  date will be 15 days after filing.
• Can be withdrawn up until the day of
  retirementNO CHANGES CAN BE MADE AFTER
  RETIREMENT DATE

33
Required Forms

• Application
• Option Form
• W4-P Tax FormCopies of documentsBirth
  Certificate, Marriage Certificate, DD214, etc.
  (varies for each option)If married
• spouse MUST witness option form

34
Disability Retirement

• Ordinary Disability (Non-Employment Related)
• Must have 10 years full time service to be
  eligible
• Veteran - regardless of age
• 50 of last year salary average under Option A
• Pension federally taxable
• Non-Veteran
• Raise age to 55 and calculate under regular
  retirement - 3 year average
• Pension is federally taxable

35
Disability Retirement

• Accidental Disability
• (Employment Related Injury)
• 72 of salary on date of injury
• or last 12 months
• working average annuity
• Pension not federally taxable

36
Disability Retirement

• Both Accidental and Ordinary Disability
• require examination by independent physicians and
  Board approval.

37
Survivor Benefits -Retired Employees

• Once you begin to receive retirement benefits,
  you should advise your beneficiaries and
  survivors as to the procedures to follow upon
  your death
• Contact the State Board of Retirement
• Furnish Board with a death certificate
• Thereafter, the Retirement Option you chose will
  be carried out
• Contact the GIC for any other applicable benefits.

38
Survivor Benefits -Active Employees (Option D)

• Active employees can fill out a form naming a
  beneficiary
• If member is married and beneficiary is not
  spouse
• An eligible Spouse has first option, Spouse can
  waive rights
• No surviving spouse/minor child (no Option D
  form)
• Lump sum refund of account to beneficiary on
  record
• Lump sum to estate if no beneficiary on record

39
Employment After Retirement

• Employment in public sector within Massachusetts
  limited under M.G.L. c.32
• 960 hours per year and/or salary difference
  within a calendar year
• Waive pension if working full-time
• No retirement contributions made
• Once employment ceases retirement will pick up
  where left off
• Reinstatement Under Section 105
• Member may un-retire but must re-pay benefits
  received and must work five (5) years before
  re-retiring

40
Forfeiture of Benefits

• Instances where your retirement allowance or
  accumulated deductions may be forfeited
• you have misappropriated governmentalfunds or
  property
• you have violated certain provisions of the
  Massachusetts conflict of interest law (M.G.L.
  Chapter 268A)
• you have violated laws applicable to your office
  or position

41
Taxes

• No state taxes in Massachusetts
• Check out of state if you move, they may tax you
  there
• Presently Massachusetts has reciprocal agreements
  with 14 states
• Alabama Alaska Florida Hawaii
• Illinois Michigan Mississippi Nevada
• New Hampshire South Dakota Tennessee Texas
• Washington Wyoming
• Federally Taxable (Still should consult
  appropriate tax authority)
• Contact the Board of Retirement at any time to
  change tax status

42
Health Insurance

• Currently 15 premium for retirees
• Premium may change
• Contact GIC for increases
• GIC - 617-727-2310 Ext. 1 (current) or Ext. 6
  (retirees)
• GIC bills premiums until 2nd pension payment
• Premium will be deducted from 2nd pension payment
• If member dies
• Spouse can continue health insurance at a 10
  rate provided they do not re-marry
• If surviving spouse re-marries - he/she loses
  insurance coverage

43
Social Security

• Eligibility
• Social Security benefits do not impact state
  retirement benefits, however, the opposite is not
  true
• Windfall Elimination Provision
• Government Pension Offset
• Exemptions
• 30 years or better of substantial earnings under
  Social Security
• Eligible to retire prior to January 1, 1986 from
  the state
• 20 years full-time service or age 55 with 10
  years or more
• All Social Security Questions should be directed
  to
• 1-800-772-1213 or www.ssa.gov/gpo-wep/

44
Vacation Sick Pay ...

• Handled by department or Agency from where member
  is retiring
• Deferral available into Commonwealths SMART Plan
  -
• Retiring employees may now defer accumulated sick
  pay, vacation pay and back pay into their SMART
  Plan account.
• Employees separating from service may defer
  accumulated vacation and/or back pay.
• Contact the SMART Plan for details1-877-457-1900

45
Contact the State Board of Retirement

• One Ashburton Place, Room 1219 Boston, MA 02108
• [phone] Fax [phone]
• Hours 745 a.m. to 500 p.m.
• 436 Dwight Street, Room 109A Springfield, MA
  01103
• [phone] Fax [phone]
• Hours 845 a.m. to 500 p.m.
• Toll Free within MA only [phone]
• www.mass.gov/treasury/srb.htm

46
Other Financial Education Programs
47
QUESTIONS?