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IS MEMBERSHIP REQUIRED FOR ALL NEW EMPLOYEES?

Membership is mandatory by state law for nearly all public employees who are regularly and permanently employed on a full-time basis. Part-time (less than 20 hours per week), seasonal and temporary employees who are ineligible for membership are required to contribute to a deferred compensation plan.

 

FOR WHOM IS MEMBERSHIP OPTIONAL?

Elected officials may elect to become members within 90 days of commencement of service.

 

WHAT ARE GROUP CLASSIFICATIONS?

  • Group 1 members are officials and general employees included clerical, administrative and technical workers, laborers, mechanics and all others not otherwise classified.
  • Group 2 includes ambulance attendants and fire alarm operators
  • Group 4 consists of public safety officers, such as policemen and firefighters, and certain employees with hazardous occupations.

 

HOW MUCH DO MEMBERS CONTRIBUTE?

Contribution rate is determined by your most recent entry into the system. Members who re-enter with funds on deposit or who transfer from another contributory retirement system within Massachusetts maintain their former contribution rate.

 

Contribution Rates:

Before January 1, 1975                       5%

After January 1, 1975                         7%

After January 1, 1984                         8%

After July 1, 1996                                9%

 

**Employees hired after January 1, 1979 will pay their regular contribution rate plus an additional 2% on any compensation over $30,000.

 

WHAT IS THE INTEREST RATE CREDITED TO MY ACCOUNT?

The interest rate is statutorily set by PERAC by averaging pass book savings account rates as of January 1st of the year in question.

 

HOW IS CREDITABLE SERVICE ACHIEVED?

In general, you earn creditable service toward your retirement allowance for the period during which you made contributions to your annuity savings account in the retirement system. It is prorated based on the hours worked versus full-time.

 

WHAT EFFECT DOES TRANSFERRING HAVE ON MY CREDITABLE SERVICE AND ACCUMULATED DEDUCTIONS?

Career changes of public employees may entail a transfer from a job presently held to a new job in a different governmental unit with a different retirement system. The accumulated total deductions (or annuity savings account) and corresponding creditable service of members involved in such a change will be transferred to the new retirement system.

 

ARE ALL FORMS OF COMPENSATION FROM MY EMPLOYER SUBJECT TO RETIREMENT WITHHOLDINGS?

No, not all payments are considered regular compensation. Examples of payments not considered to be regular compensation:

  • overtime
  • commissions bonuses, other than cost of living bonuses
  • amounts derived from salary enhancements or salary augmentation plans
  • indirect, in-kind or other payments for such items as housing or lodging, travel, clothing allowances, and annuities
  • welfare benefits
  • lump sum buyouts for Workers’ Compensation
  • job-related expense payments
  • automobile usage
  • insurance premiums
  • dependent care assistance
  • one-time lump sum payments in lieu of or for unused vacation or sick leave
  • payment for termination, severance, dismissal
  • any amounts payable as premiums for working holidays (certain employees excepted)
  • early retirement incentives
  • any other payment made as a result of the employer having knowledge of the member’s retirement
  • tuition
  • payments in kind
  • all payments other than payment received by an individual from his employing unit for services rendered to such employing unit, regardless of taxability

 

WHAT IF ABSENCE IS CAUSED BY A WORK RELATED INJURY OR HAZARD?

Any member-in-service who sustains an injury or undergoes a hazard in the course of employment which results in total incapacitation for which workers’ compensation benefits are received, is awarded full creditable service during the period of absence. The member receives the creditable service without having to contribute to the retirement system.

 

WHAT ABOUT LEAVES OF ABSENCE FOR OTHER REASONS?

For absences other than work related, the member’s creditable service will be prorated.

 

CAN I BORROW MONEY FROM MY RETIREMENT ACCOUNT?

NO! Under state law, your retirement account has no provisions for withdrawal under any circumstances.

 

WHAT HAPPENS IF I QUIT MY JOB?

At the time of termination, you must file for a refund of your annuity savings account. You may come to the Retirement Board office or download the application form, (http://www.mass.gov/perac/forms/1003ApplicationforWithdrawal.pdf) complete and mail in.However mailed in forms must be NOTARIZED.

 

If you voluntarily terminate your public service with at least ten years of creditable service, or if you are involuntarily terminated, you will receive 100% of the regular interest that has accrued to your Annuity Savings Account.

If you voluntarily terminate your public service with less than ten years of service, you will receive interest on your Annuity Savings Account at the annual rate of 3%.

WILL I BE TAXED ON THIS REFUND?

There will be 20% deducted for federal tax if you take a direct refund of your deductions rather than directly rolling them over into another qualified retirement plan; i.e. an IRA. If you are under age 59 ½ the IRS will also impose an additional 10% penalty.

 

MAY ANY AGENCY INTERCEPT MY REFUND?

An individual’s ability to obtain a refund may be affected by a Department of Revenue Child Support Enforcement Order.

 

IS ANYONE INELIGIBLE TO APPLY FOR A REFUND?

You may not request a refund if:

  • You continue to be a member-in-service;
  • You are on an official leave of absence;
  • You have a Workers’ Compensation claim pending or if you are receiving Workers’ Compensation benefits for total incapacity;
  • You have been charged with, or convicted of, misappropriation of funds or property of the governmental unit by which you were employed;
  • You are appealing a dismissal or you have otherwise expressed your intent to continue in public employment.

 

MAY I BUY BACK CREDITABLE SERVICE?

If you terminate your public service and take a refund of your accumulated total deductions and later return to public service, you may re-establish your prior creditable service by buying it back. But, you will begin as a new member, making contributions at the current rate. Of note, if a person who is a member of a retirement system as of February 16, 2012 fails to buy back certain prior service before April 2, 2013, such a member will have to pay actuarial assumed interest instead of buy back interest on the purchase. Those who re-enter or re-establish service on or after February 16, 2012 will also have until April 2, 2013 to buy back certain prior service, or they must pay actuarial assumed interest instead of buy back interest on the purchase.

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