When is a member considered to be vested

When is a member considered to be vested?

Any individual (in Group 1 or Group 2) who becomes a member of a public employee retirement system after January 1, 1978, and who has at least 10 years of service, and whose accumulated payroll deductions are on deposit with the retirement system may request a retirement allowance upon attaining age 55.

Are there any exceptions to the ten-year creditable service requirement?

Any individual (in Group 1 or Group 2) whose membership in a public employee retirement system began before January 1, 1978, and who maintains an annuity savings fund account with that retirement system is eligible to receive a superannuation retirement allowance at age 55 or later, regardless of how many years of creditable service he/she has completed.

Elected officials who have completed at least six years of creditable service and who, before age 55, fail to be nominated or reelected or fail to become a candidate for nomination, re-election or election or fail to be re-appointed or whose office or position is abolished, can leave their payroll deductions in their annuity savings fund accounts and be eligible to receive a termination retirement allowance at age 55 or later.

EMPLOYMENT AFTER SUPERANNUATION RETIREMENT

Am I limited in the amount of income I earn or receive from other sources after my retirement for superannuation? Only if you are re-employed in the service of the Commonwealth or any of its counties, cities, towns or districts. What are the restrictions pertaining to public service re-employment following superannuation retirement? There are two strict limitations on further public employment in the Commonwealth following your superannuation retirement from a public service position. Your earnings for the period of re-employment in any calendar year, when added to your retirement allowance, cannot be greater than the salary currently being paid for the position from which you retired. And your re-employment is limited to a period of up to 960 hours, in the aggregate in any calendar year. Your employment must cease when either limitation is reached. Is there any public sector re-employment that is not affected by these limitations? You may hold elective office, if the election is held after your retirement becomes effective, you may be paid for jury duty, you may be paid for services as an election officer, you may hold certain paid appointive positions, and Certain emergency employment may be authorized. Under what circumstances may I become a member-in-service once a retirement allowance has become effective for me? If, as a retiree, you are elected to office by popular vote or receive a particular type of appointment, you can elect to become a member-in-service if you repay, with interest, into the retirement system, the total amount of the allowance you have received from your date of retirement to the date you rejoin the system. Disability retirees, who are returned to service under G.L. c. 32, s. 8, will become retirement system members again and will receive creditable service for the years for which they receive disability retirement allowances, without cost.

OPTIONS FOR RETIREES

“Option” is the term used to describe how your retirement allowance is allotted. Your allowance must be paid to you in lifetime monthly payments, but the apportionment of those payments will differ depending upon your option selection. Option choice also determines what benefits, if any, will be paid to survivors after a retiree’s death.

Making A Choice

What factors should influence a member’s choice of option? Your health and age at retirement, income from other sources, financial obligations, and the need to provide for others that may survive you are some of the factors that you should consider carefully. Are there any restrictions on my election of an option? There are no restrictions. Any member is free to select either Option A or Option B or Option C. When must I make my option selection? You must choose an option before the date your allowance becomes effective. Retirement board staffers are available to thoroughly discuss options with you prior to that date. If you refuse or fail to select an option before the date your retirement becomes effective, the law provides that you shall be retired under Option B. May I change my option choice? You are not permitted to change your option selection after your retirement becomes effective.

Spousal Acknowledgment

Must my spouse acknowledge my option election? Retirement boards must provide members and their spouses with detailed information regarding benefit options to help them make informed decisions. A married member’s Choice of Retirement Option Form must be signed by the member’s spouse to acknowledge the spouse understands the option chosen. If a married member files a Choice of Retirement Option Form that has not been acknowledged by his or her spouse, the retirement board is required to notify the member’s spouse of the option selected within fifteen days by registered mail. Thirty days after the member’s spouse has been notified as provided above, the option would take effect. The effective date of the member’s retirement will not be affected by the requirement that spousal acknowledgment must be requested.

Options Available at Retirement

Option A

Election of Option A means that you will receive your full retirement allowance in monthly payments as long as you live. All allowance payments will cease upon your death and no benefits will be provided for your survivors.

Option B

Option B provides you with a lifetime allowance which is 3% to 5% less per month than Option A. The annuity portion of your allowance is reduced to allow a benefit for your beneficiary. Upon your death, your surviving beneficiary of record, or if there is no beneficiary living, the person or persons appearing in the judgment of your retirement board to be entitled thereto will be paid the unexpended balance of your accumulated total deductions from the annuity reserve account. How soon would my contributions be depleted? Although your retirement allowance is not reduced because of the depletion of your accumulated deductions, it is generally the case that your deductions are used up within twelve to fifteen years of your retirement, depending upon your age at retirement. In the event of your death, any balance that does remain will be paid to your beneficiary. Is my choice of beneficiary limited under Option B? Under Option B, you may designate any person(s) or charity or institution as your beneficiary. You may, at any time after retirement, change your Option B beneficiary (but not your option selection).

Option C

Option C is also known as the joint and last survivor allowance. Selecting this option means that the allowance payments that you would receive during your lifetime would be approximately 20% less than those you would receive under Option A. Upon your death, your designated beneficiary will be paid a monthly allowance for the remainder of his or her lifetime. That allowance will be equal to two-thirds of the allowance which was being paid to you at the time of your death. What determines the monthly payments of an allowance payable under Option C? The monthly allowance you receive under Option C depends upon life expectancy factors for you and your designated beneficiary. Who may I name as a beneficiary under Option C? You may name only one beneficiary under Option C. The eligible beneficiaries are limited to your spouse, your former spouse (provided he or she has not remarried at the time you designate him/her as your Option C beneficiary), your child, your parent, or your sibling. May I change my Option C beneficiary? You may not change your Option C beneficiary after your retirement becomes effective. If my spouse dies after receiving allowance payments under Option C, will benefits then be payable to our children? Each child would be eligible to receive an equal share of the allowance its parent/your spouse had been receiving. Payments would be made to the legal guardian of each child and would cease upon the child’s 18th birthday.

Option C "Pop Up"

How does my allowance change under Option C if my beneficiary dies before I do? If your allowance was as the result of an application filed on or after January 12, 1988 and your Option C beneficiary dies on or after that date and before you die, you will thereafter be paid the full retirement allowance you would have received had you elected Option A at the time your retirement allowance became effective. (This conversion is commonly referred to as the Option C “Pop-Up”.) Any cost-of-living increases that have been granted since your Option C retirement became effective will be reflected in your newly established Option A allowance. All payments will cease upon your death. For retirees whose retirement became effective before January 12, 1988 and who chose Option C and who are predeceased by their beneficiaries, extension of the Option C “Pop-Up” benefit is determined by their respective retirement board’s (and relevant “legislative body’s”) acceptance of section 288 of Chapter 194 of the Acts of 1998. Under Section 288, such adjustments must be made prospectively from July 1, 1998. No payment can be made relative to the period, if any, from the date of the death of the beneficiary to July 1, 1998.

Effect Of Divorce on Option C Beneficiary

Does divorce following retirement change the status of my former spouse as my Option C beneficiary? If you named your former spouse as your Option C beneficiary when you were married, your former spouse will continue to be your Option C beneficiary even if you are divorced after retirement.

What percent of my pay do I contribute to the system?

The rate is determined by your date of membership with the system, not necessarily your date of employment.

Prior to January 1, 1975 5%

After January 1, 1975 7%

After January 1, 1984 8%

After July 1, 1996 9%

Anyone, who becomes a member after January 1, 1979, pays an additional 2% on any compensation over $30,000. You do not contribute on any overtime pay.

Can I borrow against my retirement account?

No, you can not borrow against your retirement account at any time or under any circumstances.

Who can take a refund of their account?

To be eligible for a refund you must have left your employment and not have gone to another municipal or state agency. You also have to be under the age of 55, unless you have less than 10 years of creditable service.

How is my refund calculated?

The member always gets all of their contributions back when they withdraw from the system. The amount of interest that they get is determined by the amount of creditable service that they have at the time of the withdrawal.

If you have less than 5 years of creditable service 0 interest

More than 5 but less than 10 1/2 interest

More than 10 or you leave involuntarily all the interest

You can either have your refund paid directly to you or you can roll it over into an IRA. If you have the money paid directly to you we have to withhold 20% for federal taxes and you may have further tax implications when you file your tax return.

What is creditable service?

Creditable service is the amount of credit that the retirement system grants you for each year of membership. Creditable service is prorated based on the hours worked vs. full time. I.e. A person who works 30 hours per week rather than 40 would get 9 months of creditable service because they work 75% of full time, which would be twelve months.