Massachusetts State Retirement Plan

All full-time and at least 50% part-time employees hired prior to attaining age 65 must participate in the Massachusetts State Retirement Plan. The percentage rate of contribution is determined by an employee's most recent entry date into the system. Employees hired after July 1, 1996 will contribute 9% of base salary. This is a pre-tax contribution. In addition, employees hired after January 1, 1979 will pay their regular contribution rate plus an additional 2% on an part of their regular salary above $30,000.00 annually or $576.92 weekly. The plan provides retirement benefits based on three factors: age at retirement, years of service and the average of the highest three consecutive years of base salary. An employee may receive a retirement income at age 55 with ten years of service or at any age with twenty years of service.

Employees of the Commonwealth of Massachusetts are exempt from contributing to Social Security. Consequently, state service cannot be credited towards the quarters needed to qualify an individual for a Social Security pension. However, in April 1986, President Reagan signed the Consolidated Omnibus Budget and Reconciliation Act (COBRA), which mandates that all state and local government employees hired on or after April 1, 1986 are required to pay the Medicare portion of the social security tax. This tax is 1.45% of the first $125,000 of a person's wage/salary. The Commonwealth is also required to match the employee's contributions. Note: Benefits under the State Retirement Plan can possibly offset social security benefits in a variety of circumstances. Detailed information can be obtained at any local Social Security office.

One of the most unusual, but highly beneficial features of the State Retirement Plan, is that under certain circumstances, a faculty member may "buy into" the system for certain periods (up to ten years) of creditable service in another state. In general, the stipulation is that prior service must be as a teacher in a publicly-supported educational institution (i.e., city, town or state) and must be matched by at least an equal number of years of creditable service at the University of Massachusetts prior to age 65.

The cost of such a "buy-in" would be 5%, 7%, 8% or 9% of the gross salary at the other institution plus interest to the date of purchase into the Massachusetts Retirement Plan. The percent one pays for this "buy-in" would be the same percent that is deducted from the faculty member's weekly paycheck at the University of Massachusetts. The total cost can be paid either by one lump sum or by payroll deductions, which can be spread over a period of up to five years.

An employee who has ten (10) or more years of creditable service in the Massachusetts Retirement Plan and who, before attaining age 55, resigns or voluntarily terminates his/her employment and leaves the accumulated total deductions in the annuity savings fund of the retirement system, shall have the right, upon reaching age 55 - and prior to reaching compulsory age - to apply for and receive a retirement allowance based on his/her age, service and salary.

If an employee leaves the service of the Commonwealth prior to age 55, he/she may withdraw the money contributed to the retirement system or transfer the funds to another qualified account. Funds that are withdrawn are subject to federal tax withholding of 20%. If you have less that five (5) years of creditable service and you voluntarily terminate service, you will receive NO interest credited to your total deductions. If you have five (5) years, but less than ten (10) years of creditable service, and you voluntarily terminate service, you will receive 50% of the interest credited to your total deductions. If you have ten (10) or more years of creditable service, or if you were involuntarily terminated from service, you will receive 100% of the interest credited to your total deductions.

Forms to file for retirement may be obtained from the State Board of Retirement, One Ashburton Place, 12th floor, Boston, MA 02108; forms to withdraw or transfer accumulated deductions upon termination of employment with the Commonwealth may be obtained in the University's Personnel Office, 3rd floor, Administration Building, Harbor Campus.

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