Chapter 176 of the Acts of 2011 made a number of significant changes to the Massachusetts public pension system. The law affected both the operations of the local Boards as well as the calculation of benefits for members. This post will attempt to summarize the changes to benefits for public employees.
To begin, for active employees who were members of the system prior to April 2, 2012, the new law made absolutely no changes to your benefits. Your benefits will stay the same so long as your account remains in the retirement system. However, if you leave your job and take a refund of your account, this will end your membership. If you are subsequently rehired, you will be considered a new hire, and subject to the new law, and all the changes described below.
If you were hired on or after April 2, 2012, there are a number of changes to the law that affect how your benefits will be calculated when you eventually retire. The allowance you receive at a given age and service time will not be the same as one received by a pre-2012 employee. The most important changes to the law are listed below:
- The minimum retirement age for all groups has been increased. For Group 1 employees, the minimum age for retirement is now 60. For Group 2 employees, the minimum age is 55, and for Group 4 employees, it is age 50.
- The law sets new age factors to be used in calculating an allowance. Again, the exact figures vary by group. Group 1 employees will reach the maximum age factor at age 67. Group 2 employees at age 62 and Group 4 employees at 57.
Our office has prepared new benefit charts to show the impact of these changes. They are available on our Benefit Calculator page.
In addition,
- Retirement calculations will be based on the average of 5 years of earnings, rather than 3 years of earnings. This will result in a somewhat lower salary number for nearly all employees.
- The law includes a new requirement that any make-up or redeposit paid into the system must be completed within one year, or be subject to a higher interest rate.
- Termination allowances have been eliminated for new hires. Pre-2012 remain eligible to collect a minimum benefit if they are involuntarily terminated form their position after twenty years of service.
Our office has begun to provide separate guidebooks for pre-2012 employees and post-2012 employees. Both books are available on our Benefit Guide page.
Most Viewed Frequently Asked Questions
- What happens if I get a retroactive payment?
- Do I Have to Pay Taxes on My Retirement Allowance?
- Can I Work After Retirement?
- What is the most I can get as a retirement allowance?
- If I leave employment, can I leave my money in the system?
- When I am ready to retire, what should I do?
- Which Option do Most People Take?
- What Happens If I Go Part-Time?
- How Does the 2012 Pension Reform Affect Me?
- What should I know about naming a beneficiary?
- When will I receive my monthly retirement allowance?
- What is the process to apply for a refund?
- Do you invest my money?
- Why do I have to contribute to the Cambridge Retirement System?
- How could I be affected by “anti-spiking” regulations?
- What is the procedure if I want to buy back previous service time?
- What do I do if I change my bank account?
- Will there be any change to may retirement allowance if my spouse dies?
- What if I go to Florida in the winter, how will I get my 1099R in January?
- Who can make changes to my retirement information?
- Is there a difference in life expectancy between public safety employees and civilians?
- Do I have to notify the Retirement Board if I move?
- How can I change my direct deposit information?