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 FAQ
What are the ground rules? Is membership mandatory for Massport employees? Yes. Membership in the Massport Retirement System is required by law for all regularly employed employees who work at least 21 hours a week. Employees who are over age 65 at the time they are hired may elect membership although it is not required. How are changes made to the retirement plan? The Massport Retirement Plan is governed by the provisions of M.G.L., Chapter 32, as are most Massachusetts public retirement plans. Any changes in the plan must be made through the legislative process. How is my membership date determined? For most Massport employees, the date you were hired will be your membership date. Technically, it's the date you first began making contributions from your regular compensation into the retirement system. If you have a period of employment with Massport in which you did not make retirement contributions, you may want to contact the Retirement Office to inquire about purchasing your prior employment as creditable service. Contributions: how much and how calculated? How much do members contribute to the Retirement System? The amount each employee is required to contribute to the retirement system each year is set by statute. If you began employment on or after July 1, 1996, you must contribute nine percent of your regular compensation to the Retirement System. If you were hired any time between January 1, 1984 and July 1, 1996 your contribution rate is set at eight percent. Members who joined the system any time between 1975 and 1983 contribute seven percent. Those employees who became members prior to 1975 are contributing five percent. The law also mandates that for members whose employment commenced on or after January 1, 1979, an additional two percent of regular compensation will be withheld on compensation over $30,000. This two percent is in addition to the seven, eight or nine percent that is already being deducted from total regular compensation. Do a member's contributions to the Retirement System earn interest? If so, how is the interest calculated? Your contributions are placed in an individual annuity savings fund, which earns annual interest at a rate comparable to that of a passbook savings account. The interest rate is determined by the Public Employee Retirement Administration Commission and the Commissioner of Banks. This annual interest rate is independent of that earned on the Retirement System's investments. Does the amount of interest credited to your individual annuity savings fund affect overall retirement benefits? No. The amount of money in your annuity account has no bearing on your future retirement allowance. This is determined by a formula consisting only of your age, service and three-year salary average. Are employee contributions used to fund the administrative expenses of the Retirement System? No. Employee contributions are never used to fund administrative expenses. Operating expenses, including fees associated with actuarial and audit services, investment management, consultant and custodial fees, are funded solely through the system's investment income. Benefits: How earned and how allocated? What does it mean to be vested? When you are vested, you have earned the right to a retirement allowance at a later date. You no longer have to remain in service to be eligible to collect it. When does vesting occur? You must have ten years of creditable service in order to be considered vested. If you transfer creditable service from another retirement system or if you buy back prior service, such service is added to your Massport service to determine whether you are vested. When is retirement an option? You are eligible to retire at age 55 or older if you have at least ten years of creditable service. If you have 20 years of service, you can retire at any age. What is the retirement allowance based on? How is it calculated? Because the Massport Retirement Plan is a defined benefit plan, your benefits are determined by a formula and are not affected by the amount of money in your annuity account at the time of retirement. The factors used to determine your benefit are: your age at the time of retirement, your amount of creditable service, your group classification and an average of your three highest years of regular compensation. Can I purchase creditable service earned in another Massachusetts public retirement system? If you were a member of another retirement system subject to the provisions of M.G.L., Chapter 32, and you withdrew your retirement funds, it is possible to buy back your prior creditable service. The Retirement Office will verify your prior service, then calculate the amount of your buyback. You must repay the amount withdrawn, plus interest, to the date of repayment. You may complete a buyback as a lump-sum payment or through payroll deduction over a five-year period. Will prior creditable service affect my membership date or contribution rate in Massport's retirement system? If you have retirement contributions from a previous public employer directly transferred to our system, you are entitled to maintain the level of contribution you were paying in your previous employment. Under current regulations, if you received a refund of retirement contributions from your previous retirement system and later became a member of Massport's system, your contribution rate with Massport will be at the new member rate, regardless of what you were paying in your prior system. If you should later purchase your prior creditable service through a buyback, your contribution level will remain at the new member rate and will not be reduced to your previous rate. If I was a temporary employee at Massport, may I apply that time towards my retirement creditable service? If you were employed by Massport on a temporary basis, prior to becoming permanent, you may be entitled to purchase this service towards your retirement creditable service. If you had temporary service with another public agency in Massachusetts, you may be entitled to purchase that as well and apply it to your retirement creditable service here at Massport. Each person's situation is different and requires research. Please call the Retirement Office for more information. Note: this does not apply to service as a Massport student intern. How is creditable service achieved? You earn creditable service towards your retirement allowance for the period during which you are contributing to the retirement system. For many full-time employees, this service time starts accruing the day you begin work and continues until the day you separate from service. However, if there is a period of time when you are off the payroll, you should consult with the Retirement Office as to how this will affect your amount of creditable service. What if I work part-time? If you are an employee with periods of both part-time and full-time service, your part-time service will be pro-rated based on actual hours worked. However, if you are a part-time employee for your entire career, you are entitled to receive full creditable service. Is regular compensation the same as total compensation? No. Regular compensation is the portion of your salary that is subject to retirement contributions. Overtime, bonus pay, severance pay and any payments made for unused sick time are not considered regular compensation, are not subject to retirement and cannot be used towards your three-year salary average for the purpose of determining your retirement allowance. Does the amount of my vacation buyback count as regular compensation? Yes. As of January 1, 2001, any money you receive from the Authority as payment for a "vacation buyback" is considered regular compensation and is therefore subject to retirement contributions. This means that the amount of your vacation buyback can now be used towards your three-year salary average for the purpose of determining your retirement allowance. This does not apply to final payments made for accumulated vacation time upon separation from service or retirement. What are the group classifications within the Retirement System? The law determines your group classification based on your occupation. When you retire, your group number determines which formula is used in the calculation of your retirement allowance. The Board assigns employees to one of four groups as set forth in M.G.L., Chapter 32, Section 3:
Does my participation in the 457 deferred compensation plan affect my Massport retirement benefit in any way? No. Your Massport retirement benefit is separate from and not related to participation in the deferred compensation plan. The 457 plan is an optional savings vehicle, which allows you to supplement your retirement savings on a tax-deferred basis. It is strongly recommended that this plan be considered as an option by members. Portability issues: What happens upon departure? If I leave my job at Massport, what happens to my contributions? If you leave your job at Massport and are not going to work for another governmental agency under the provisions of Chapter 32, you may eligible to receive a refund of your contributions. If you are leaving to accept a position with a Massachusetts political subdivision subject to Chapter 32, you must transfer your retirement contributions directly to your new retirement system. If I leave my job at Massport and decide to withdraw my contributions, will I receive all my interest? It depends on your length of service. If you leave Massport with less than five years of creditable service, you will not receive any interest on your deductions. However, if you have between five and ten years of creditable service, you will receive 50 percent of the interest credited to your account. If you withdraw your funds with at least 10 years of creditable service, you will receive 100 percent of the interest that has accrued. Is there any time limit after your termination for requesting a refund of your contributions? No. You may request a refund of your funds at any time after termination. If you leave your funds on deposit, however, and later seek a refund, your deductions will only earn interest for two years after termination. Question 22 outlines the criteria used to determine your interest eligibility. Can a member who is vested and who terminates employment with Massport still be eligible for a refund? Any member who terminates employment and is under the age of 55 may be eligible to withdraw retirement funds. If the member is vested and has earned the right to a retirement allowance at a later date, careful consideration should be given to the value of the retirement benefit he or she may be forfeiting in exchange for a refund. If I terminate my employment at Massport and leave my money in the retirement system, can I retire at a later date? If you are vested and terminate employment at Massport, you can choose to "defer" your retirement by leaving your money in the system until you are ready to retire. An important factor in deferring retirement is that you must continue paying the premium on your $5000 Massport life insurance policy in order to maintain insurability with the Group Insurance Commission (GIC) for the purpose of obtaining any future retiree health coverage. Can a member withdraw or borrow money from his or her account in the retirement system without resigning or retiring? No. There is no loan provision in this plan. An active member cannot withdraw or borrow any contributions from the fund under any circumstances. What are the tax consequences if I take a refund of my retirement contributions prior to age 59? Your contributions and all of the interest you receive from your account are subject to federal income tax (with the exception of any contributions made prior to January 12, 1988). When processing a refund of retirement contributions, the Retirement Office is required to withhold 20 percent of the taxable portion of your refund for federal tax. The 20 percent tax payment is required only if the refund is made directly to the member. To defer tax payments, you must make a direct rollover of your retirement funds to an Individual Retirement Account (IRA) or another type of retirement account with a financial institution. With a direct rollover no tax is withheld and the entire taxable portion of your refund is transferred. If you have both taxable and nontaxable contributions, you may accept receipt of the nontaxable portion of your refund with no tax consequence and the taxable portion may be rolled over. If I die before retirement, what happens to my money? If you are married and die before you retire, your surviving spouse will have the option of collecting a monthly benefit or receiving a lump sum payment of your contributions. If you are single, you may want to consider choosing an "Option D" beneficiary that would allow you to provide for a child, parent, sibling, or former spouse in the event of your death prior to retirement. Contact the Retirement Office for more information. |
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