State Employee Retirement Plan
Membership in the Massachusetts State Employee Retirement System (SERS) is mandatory for all employees with the exception of full-time teaching faculty, vice presidents, presidents and deans who have the option of participating in either SERS or the Optional Retirement Program (ORP). Both of these programs are in lieu of Social Security. Employees working at Salem State do not earn Social Security quarters. Employees who were hired after April 1,1986 pay 1.45 percent into Medicare and are earning Medicare quarters only.
The State Retirement Plan is a “defined contribution plan” and new employees contribute 9 percent of their salary plus an additional 2 percent of salary in excess of $30,000. Employees who were hired before July 1, 1996 pay a smaller percentage. These deductions are pre-tax deductions and there are no matching state funds.
Vesting: Employees are “vested” for pension and retirement benefit purposes when they have completed the equivalent of 10 years of full-time service. Employees employed on a part-time basis earn an amount of service equal to their percentage of full-time service; i.e., employees who work half time will receive six months of service for each year worked.
Refunds: If you terminate employment with the state, you may receive a refund of all your retirement contributions if you are under age 55 or if you are 55 or over but have less than ten years of service.
Refund of interest:
If you leave voluntarily: Less than 5 years No interest
“ “ “ 5 – 10 years 50% of interest
If involuntary termination All interest refunded
Eligibility for Retirement: Employees are eligible to retire at any age after twenty (20) years of service, or at age 55 with at least ten (10) years of service. Employees with ten or more years of service who are less than age 55 when they leave state employment may “defer” their retirement.
Retirement Benefits are based on: 1) your age, 2) your length of service, and 3) the average of three consecutive highest earning years of salary. See Percentage Chart
Military Buyback: If you are a qualified veteran, you can apply to the Retirement Board to receive service credit for up to four (4) years of active service in the armed forces by making a payment to the Retirement Board for that time. The Retirement Board calculates the amount you owe. Service in the National Guard and Reserves also qualifies, five years of such service equals one year of creditable service. See section on Military Buy-Back.
Buying Back Former State Service: If you were employed by a city, county, state, or governmental unit in Massachusetts prior to entering (or re-entering) active service with the State, you may be eligible to purchase credit for service rendered on at least a half-time basis even if you were not a member of a contributory retirement system during that time. This service can be transferred and count towards your years of creditable service under the State Employee’s Retirement System (not the ORP). If you worked and paid into any of the state retirement plans in any former position in Massachusetts and took a refund when you left your former position, you may want to “buy back” this former service in order to become “vested” or to increase your pension and add years to your pension calculation. Please read more under Former State Service Buyback.
Buying Back Former Contract “03” Service: If you were hired as a contract employee at Salem State and have since become a “benefited employee” paying into the State Retirement Plan, you may be eligible to buy back up for four years of your former contract service. You need to reach your ten years of vested service before you can buy-back your former contract time. Please read the section on Buying Back Former Contract Service.
Borrowing from your retirement account: The State Retirement Board does not allow employees to obtain loans from their account.
Health and other benefits in retirement: Employees who have the minimum of ten years of full-time service qualify for a pension and also can receive health insurance for themselves and their spouse at a reduced rate in retirement. Employees are required to retain their basic life insurance whenever they carry health insurance. Employees can additionally retain their optional life insurance; however the “retiree” rates are much more expensive. Retirees should review the amount of optional life insurance and its cost to determine whether it makes economic sense to continue this insurance in retirement. You cannot increase the amount of life insurance you carry after you retire.
Employees who are not at retirement age under the state rules when they leave state employment (must be age 55 or older), can with 10 years of full service “defer” their retirement until they reach the minimum age of 55 or older. Once the deferred retiree reaches age 55, they can then apply to receive their pension and can receive health and basic life insurance benefits at the “discounted” level. Employees must keep their money in the retirement system until they retire and should at a minimum continue to carry basic life insurance while they are “deferred retirees” paying the full cost (which is minimal). Read section on “Deferred Retirement” for additional information.
State Retirement Board Contact Information:
One Ashburton Place
Boston, MA 02108