Section 60 Pension Reform
About Section 60
Section 60 of the state’s Pension Reform Act of 2011 allows a one-time opportunity for:
- Active ORP participants and those on an approved leave of absence to change their retirement plan coverage from the ORP to the Massachusetts State Employees’ Retirement System (MSERS);
- These ORP participants to purchase service under the MSERS equal to the time they participated in the ORP, and any service in the MSERS immediately prior to ORP enrollment; and
- Current active members of the MSERS who are former ORP participants to purchase service under the MSERS equal to the time they participated in the ORP.
Internal Revenue Service Ruling
The Department of Higher Education (DHE) and the State Retirement Board (SRB) received a favorable ruling from the Internal Revenue Service, which enables the two departments to proceed with implementing the provisions of Section 60.
Section 60 required the Commonwealth to seek a favorable ruling on allowing employees a second choice of retirement plan coverage. The ruling would ensure that both plans, the ORP and the MSERS, would retain their tax-favored status.
December 24, 2013
Eligibility for Section 60 coverage:
The DHE reviewed issues relating to maintaining one’s eligibility to change plans under Section 60 between receipt of the favorable ruling and the effective date of the implementation; expanding the statuses, under terms of the Plan, to include Deferred Retirees. Click here for more information about this issue.
Fiscal Year 2014 Retirement Incentive:
After careful review of issues relating to ORP participants initially identified as being eligible to change plans under Section 60 and who elected to participate in the FY 2014 Retirement Incentive, the DHE has concluded that, in the spirit of the Incentive, these ORP participants will be deemed “Retirees”, under terms of the ORP, and therefore not eligible to change plans under Section 60.
The DHE will identify each ORP participant affected by this decision and contact them directly; providing notice of their forfeiture of the opportunity to change plans.
Now that the Commonwealth has received the favorable ruling required under Section 60, the DHE, SRB, and Massachusetts Teachers Association (MTA) are working closely to develop and implement a process for allowing ORP participants to change retirement plan coverage and purchase service under the MSERS.
While current language in Section 60 loosely prescribes a process, the three organizations agree that the current language requires clarification and improvement in order to create a valuable and meaningful experience for affected employees.
The three organizations are preparing an amendment to Section 60 to clarify the current language and establish reasonable time periods during which the process can be completed. The underlying premise of the process is to provide helpful information for employees, ensuring they are well-prepared to make this important decision.
Questions & Answers
Information About the Two Plans
- State Employees’ Retirement System: Extensive information about the MSERS is available on the Retirement Board’s website . Additionally, the Retirement Board offers an excellent Guide to MSERS Benefits (.PDF).
- Optional Retirement Program: This website includes important information about Choosing a Retirement Plan. Additionally, these pages provide detailed information about the Plan’s features, provisions and the Providers. Click here to return to the ORP main menu.
- The State Board of Retirement is currently conducting a series of general seminars about the MSERS. Visit their website to access the seminar schedule and register to attend.
- Section 60 Educational Seminars TBA.