Section 60 Pension Reform FAQ's

Jump to a specific question:

  1. What is Section 60?
  2. Who is eligible for Section 60 opportunities?
  3. When will Section 60 be implemented?
  4. What are the procedures and related deadlines for changing retirement plan coverage under Section 60?
  5. What service does Section 60 allow participants to purchase?
  6. How will eligible participants know the amount of qualifying service available for purchase under Section 60?
  7. May eligible Participants purchase only some of their qualifying service?
  8. What is the cost to purchase qualifying service under Section 60?
  9. Is “Other” creditable service available for purchase under Section 60?
  10. What resources may be used to purchase qualifying service under the MSERS?
  11. What will be done with the employer-funded portion of ORP accounts?
  12. Which ORP investment products have restrictions that limit their ability to be used to purchase qualifying service?
  13. When is payment for the purchase of qualifying service due to the State Retirement Board, and what is the sequence of payments?
  14. Which MSERS rules will apply to eligible participants who leave the ORP to join the MSERS?
  15. What if I am planning to retire in the next 12 months?
  16. What will happen to ORP insurance benefits for participants who choose to join the MSERS?
  17. Long Term Disability from the Group Insurance Commission (GIC)
  18. How does Section 60 affect an eligible employee’s insurance coverages from the Group Insurance Commission (GIC)?
  19. What will happen if an eligible earticipant dies during the process of changing retirement plan coverage under Section 60?
  20. Are Social Security Offsets applicable to both ORP participants and MSERS members?
  21. Where may eligible participants learn more about the two plans?

1. What is Section 60?

 Section 60 of the state’s 2011 Pension Reform Act  reflects  the Legislature’s intent to provide a one-time opportunity for certain ORP participants to change their retirement coverage from the ORP to the Massachusetts State Employees’ Retirement System (MSERS).

Under Section 60, ORP participants whom the Department of Higher Education (DHE) identifies as eligible to change plans may elect to transfer their ORP participation to the MSERS. Participants electing to change their coverage to the MSERS must purchase “qualifying service” under that plan, equal to the years, months and days of creditable service they accrued while in the ORP and any creditable service in the MSERS immediately prior to their enrollment in the ORP.

This is a one-time, irrevocable opportunity for eligible ORP participants to change their retirement plan coverage to the MSERS and purchase qualifying service.

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2. Who is eligible for Section 60 opportunities?

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3. When will Section 60 be implemented?

The effective date of the Section 60 implementation is May 1, 2014.

The effective date of the Section 60 implementation for active MSERS members is July 1, 2014.

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4. What are the procedures and related deadlines for changing retirement plan coverage under Section 60?

The procedure established for eligible participants to transfer their ORP participation to the MSERS is comprised of five basic steps, with a potential sixth:

  1. Notice of Eligibility: The Commonwealth will notify each eligible participant of their opportunity to change plans on or before the Section 60 effective date.
  2. Notice of Interest Form: Each eligible participant will receive a Notice of Interest Form along with their Notice of Eligibility Statement. Participants must complete and return the Notice of Interest to the DHE in order to receive an estimate of the amount of qualifying service and the cost to purchase that service under Section 60. Participants must return, and the DHE must receive, the Notice of Interest Form on or before October 27, 2014, in order to maintain their eligibility for the opportunity to change retirement plans.
  3. Retirement Plan Information Package: Within 180 calendar days of receipt of a participant’s Notice of Interest Form, the Massachusetts State Retirement Board (MSRB) will provide a Statement of Service with the estimated amount of qualifying service and the estimated cost to purchase that service. Also included will be a Plan Election Form
  4. MSERS Election Form: Participants must complete and return the MSERS Election Form and any other related documents, to the DHE within 180 calendar days of the date the Retirement Plan Information Package was mailed. The Election Form will record their choice of plans: ORP or MSERS.
  5. Transfer of ORP Assets: The DHE will initiate the transfer of ORP assets to the State Retirement Board (“MSRB”) on behalf of participants electing to change their retirement plan coverage to the MSERS. The transfers will be initiated once the Retirement Board has completed its updated service and cost calculations.
  6. If a participant’s ORP assets are not sufficient to purchase all of their service, then they may utilize other assets to complete the purchase (See Question 10 Other Payment Venues – Voluntary Transfer)

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5. What service does Section 60 allow participants to purchase?

Under Section 60, “qualifying service” is the combination of:

  1. Full and partial Years of Creditable Service under the MSERS immediately prior to enrollment in the ORP, where the employee withdrew their contributions[1] from the MSERS upon joining the ORP. Service “immediately prior” to enrollment in the ORP is a contiguous period of creditable service ending anytime within the ninety (90) calendar days prior to ORP enrollment.
  2. Full and partial Years of Participation under the Optional Retirement Program. A month of participation under the ORP is any calendar month during which the participant makes a contribution to the plan.

[1] Former MSERS members who did not withdraw their contributions from the MSERS when they joined the ORP already have that service on record with the State Retirement Board and therefore need not purchase it.

Determining Service

  1. The MSRB will determine the amount of qualifying service that will be available for purchase under Section 60 in accordance with its established procedures and Chapter 32 of the Massachusetts General Laws. The MSRB will report that amount to individuals as part of the overall Section 60 procedure.
  2. Once membership in the MSERS has been established, members may ask the MSRB about their accrued service at any time. A final and authoritative determination of total creditable service is conducted for all MSERS participants at the time of their retirement.
  3. Pursuant to its regulations, the MSRB grants creditable service in proportion to the amount of time a member of the MSERS actually works. For example, someone who works half time for ten years would have accrued five years of creditable service.
  4. Creditable service under the MSERS is broken down into years, months and days of service.

>> How “service” is used for vesting and determining benefits in each plan

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6. How will eligible participants know the amount of qualifying service available for purchase under Section 60?

The MSRB will provide the estimated amount and cost of qualifyingservice that must be purchased under Section 60. This information will be provided in a Statement of Service within 180 calendar days of receipt by the Department of Higher Education of the participant’s “Notice of Interest Form.”

The Statement of Service will report the two components of qualifying service and the respective cost for each segment: (A) MSERS time immediately prior to ORP enrollment, and (B) ORP participation.

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7. May eligible participants purchase only some of their qualifying service?

No. The legislation permits a transfer of one’s membership from the ORP to the MSERS. Accordingly, eligible participants must purchase all of their qualifying service when they join the MSERS under Section 60.

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8. What is the cost to purchase qualifying service under Section 60?

Prior MSERS Creditable Service

The cost of purchasing creditable service under the MSERS is the sum of the employee’s required contributions that had been made to the retirement system during the period immediately prior to ORP enrollment, plus actuarial-assumed interest.

The purchase of MSERS qualifying service is only applicable to those ORP participants who transferred their contributions from the MSERS to the ORP.

The actuarial-assumed interest rate is 8.00%, compounded annually. The interest accrual period to purchase MSERS creditable service immediately prior to ORP enrollment begins with the date the funds were transferred out of the MSERS. The MSRB has frozen the interest accruals as of December 31, 2013.[2]

ORP Participation

The cost of purchasing a participant’s total Years of Participation in the ORP as creditable service under the MSERS is the sum of the employee’s required contributions to the ORP, plus actuarial-assumed interest; or if greater, the sum of the employee’s required contributions plus all investment gains and interest accrued on those contributions in the ORP.

The actuarial-assumed interest rate is 8.00%, compounded annually, for service purchases submitted after January 1, 2014. The interest accrual period for purchasing ORP time begins with the employee’s first contribution to the ORP.

The MSRB has frozen the interest accrual at December 31, 2013. This means that: (A) the interest accrual period ends on December 31, 2013, and (B) the cost to purchase qualifying service will increase (beyond the estimate reported on the Statement of Service) only by the amount of contributions made to the ORP after the calculation’s end date.

The MSRB’s interest accrual freeze is applicable to the purchase of qualifying service made via a single lump sum payments to the MSRB upon first becoming a member of the MSERS.

The interest accrual will resume when all lump sum payments have been made to the Retirement Board, yet service remains to be purchased.  The accrual will be reflected in the use of payroll deductions, and when purchasing service with occasional lump sums over time in the future.

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9. Is “Other” creditable service available for purchase under Section 60?

No. “Other” creditable service, such as contract service, refunded creditable service under another Massachusetts retirement system, and military service may only be purchased after an eligible participant has become a member of the MSERS and completed the purchase of their qualifying service under Section 60.

PDFMore information about “other” service

“Other” service may be purchased in accordance with the MSRB’s current terms, including the interest rate used to determine the cost of purchasing other service. Note however, that some forms of “other service” (i.e. contract service) may only be purchased after satisfying the MSERS’ ten-year vesting requirement.

Information about different types of service that are eligible for purchase and use under the MSERS is available in the PDF Retirement Board’s “Guide to Benefits” . Hard copies are available from campus Benefits Administrators.

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10. What resources may be used to purchase qualifying service under the MSERS?

Under terms established by the MSRB, employees may use one or more of the lump sum sources identified below in combination with payroll deductions to purchase qualifying service during the one-time opportunity under Section 60.

Payment for the purchase of qualifying service under Section 60 must be made when the eligible participant becomes a member of the MSERS.

The Section 60 payment process has been structured to follow the MSRB’s standard practice of remitting payment in lump sums prior to use of payroll deductions to purchase service under the MSERS. The following information reflects this approach.

“Employee” Assets in the ORP—Mandatory Transfer

Under the law, the DHE must transfer all of the employee’s required ORP contributions plus the net investment gain and interest thereon, directly to the State Retirement Board to purchase qualifying service on behalf of the participant.  The DHE will initiate this transfer after the participant’s final contribution to the ORP.

Other ORP Assets—Voluntary Transfer:

  1. Original MSERS Transfer: Participants who transferred their original MSERS contributions to the ORP may instruct the DHE to transfer some or all of those funds plus the net investment gain and interest thereon to the Retirement Board to help purchase qualifying service. This instruction is included in the participant’s “MSERS Election Form” when reporting their intent to change their retirement plan coverage to the MSERS.
  2. Other Funds Rolled Into the ORP: Participants who rolled funds from other retirement plans and IRAs into the ORP may instruct the DHE to transfer some or all of those funds plus the net investment gain and interest thereon to the Retirement Board to help purchase Qualifying Service. This instruction is included in the participant’s “MSERS Election Form” when reporting their intent to change their retirement plan coverage to the MSERS.

Other Payment Venues—Voluntary Transfer

Where ORP assets, mandatory and voluntary, are not sufficient to purchase all of a participant’s qualifying service, the Retirement Board will determine the remaining balance of service and cost. The Board will send an invoice to the participant reporting the shortage, and highlighting the following payment methods. Under the terms of the invoice, the participant will have up to 35 days to complete the purchase using the following resources.

  1. SMART Plan Assets: Assets held under the Commonwealth’s SMART Plan may be directly transferred to the State Retirement Board to purchase Qualifying Service under Section 60. Funds held under the “OBRA Mandatory” and “OBRA Voluntary” programs may also be directly transferred to the State Retirement Board to purchase creditable service under Section 60. The MSRB will notify newly enrolled MSERS members under Section 60 when to contact Great West to arrange for the direct transfer of these funds to the State Retirement Board in order to purchase Qualifying Service under Section 60.
  2. 403(b) Elective Deferral Savings Plan: Assets held under the Commonwealth and/or University of Massachusetts’ “403(b)” Elective Deferral Savings plans may be directly transferred to the Retirement Board to purchase qualifying service under the MSERS. Eligible participants making these extra, voluntary contributions to VALIC, Fidelity and TIAA should not confuse these assets with their ORP assets. These “403(b) Plan” assets are held in separate products that are different from ORP accounts, even though the company and investment funds may be the same.

    Liquidity Issues: While most 403(b) products are transferable to the Retirement Board in a lump sum, participants should check with their 403(b) plan Provider to identify any assets in these plans that are invested in funds that cannot make a lump sum transfer to the Retirement Board. These accounts are typically fixed annuities issued by insurance companies.
  3. Assets in Other Retirement Plans: Assets in other retirement plans, such as 401(k) plans and IRAs, may be used to purchase qualifying service under the MSERS.

    Special Procedure:Assets in other retirement plans and IRAs must first be withdrawn from the plan and rolled over (tax-free) to an existing or new account under either the SMART Plan or a 403(b) Plan. The funds would then be directly transferred to the Retirement Board for the purpose of purchasing qualifying service under the MSERS.

    Eligible participants who need to open a new SMART Plan or 403(b) account for this purpose should contact their campus’ Benefits Administrator.
  4. Personal Assets: Eligible participants may make payments via check from personal assets, directly to the Retirement Board to purchase qualifying service under Section 60. Such payments are made on an “after tax” basis, and will be reported to state and federal taxing authorities as having already been taxed when payment is made to the participant or their beneficiaries.

Payroll Deductions

After all lump sum payments from the sources noted above have been made to the MSRB, eligible participants may purchase any remaining service under the MSERS through the payroll system. The payments are deducted from the employee’s earnings each pay period on an after-tax basis, and remitted directly to the State Retirement Board. These deductions accrue both interest and a carrying charge during the payment period.

MSERS members may set their contribution payment period from six months to five years. Such deductions are made on an “after tax” basis, and will be reported to state and federal taxing authorities as having already been taxed when payment is made to the participant or their beneficiaries. The MSRB will determine the amount of service to purchase via payroll deduction, and the cost per pay period, after all other sources of funding (i.e., lump sums) have been applied to an individual’s service purchase.

Participants initiate the payroll deduction system directly with the Retirement Board (not their campus administrator).

Interest Accrual: The accrual of actuarial assumed interest will resume upon commencement of the payroll deduction method of purchasing service.  Additionally, the Retirement Board assesses a 4% carrying charge to administer this program. 

Occasional Lump Sum Payments

Participants who do not purchase all of their qualifying service with lump sum payments upon entry in the MSERS may purchase their remaining qualifying service with the occasional remittance of lump sums directly to the Retirement Board.

Lump sums may be remitted to the Retirement Board, from time to time, whether or not a participant has engaged in the Payroll Deduction program to buy service.

The sources of these lump sums may be those noted above (i.e. 403(b) savings; other retirement plan assets; personal assets; etc).  Note that accrual of actuarial assumed interest resumes after the initial opportunity to purchase qualifying service, when the participant first becomes a member of the MSERS under Section 60.

Payment Sequence

Payment for qualifying service under Section 60 will follow this sequence:

  1. Lump sums transferred from the ORP (by the DHE);
  2. Lump sums transferred directly from the SMART Plan and/or 403(b) plans (by the participant);
  3. Lump sums from other retirement plans and IRAs rolled into the SMART Plan for direct transfer to the MSRB (by the participant);
  4. Lump sum payments of personal assets directly from the eligible participant (by the participant);
  5. Payroll deductions for any remaining service that must be purchased (by the participant; coordinated by the MSRB).
  6. Remittance of occasional lump sums for any service remaining for purchase.

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11. What will be done with the Employer-funded portion of ORP accounts?

The Commonwealth’s “Employer Plan Contributions” and any investment gains and interest accrued on these contributions may not be used to purchase qualifying service under Section 60.

Transfer to the Retirement Board: When an eligible participant becomes a member of the MSERS, the ORP Administrator, where applicable, will transfer all ORP assets in the participant’s account attributable to Employer Plan Contributions directly to the Retirement Board’s Pension Reserve Fund to help defray the employer costs related to providing the pension for each newly enrolled MSERS member under Section 60.

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12. Which ORP investment products have restrictions that limit their ability to be used to purchase qualifying service?

Jump to:   TIAA-CREF   Fidelity   VALIC

TIAA-CREF

The TIAA Traditional account has restrictions on the transfer of assets to another investment medium, including the MSRB. This investment fund provides guaranteed, fixed interest and is offered under the two products in the ORP noted below. While an overwhelming majority of participants hold funds in only one product, some participants do have assets in both.

It is important that each participant know which product(s) they hold with TIAA-CREF under the ORP, and the product’s respective provisions:

  1. The Group Retirement Annuity (GRA) requires that funds in the “TIAA Traditional” account be transferred-out to another investment medium only through a “Transfer Payout Annuity” (TPA). The TPA provides ten (10) installments over a period of nine years and one month.

    The GRA was issued to employees who joined the ORP before September 1, 2010.
  2. The Retirement Choice Annuity (RC) requires that funds in the TIAA Traditional Account be transferred-out to another investment medium, such as the Retirement Board, only through eighty-four (84) monthly Systematic Withdrawals (SWATs).

    The RC has been issued to employees joining the ORP since September 1, 2010.

Transfer Payout Annuity Liquidity: Assets held in a TPA, waiting to be transferred, may not be liquidated for the participant at any time.  The installments continue for their prescribed frequency and duration.

TIAA Exceptions

TIAA has provided two exceptions to their liquidity restrictions on the TIAA Traditional Account: one for those retiring soon, and one for those with small accumulations in the fund.

Retiring Soon: Participants who have provided notice to the Dept. of Higher Education of their intent to retire prior to January 1, 2017 (“retiring soon”) will have all of their TIAA Traditional Account assets liquidated to help purchase their qualifying service. This is a special benefit that TIAA has offered their customers, in addition to waiving the 2.5% surrender fee.

TIAA mailed an endorsement to all TIAA Traditional investors documenting this change to each participant’s TIAA contract.  The endorsement is applicable only for retirements prior to January 1, 2017.

Under the endorsement, participants may transfer their ORP participation to the MSERS and have the Dept. of Higher Education liquidate  and transfer their TIAA Traditional Account holdings to the Retirement Board to purchase qualifying service; and then retire immediately or at a later date as long as their employment termination date  precedes January 1, 2017.

Participants who are transferring their ORP participation to the MSERS and who have indicated their intent to retire soon to the Dept. of Higher Education, must also make this representation to TIAA-CREF.  This representation is documented on the “TIAA-CREF Retiree Direct Transfer form that will be included in the Retirement Plan Information Package for those who notified the DHE that they will retire before January 1, 2017.

Small Sum Transfer:  TIAA is also providing a “small sum” transfer to help participants liquidate their TIAA Traditional holdings for the sole purpose of purchasing qualifying service under Section 60.   Accordingly, participants holding less than $5,000 in the TIAA Traditional Account at the time of transfer may liquidate their entire Traditional Account holdings to transfer to the Retirement Board.

TIAA mailed an Endorsement to all TIAA Traditional investors, documenting this change to each participant’s TIAA contract.
Participants holding $5,000 to $9,999.99 in the Traditional Account may not utilize the Transfer Payout Annuity because the contractual minimum amount that may be transferred under a TPA is $10,000.

Other TIAA-CREF Investment Funds: All other investment funds offered by TIAA –CREF are fully liquid and can make a lump sum transfer directly to the Retirement Board.

Contact TIAA: Participants holding funds in the TIAA Traditional Account should contact TIAA-CREF directly to discuss establishment of the transfer-out installments described above.

Fidelity Investments

All investment funds offered by Fidelity are fully liquid and can be transferred to the Retirement Board to purchase qualifying service under Section 60.

VALIC

Notes on VALIC: VALIC has voluntarily waived the liquidity restrictions on their “Fixed Account Plus” fund, thus ensuring that all “Employee” assets at VALIC are available to help their customers purchase qualifying service. The waiver is only valid for eligible participants under Section 60, and only during the Section 60 implementation. The Fixed Account Plus is available under VALIC’s Portfolio Director Annuity. This product was issued to employees joining the ORP prior to September 1, 2010.

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13. When is payment for the purchase of qualifying service due to the State Retirement Board, and what is the sequence of payments?

Payment to the Massachusetts State Retirement Board (MSRB) to purchase qualifying service will be made upon becoming a member of the Massachusetts State Employees’ Retirement System (MSERS). The multi-part transaction will follow this sequence:

  1. After the MSRB receives the new member’s first contribution, they will prepare a current statement of Qualifying Service to reflect the employee’s ORP participation up to their final ORP contribution.  The MSRB will report the new service and cost figures to the Department of Higher Education (DHE).
  2. When the MSRB notifies the DHE that the updated service and cost calculations have been completed, the DHE will proceed, to the extent possible, to transfer all “Employee” assets in the participant’s ORP account to the Retirement Board to purchase as much Qualifying Service as possible. (See Question 10 – Employee Assets)
  3. Upon receipt of the “Employee” assets from the ORP, the MSRB will pay-down the total amount of Qualifying Service, allocating funds to the purchase of old MSERS time first and applying any remaining assets to the purchase of ORP time. Purchasing old MSERS time first allows the Retirement Board to establish a Membership Date for each person at the earliest possible time.
  4. After purchasing Qualifying Service with the ORP “Employee” assets, the MSRB will re-calculate the amount of service yet to be purchased, and report that amount to the new MSERS member via an invoice.
  5. The new MSERS member will have 35 days to accumulate and remit all other payment sources that can be transferred to the MSRB as a lump sum. (See Question 10 – Other Payment Venues)
  6. Upon receipt of the other sources that can make a lump sum payment, the MSRB will pay-down the remaining amount of Qualifying Service, allocating funds to the purchase of old MSERS time first and applying any remaining assets to the purchase of ORP time.
  7. Payroll Deduction Phase: After purchasing qualifying service with the other “lump sum” assets, the MSRB will re-calculate the amount of service yet to be purchased and report that amount to the new MSERS member via an invoice. The invoice will include information about purchasing remaining service via payroll deductions. The member returns the “bill” directly to the MSRB (not their campus administrator). The SRB will establish the payroll deductions. (See Question 10 – Payroll Deducions)

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14. Which MSERS rules will apply to eligible participants who leave the ORP to join the MSERS?

Eligible participants who choose to join the MSERS will be treated under the MSERS provisions in effect on the date the participant would otherwise have become a member of the MSERS, had they not joined the ORP.

This applies to plan features such as the participant’s contribution rate and the age and service requirements for retirement.

New provisions under the Pension Reform Act of 2011 are only applicable to eligible participants whose membership date will be on or after April 2, 2012.

The final determination of a participant’s membership date will be made by the Retirement Board.

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15. What if I am planning to retire in the next 12 months?

Participants planning to retire in the next 12 months should consider the following steps as a guide to the transition from active work to retirement under the MSERS; to help create reasonable expectations of the time needed to complete the process. Where possible, the MSRB and the Department of Higher Education (DHE) will expedite the Section 60 procedures for those ORP participants who reported their intent to retire in the next 12 months.

The MSRB will consider individuals who transfer membership from the ORP to the MSERS under Section 60 to have transferred membership into the MSERS pursuant to Massachusetts General Laws Chapter 32, §3(8)(a). Accordingly, the “two year rule” (which requires a certain members to complete two years of creditable service in order to be eligible to retire) would not apply. See G.L. c.32, §3(6)(e).

Sequence of Retirement Activities Under Section 60

Please note that there is some overlap of the individual steps, and several will be conducted concurrently.

  1. The participant submits their completed MSERS Application for Retirement (“S60”) to the DHE along with their other forms.
  2. As their retirement date approaches, the participant would make their Retiree Insurance selections and complete the Group Insurance Commission (GIC) Form-1 with their campus Benefits Administrator.  The campus Administrator will sign the Form-1 and submit it to the GIC on behalf of their employee.

    This is NOT the GIC Form-1 included in your Information Package. That Form-1 is for the sole purpose of purchasing the GIC’s long term disability insurance.
  3. The participant becomes a member of the MSERS.
  4. The Retirement Board (SRB) begins bringing the member’s Section 60 estimate of service and cost up-to-date.
  5. The participant terminates employment.  Their campus payroll office records the termination as a “Retirement” under the MSERS in their respective payroll system.
  6. The DHE submits the member’s MSERS Application for Retirement to the SRB.
  7. The GIC’s system identifies the member as a retiree in the payroll system.  The GIC coordinates this with their receipt of the GIC Form-1 (for Retiree Insurances); allowing Retiree Insurance coverages for the new Retiree.

    SPECIAL NOTE: The GIC expects the new Retiree to begin their retirement income from the MSERS within 60 days of their retirement. However, with confirmation from the Retirement Board that the member is retiring, the GIC may extend this deadline to 90 days.

    Upon expiration of the GIC’s 60/90 day period to begin a retirement income, the GIC would recharacterize the member as a Deferred Retiree, and bill the member for the difference between the (discounted) Retiree insurance rates and the (full) Deferred Retiree insurance rates.

    The GIC will continue billing the member as a Deferred Retiree until the member’s retirement income has begun. At this point, the GIC will refund the difference between the (full) Deferred Retiree premium rates to the (discounted) Retiree rates.
  8. The SRB completes the updated service and cost calculations to purchase the Qualifying Service under Section 60.  The SRB notifies the DHE to transfer ORP assets to the Retirement Board to purchase the service on behalf of the member.
  9. The SRB begins researching the member’s work history and service in preparation of calculating the monthly retirement income.
  10. The DHE submits the member’s ORP Employee assets to the Retirement Board to purchase service under Section 60. See Question No. 10 for information about using other assets to purchase service not covered by the participant’s ORP assets.
  11. If applicable, the member initiates the purchase of “other service” with the SRB.
  12. The SRB completes its thorough research of the member’s work history and service, then calculates the amount of monthly retirement income.
  13. The SRB’s first check will be retroactive to the member’s retirement date in accordance with this policy:

    MSERS Retirement Date:

    ORP participants who separate from their Commonwealth employment prior to the completion of the Section 60 transfer process; become members of the MSERS; and have not commenced any new employment with the Commonwealth, may select their separation date as their a retirement date for the start of their MSERS retirement allowance.

    For ORP participants who qualify to transfer to the MSERS pursuant to Section 60 because they were on an employer-approved leave of absence as of the qualifying date of this legislation, the date of their separation from employment for purposes of calculating a retirement benefit will be no earlier than the date on which their approved leave of absence ends.

    Any affected individuals who choose their separation date from the Commonwealth as their retirement date with the MSERS, and who have been employed in the public sector in Massachusetts, are subject to the statutory earnings and employment limitations for public retirees under G.L. c.32, §91.

    For those who have already submitted their MSERS Retirement Application to the DHE, the Retirement Board will contact each person to ask if they wish to amend their form to set a different retirement date. Please note, the start of retirement benefits cannot occur until all transfers of funds and any service purchases have been completed, and the member’s retirement account is in balance with the MSERS.

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16. What will happen to ORP insurance benefits for participants who choose to join the MSERS?

ORP Group Term Life Insurance

Group life insurance provided by the ORP will end for eligible participants who choose to enter the MSERS. The coverage will terminate at the end of the month during which the final ORP contribution is made to the Plan.

Conversion: Participants who choose to join the MSERS may convert their ORP Group Life Insurance to a policy that is owned and fully paid by the former ORP participant. While converted life insurance can be expensive, the insurance company is compelled to issue the coverage without proof of the individual’s good health. So, this can be an important source of insurance for those whose insurability may be questionable.

The DHE will provide a life insurance Conversion Form for each participant who becomes a member of the MSERS.

ORP Long-Term Disability Insurance

Long-term disability insurance provided by the ORP will end for participants who choose to enter the MSERS. The coverage will terminate at the end of the month during which the final ORP contribution is made to the plan.

No Conversion: The ORP long term disability insurance is not convertible to individually-owned coverage when the ORP participant changes retirement plan coverage, such as would be the case under Section 60.

Disability Claims: ORP participants who change their retirement plan coverage to the MSERS may be eligible to file a claim for benefits under the ORP long term disability policy after they have changed retirement coverage to the MSERS. The ability to file such claims will be dependent on individual circumstances and the provision of the ORP long term disability contract.

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17. Long Term Disability from the Group Insurance Commission (GIC)

GIC Disability Insurance

ORP participants who change their retirement plan coverage to the MSERS should consider purchasing the long term disability (LTD) insurance offered by the Group Insurance Commission (GIC). It is an important supplement to any disability retirement benefits payable under the MSERS.

The GIC has arranged a special open enrollment with UNUM, the current LTD carrier, on behalf of ORP participants who change retirement plans under Section 60:

  1. Participants who become MSERS members may enroll in the GIC’s disability plan without demonstrating their insurability.
  2. The only exception to this provision is where an employee had applied for this coverage in the past and was declined by UNUM. In these cases, the employee will have an opportunity to demonstrate their current insurability to UNUM, using the company’s standard Statement of Health form.
  3. The opportunity to purchase the GIC’s LTD coverage without demonstrating insurability is only available to those ORP participants changing plans under Section 60.

This open enrollment for the LTD coverage is available during the thirty-day (30) period that begins with the pay period end date when the participant’s first contribution to the MSERS is made.

GIC Form-1: The DHE will include GIC Form-1 in each Retirement Plan Information Package for those participants who are either active employees or on an approved leave of absence. Participants should use this form to indicate their intent to purchase the LTD coverage.

RETURN THIS FORM TO THE DHE ALONG WITH YOUR MSERS ELECTION FORM. DO NOT SEND THIS FORM TO EITHER YOUR CAMPUS ADMINISTRATOR OR THE GIC. The DHE will sign the form and send it to the GIC on your behalf.

Effective Date: The GIC will establish this coverage on your behalf. This process can take up to 60 days. So, participants should anticipate some period during which they are not covered by either the ORP’s LTD insurance policy or the GIC’s LTD policy.

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18. How does Section 60 affect an Eligible Employee’s insurance coverages from the Group Insurance Commission (GIC)?

GIC Retiree Health Insurance

GIC Retiree Health insurance is equally available to both ORP participants and MSERS members upon retirement. The GIC requires participants in both plans to have accrued at least ten total years of creditable service. However, each plan’s methodology for accruing service is different.

ORP participants need to have contributed to the plan for ten years of participation, regardless of whether their workload was full-time or part-time. Months of participation accrue for each month during which the participant makes a contribution to the plan. For example, an ORP participant working at 50% full time equivalency would have to work ten years in order to meet the service requirement to be eligible for Retiree Insurances from the Group Insurance Commission.

MSERS members need to be vested in the pension system before they can become eligible to retire. Vesting requires that an employee complete ten years of full-time employment before receiving pension benefits and GIC retiree health insurance. For example, an MSERS member working at 50% full time equivalency would have to work twenty years in order to be vested and meet the service requirement to be eligible for Retiree Insurances from the Group Insurance Commission.

In other words, any ORP participant who transfers to the MSERS must have completed the equivalent of 10 years of full-time employment either in the ORP, the MSERS or a combination of years under both systems, before becoming eligible for retiree benefits.

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19. What will happen if an eligible participant dies during the process of changing retirement plan coverage under Section 60?

Eligible Participants who die while changing their retirement plan coverage to the MSERS will be treated as a deceased participant in the ORP if they still hold assets in that Plan at the time of their death, and will be treated as a deceased member of the MSERS if they have become a member of that Plan at the time of their death.

Beneficiaries: ORP participants who change plans under Section 60  should use that opportunity to ensure that their beneficiary designation under the ORP is up-to-date.

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20. Are Social Security Offsets applicable to both ORP Participants and MSERS members?

Yes. The two Social Security Offsets, Windfall Elimination Provision and Government Pension Offset, are applicable to participants of each plan: the ORP or the MSERS. For more information, go to the Social Security Administration website.

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21. Where may Eligible Participants learn more about the two plans?

ORP Provisions and Features

Participants will find detailed information about the ORP on the ORP's web pages. Menu items along the left side of the page provide a wide variety of topics, including up-to-date information about Section 60.

Some key topics include:

Choosing A Retirement Plan: This section of the ORP web pages provides a helpful comparison of the two plans’ basic features.

Enrollment Center: Steps 1 and 4 provide extensive information about the plan’s providers – the services and investment funds they offer.

Drawing Benefits from the ORP: This section provides detailed information about eligibility to draw benefits from the plan, and the many payment methods available to participants and their beneficiaries.

MSERS Provisions and Features

The MSRB website includes extensive and helpful information about MSERS benefits, including a pension estimate calculator. 

Benefit Guide: The PDF Guide to Benefits provides a concise and invaluable description of benefits available under the plan, and a clear explanation of how retirement incomes are calculated.

Professional Financial Guidance

Participants who want or need assistance in assessing the benefits of the ORP and MSERS in relation to their personal career and retirement plans should consult a professional financial planner who is familiar with defined contribution (ORP) and defined benefit (MSERS) plans.

The Mass Financial Planning Association website provides information for consumers searching for a Certified Financial Planner (CFP designation).

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