Pension Reform Update: September 2012
These notes provide an update on the DHE’s progress in implementing Section 60 of the 2011 Pension Reform Act (Chapter 176 of the Acts of 2011) which allows a one-time opportunity for certain ORP participants to change their retirement coverage to the State Employees’ Retirement System (MSERS).
The Department of Higher Education and the State Board of Retirement engaged outside counsel to prepare and submit a request for a Private Letter Ruling on the effects of allowing ORP participants a second opportunity to join the MSERS. Soliciting a Ruling is required under the Pension Reform Act in order to ensure that the second choice of plans would not jeopardize the tax-qualified status of the two plans: ORP and MSERS.
The request for a ruling was completed and was submitted to the IRS during the first week of September. The IRS accepted the request, but is not compelled to act on it. We do not know how they will react to it, or if they will ever issue a ruling on it. Please note, however, that the IRS would contact us if they were preparing a negative response; allowing an opportunity for the Commonwealth to present additional arguments to secure a favorable ruling.
The Department is sending a letter to all active ORP participants, and those on unpaid leave of absence, with an update on the status of this project. We will send a copy of the letter to you when it is mailed.
Work Histories: The Department has been working on queries that could provide accurate work histories for periods during which an employee participated in the ORP. The data would be used by the Retirement Board to prepare an estimate of the cost to purchase this time under the MSERS.
We have sent test files with work histories to the Retirement Board so they can assess the value of the data for their purposes. While testing has not been completed, their initial response has been positive.
Direct any questions you may have or receive about Section 60 to the Plan Administrator.
The next ORP Administrators' Workshop is not yet scheduled. Please check back for an announcement.
Pay Period End Date: May 18, 2013
Funds for this contribution should be transferred to the Program Providers within the next three to five business days. Your Provider may require several additional days to process the allocation and post the funds to your account.