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Comparison of Plan Structures
The main difference between the ORP and SERS is the method of accumulating benefits. The ORP is a defined contribution plan; SERS is a defined benefit plan.
ORP — Defined Contribution Plan
A defined contribution plan provides retirement income that, for the most part, is based on the account balance at the time of retirement. Plan contributions and the account’s investment growth are tax-deferred.
While the contribution amount is prescribed by the ORP, the amount of retirement income is not. Income from a defined contribution plan can either be fixed or variable, reflecting the nature of the underlying investments.
The participant in a defined contribution plan selects the investments for plan contributions. Strong investment performance can help the account grow, providing large benefits at retirement. Conversely, poor investments can result in little growth.
To enroll in the ORP, employees must complete the enrollment forms and select a provider.
SERS — Defined Benefit Plan
A defined benefit plan provides predictable and guaranteed retirement income. Your employer is responsible for ensuring that adequate funds are available to pay the benefit that is promised to you at retirement.
The SERS is a defined benefit plan. A defined benefit plan provides predictable and guaranteed retirement income. The employer is responsible for ensuring adequate funds are available to pay the benefit promised at retirement. The funds are invested by professional asset managers hired by the Commonwealth. The success of the investment of these funds does not affect the benefit amount.
Under a defined benefit plan, the benefit received at retirement is predictable and guaranteed, because benefits are determined by a formula reflecting the average of the highest three consecutive years of salary, age, years of service, and group classification. A fixed income is then paid to during the employee's lifetime. Benefits are based on two components: the annuity savings fund and the pension paid by the Commonwealth.
Contact the Massachusetts State Board of Retirement 
for more information about the SERS.
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