Participants must draw a monthly income from their ORP account (retiree income) in order to satisfy the Group Insurance Commission’s (GIC) definition of a retiree; thereby enabling participants to purchase post-employment “retiree insurance” from the GIC.
The minimum amount of Retiree Income is the sum of one’s monthly insurance premiums, but not less than $100 per month.
Participants who use non-annuity “systematic withdrawals” (SWAT/SWP) and subsequently reduce their assets in the Plan to a point where their account cannot support a retiree income for the participant's life expectancy*, will no longer be considered to maintain a viable retiree income and will lose their eligibility for retiree benefits from the Group Insurance Commission.
*Or the joint life expectancies for participants purchasing insurance coverage for one or more other people.
Spousal Consent
Any married participant electing non-annuity payment methods must procure their spouse’s consent to waive their rights to the default payment method of a Joint and Survivor Annuity. Such consent may be made with the Participant’s Provider
The plan administrator will determine if a participant’s monthly systematic withdrawals are structured for their life expectancy. This will be done by comparing the participant’s current account balance, for funds available to be distributed by systematic withdrawal, to the sum required to fund an annuity that generates an equal amount of monthly income, at the participant’s current age.
For married participants, the annuity used for comparison purposes will be a fixed, joint and survivor annuity with 50% benefit to the spouse , with neither guarantee periods nor cost of living adjustments. The plan administrator will assume that both annuitants’ dates of birth are the same as the participant’s.
For single participants, the annuity used for comparison purposes will be a fixed, single life annuity with neither guarantee periods nor cost of living adjustments, at the participant’s current age.
The plan administrator will monitor the status of participants whose retiree incomes are paid by systematic withdrawal or other non-annuity venues. Any retiree whose account balance can no longer support the current (gross) monthly retiree income for the participant's life expectancy (or joint expectancies when also covering others) should change their payment method to an annuity. See the NOTE above concerning the loss of eligibility for Retiree Insurance benefits.
Your retiree income must be paid from a single ORP provider, on the first day of each month. The plan administrator may require you to consolidate your ORP assets with a single provider to generate an adequate income from one source.
Your retiree income must be sufficient to pay the cost of your retiree insurance benefits. The plan administrator will determine the adequacy of your income based on these factors:
The minimum “adequate retiree income” is one where total monthly retiree insurance premiums do not exceed the participant’s gross monthly retiree income from the plan.
If a participant’s income is not adequate to cover the cost of their retiree insurance, the plan administrator may require the participant to increase their amount of retiree income (systematic withdrawals) to be “adequate” to pay monthly premiums. However, such increase in the monthly income must be financially sustainable for the life expectancy (or expectancies in the case of two people covered by the Retiree Insurance benefits) of the Retiree.
In order to be eligible for the Insurance Commission’s retiree insurance offerings, a participant must begin receiving their retiree income within sixty (60) days of the later of:
Section 60 Pension ReformChoosing a Retirement PlanEligibility & EnrollmentORP Insurance BenefitsChanges in Employment StatusMaintaining Provider Account
Retirement & Post-Employment Insurance Benefits
Drawing Benefits from the ORPSocial Security Offset ProgramsDomestic Relations OrdersConnect @MassDHE
