The State Employee Retirement System

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Introduction: For Massachusetts state employees, like myself, there is one big decision that has to be made after being employed. That decision is if you are going to select the State Employee Retirement System (MSERS), or the Optional Retirement Plan (ORP). Upon employment, any contributions are immediately put into the MSRES system; the employee has 180 days to indicate that he/she would like to switch over to the ORP. Once the decision is made it is irreversible. Because there is no reversing this decision, it is a decision that employees spend time thinking about what the best long-term decision is. Defined Benefit vs. Defined Contribution These two programs are different in that the MSERS is a “defined benefit” plan,…show more content…
It may also be structured as a “profit sharing plan.” This is a plan in which the employers can make the decision of how much to contribute each year. Unlike the money purchase pension plan, which requires a fixed amount to be contributed, the contributions in a profit sharing plan is usually in proportion of the employees pay. MSERS Plan The SERS plan, which is a defined benefit system, has calculations made on retirement benefits that are based upon combining the number of years served in addition to age. All employees in the pension plan have monthly contributions taken out of their pay check; all of their contributions are deposited into an annuity account. The amount that is contributed is defined by when state service is started. For new state employees, contribution percentages are set at 9% of the salary. There are regulations to how much can be contributed. If the employee makes $30,000 or more, there is an extra 2% added. Employees who have signed up for MSERS, are vested at age 55 after serving 10 years, or at any age with 20 years of service. At the time of retirement, the employee is eligible for monthly retirement benefits for the rest of their life. Vesting means the employee is entitled to the retirement benefits under the plan. Under the SERS plan, the retirement income is predictable. This is due to the
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