MEMBERS
1. Am I required to become a member of
the Retirement System?
Membership in the Leominster Contributory Retirement System is
a statutory requirement for all employees who work a minimum of
20
hours per week on a permanent basis. Only elected officials have
the
option of whether or not to join the System.
2. How much does a member contribute to
the Retirement System?
The amount a member contributes each year is a set statute, and
it is
determined by the date of your membership into the System. If
you
became a member prior to January 1, 1975 your contribution rate
is
5%. If your membership date was January 1, 1975 to December 31,
1983
your contribution rate is 7%. From January 1, 1984 to June 30,
1996 the
contribution rate is 8%. Any one who enters the System after
June
30, 1996 the contribution rate is 9%. In addition to these
contributions
any member who enters the System on or after January 1, 1979
must contribute an additional 2% of their salary in excess of
$30,000.
3. What happens to the money I
contribute to the System?
Once you become a member of the Retirement System, an Annuity
Savings Account is established on your behalf. All of your
contributions
are deposited into your account. Your contributions, plus any
accumulated interest, are credited directly to your account.
Each year, the Board issues a statement to all of its active
members that reflects the yearly and the total contributions,
along with the interest credited to your account.
4. Can I borrow money from my
retirement account now and pay it back later on?
No. Under State Law, your retirement account has no provisions
for withdrawal under any circumstances.
5. Can I receive a refund of my
contributions and will I get the interest on those
contributions?
You may receive a refund of your total contributions if you
officially
resign from your position with the City and it is not your
intention
to accept another position of employment that requires
membership in
another Massachusetts Retirement System.
If you voluntarily leave employment that began after January 1,
1984 and have less than five years of service, no interest will
be refunded to you. If you have served between five and ten
years of service, you will receive half of the interest. If you
have over ten years of service, all of the interest will be
refunded to you. It is important to note that if you do receive
a refund or your retirement contributions, we are required to
withhold 20% for your federal tax liability. Alternatively, you
can have the entire retirement contribution “Rollover” into a
tax-qualified IRA.
6. When am I eligible to retire?
You are eligible to retire at the age of 55 or older if you have
at least
ten years of creditable service. If you have 20 years of
service, you
can retire at any age.
7. What are the factors used to
determine my retirement allowance?
Because the Leominster Contributory Retirement Board is a
defined benefit plan, your benefits are determined by a formula.
The factors used to determine your benefits are: your age at the
time of retirement, your amount of creditable service, your
group classification and an average of your three highest
consecutive years of regular compensation.
8. What is the maximum retirement
allowance that I can receive?
The maximum benefit you can receive is 80% of your three highest
consecutive years of regular compensation.
9. Are there any additional benefits to
which I am entitled?
If you are a veteran as defined in the Massachusetts General
Laws,
a veteran’s credit will be added to your retirement allowance.
The
amount of credit will be equal to $15 per year for each year of
creditable service you have accrued, not to exceed 20 years or
$300. You will receive this additional benefit even if you are
already
at the maximum, or if the additional $300 puts your total
allowance over the 80% maximum.
10. What does the term “vested” mean?
When am I considered vested?
Vested is a term commonly used to signify the right to a
retirement
allowance at a later date. Vested benefits are those benefits
that a
member is entitled to today, not based on additional service.
You are
vested in the Leominster Contributory Retirement Board once you
have accumulated the equivalent of 10 years of full time
service.
11. Can I purchase creditable service
earned in another Massachusetts Retirement
System?
If you were a member of another retirement system subject to the
Provisions of Chapter 32 of Massachusetts General Laws, and you
withdrew your retirement funds, it is possible to buy back your
prior
creditable service. The Retirement Office where you previously
were a
member will verify your prior service, then calculate the amount
of your
buy back. You must repay the amount withdrawn, plus interest to
the date
of repayment. You may complete a buy back as a lump sum payment
or a
payment plan up to the number of years you wish to buy back may
be set
up.
12. Will prior years of creditable
service affect my membership date or contribution
rate in the Leominster Contributory Retirement Board?
If you have retirement contributions from a previous public
employer
directly transferred to our System, you are entitled to maintain
the level
of contribution you were paying in your previous employment. If
you
have received a refund of your retirement contributions from
your
previous retirement system and later became a member of the
Leominster
Contributory Retirement Board, your contribution rate will be at
the new
member rate, regardless of what you were paying in the prior
system.
If you should later purchase your prior service through a buy
back, your
contribution level will remain at the new member rate and will
not be
reduced to your previous rate.
13. How is creditable service achieved?
You earn creditable service towards your retirement allowance
for the
period during which you are contributing to the retirement
system. For
members of the System who work 20 or more hours per week on a
permanent basis service time starts accruing the day you begin
work and
continues until the day you separate from service.
14. Is regular compensation the same as
total compensation?
No. Regular compensation is the portion of your salary that is
subject
to retirement contributions. Overtime, bonus pay, severance pay,
payments made for unused sick time and certain other payments
are not
considered regular compensation, are not subject to retirement
and can
not be used towards your three year average for the purpose of
determining your retirement allowance.
15. What are the group classifications
within the Retirement System?
Group 1 – General employees, including clerical, administration,
technical workers, laborers and all other not otherwise
classified.
Group 2 – Fire or police signal operators or signal maintenance
repairmen; employees of the city who are licensed electricians.
Group 4 – Police Officers and Firefighters.
16. What are the different options I
can chose from when I retire?
Option A: This option provides you with the highest payment
monthly.
There is no payment to a beneficiary after your death.
Option B: This option provides you a lower payment monthly, but
after your death a lump sum payment is made to your beneficiary
of any remaining balance in your account. The total annuity
portion paid to you up until the date of your death is deducted
from your accumulated contributions. The remaining
balance is payable to your beneficiary.
Option C: This option provides you with a lesser monthly
payment. But
upon your death, your beneficiary will receive two-thirds of
your
monthly allowance, until he/she passes away.
17. If I leave my job what happens to
my contributions?
If you leave your job and are not going to work for another
Government unit which comes under the provisions of Chapter 32,
you may be eligible to receive a refund of your contributions.
If
you are leaving to accept another position with a Massachusetts
political subdivision subject to Chapter 32, then you must
transfer
your retirement contributions directly to your new retirement
system.
18. Is there any time limit after your
termination for requesting a refund of your
contributions?
No. You may request a refund of your funds at any time after
termination.
If you leave your funds on deposit, however, and later seek a
refund, your
deductions will only earn interest for two years after your
termination
date.
19. Can a member who is vested and who
terminates employment be eligible
for a refund?
Any member who terminates employment may be eligible to withdraw
their retirement funds. If the member is vested and has earned
the
right to a retirement allowance at a later date, careful
consideration
should be given to the value of the retirement benefit he/she
may be
forfeiting in exchange for a refund.
20. If I terminate my employment and
leave my money in the retirement system
can I retire at a later date?
If you are vested and terminate employment, you can choose to
“defer”
your retirement by leaving your money in the system until you
are
ready to retire.
21. What are the tax consequences if I
take a refund of my retirement contributions?
Your contribution and any interest that you receive from your
account
are subject to federal tax income (with exception of any
contribution
made prior to January 12, 1988). When processing a refund of
your
retirement contributions the Retirement Office is required to
withhold
20% of the taxable portion of your refund for federal tax. The
20% tax
payment is required only if the refund is made directly to the
member.
To defer tax payments, you must make a direct rollover of your
retirement funds to an Individual Retirement Account (IRA), or
another
type of retirement account with a financial institution. With a
direct
rollover, no tax is withheld and the entire portion of your
refund is
transferred. If you have both taxable and nontaxable
contributions
you may accept receipt of the nontaxable refund without tax
consequence
and the taxable portion maybe rolled over.
22. If I die before retirement, what
happens to my money?
If you are married and die before you retire, your surviving
spouse will
have the option of collecting a monthly benefit, including a
monthly
allowance for any children under the age of 18 or if a student
is in an
institution until the age of 22, or receive a lump sum payment
of your
contributions. Contact the Leominster Contributory Retirement
Board
Office at 978-534-7507 ext. 246 for more information.
RETIREES:
Annual Verification Statements
“Yes, I’m still alive! Please continue to send or deposit my
monthly benefit check.”
Annually every retiree and survivor receiving a monthly benefit
check from the Leominster Contributory Retirement Board will
receive an “Annual Verification Statement” form. Each
retiree/survivor must complete this form, sign and return the
form to our office promptly. If this form is returned to our
office by mail or delivered by someone other than the named
individual, the Retiree’s/Survivor’s signature must be notarized
by a Notary Public. If the retiree/survivor delivers the form in
person, a member of our staff will gladly accept this form from
them.
Failure to return the “Annual Verification Statement” in the
time allotted may result in a suspension of your retirement
benefits.
Please call the Leominster Contributory Retirement Office at
978-534-7507 ext. 246 if you have any questions.
Post Retirement Employment Restrictions
As a Massachusetts Public Employment Retiree, there are some
restrictions on post-retirement employment for any and all
Massachusetts Public Employees (including all cities, towns,
public schools, fire/water or health districts, housing
authorities, state agencies, state colleges and universities).
Restrictions also apply to federal grant funded positions with a
Massachusetts Public Employer.
Public sector employment for retirees is limited to both
aggregated hours and earnings per calendar year. Hours of
compensated work are limited to an aggregate of 960 hours per
calendar year. Earnings are limited to the difference between
your retirement allowance and the compensation paid for the
position you retired from. (For example the position you retired
from currently pays $30,000 and your retirement allowance is
$20,000, you are limited to the difference. $10,000 of earnings
from public sector employment is what you can earn per calendar
year). The rationale – as a public sector retiree, you cannot be
compensated (from public funds) more than you would have
received had you continued working in the position from which
you retired. You must cease all public employment when either
limit is reached. If you exceed either limitation, you will be
subject to reimbursement of all compensation in excess of limits
or you must waive receipt of your retirement allowance for the
period of re-employment with any public sector employer.
For regular Superannuation Retirees retirement employment in the
private sector is not subject to restrictions.
For all Disability Retirees all post – retirement earnings
including private sector earnings are subject to restrictions.
Reporting the Death of a Retiree or
Beneficiary
The option you chose when you retire determines the benefit
available for your named beneficiary. Please advise your family
or other beneficiary that benefits may be available to them and
to notify the Leominster Contributory Retirement Board upon your
death. They will need to provide us with a copy of your death
certificate for us to appropriately payout benefits to them.
If you retired after January 12, 1988 and chose Option C benefit
at retirement and your named beneficiary predeceases you, you
will be eligible for an increased benefit (Pop-Up) equivalent to
Option A calculations. In such a case you will need to notify us
and provide us with a copy of your beneficiary’s death
certificate. Upon notification and receipt of the death
certificate, we will adjust your allowance retroactive to the
date of your beneficiary’s death.
If you chose either Option A or Option B at retirement you may
change your beneficiary at any time by completing and submitting
a “Change of Beneficiary” form to our office. It is important to
note a specific form that can be obtained from the Leominster
Contributory Retirement Board is required to change a
beneficiary. No change will take effect unless that form is
received by our office.
It is also important to keep us informed of changes in addresses
for your beneficiary in the event we need to contact them upon
your death. To change a beneficiary’s address a specific form is
not required, simply call or write to the Leominster
Contributory Retirement Board, 25 West Street, Room 15,
Leominster, MA 01453.
Government pensions Social Securities
Benefits that you may receive from Social Security may be offset
by the pension that you receive from the Leominster Contributory
Retirement Board (which is a Government Pension Plan). The
amount of offset is determined by Social Security. While you do
not need to report your Social Security benefits to us, you do
need to report all benefits you receive from us to Social
Security. If you are subject to offset by Social Security, you
must report all changes in benefits (i.e. COLA increases) to
Social Security. Further information is available on the Social
Security Administration web site:
http://www.ssa.gov |
Leominster
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