Pension Reform III, effective November 16, 2011, created a new benefit structure for individuals who became members of Massachusetts public retirement systems on or after April 2, 2012.
How they differ, by provision
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| Provision | Membership Tier 1 | Membership Tier 2 |
|---|---|---|
| Effective membership date | Before April 2, 2012 | On or after April 2, 2012 |
| When eligible to retire (superannuation) | EITHER 20 years of creditable service, at any age, OR at age 55 with 10 years of creditable service. | At age 60 with at least 10 years of creditable service |
| Termination retirement formula | Available | Not available |
| Age factors | One age factor table; maximum factor of 0.025 reached at age 65 | Two age factor tables; one for members with 30 years of service, and another for members without 30 years of service; maximum factor of 0.025 reached at age 67 |
| Final salary average period | 3 years | 5 years |
| RetirementPlus additional 2% begins... | After 24 years of service (i.e., with 30 years of creditable service, the additional R+ percentage is 12%) | After 23 years of service (i.e., with 30 years of creditable service, the additional R+ percentage is 14%) |
| Contribution rate | Does not change | When the member has 30 years of creditable service, the contribution rate is decreased by 3%. Note: For Tier 2 members participating in RetirementPlus, the contribution rate will decrease from 11% to 8%; for those not participating in RetirementPlus, the contribution rate will decrease from 9%, plus 2% on earnings over $30,000/year, to 6%, plus 2% on earnings over $30,000/year. |
| Active data benefit formula for member-survivors | If member is under age 55 at the time of death, his or her age is increased by the number of years and months to reach age 55 (age factor 0.015); survivor's age increased by same period. | If member is under age 60 at the time of death, his or her age is increased by the number of years and months to reach age 60 (without 30 years of creditable service, the age factor is 0.0145; with 30 years of creditable service, the age factor is 0.01625); survivor's age increased by the same period. |
| Ordinary disability retirement benefit formula for nonveterans | If member is under age 55 at the time of retirement, the age factor for 55 is used (0.015). | If member is under age 60 at the time of retirement, the age factor for 60 is used (without 30 years of creditable service, the age factor is 0.0145; with 30 years of creditable service, the age factor is 0.01625). |
| Ordinary disability retirement excludable | Begins when retiree attains age 55 | Begins when retiree attains age 60 |
| Right to buyback interest on §3 SCPs after 4/2/2013 | None; all §3 purchases subject to actuarial interest after 4/2/2013 | If member had previously taken a refund from a MA contributory retirement system, then he or she may purchase §3 service at buyback interest if the purchase is made within one year of returning to MA public service. |