About your benefits and the MTRS “defined benefit” plan
Your MTRS benefits are very important to your financial future—the MTRS is your retirement plan. During your retirement, your MTRS pension may be your greatest financial asset. The plan provides the following types of benefits to eligible members:
- Regular “service” retirement benefits
- Disability retirement benefits ordinary and accidental)
- Survivor and accidental death benefits (if you die while you are an active member)
Under the MTRS “defined benefit” plan, your retirement benefit is determined according to a set formula, and the amount is guaranteed regardless of fluctuations in the pension fund’s performance. Likewise, your benefit amount is payable for your lifetime.
In contrast, a “defined contribution” plan is dependent on the contributions made by the employee, and possibly by the employer, and the growth of those assets over time as they are invested in the financial markets. A defined contribution plan is very susceptible to fluctuations in the market; nothing is guaranteed.
How your MTRS benefits are funded
Your MTRS retirement benefits are provided as a contractual obligation of the Commonwealth, and, as such, are guaranteed by the Commonwealth.
The funding for your MTRS benefits comes from three sources:
- Employee contributions: your retirement contributions to the MTRS during your membership, which are invested in the Pension Reserves Investment Trust (PRIT) Fund;
- Investment earnings: the earnings on the PRIT Fund ; and,
- Employer contributions: the Commonwealth makes an annual appropriation from tax revenues for the payment of public employee retirement benefits. For the purposes of retirement benefits, the Commonwealth is the “employer” for public teachers. Local school district employers do not contribute toward their teachers’ retirement benefits.
About the PRIT fund
The Pension Reserves Investment Trust (PRIT, a pooled investment fund established to invest the pension reserve assets of the Massachusetts State Employees’ and Teachers’ Retirement Systems) is managed by the Pension Reserves Investment Management (PRIM) Board. PRIM’s mandate is to accumulate assets through investment earnings and other revenue sources in order to reduce the Commonwealth’s unfunded pension liability and to assist local participating retirement systems in meeting their future pension obligations.
The PRIM Board consists of nine elected and appointed members. The MTRS is well represented, as three of these members are:
- a member of our Board, who is selected by the other Board members (currently, Dennis J. Naughton );
- an active or retired member of the MTRS, who is elected by the MTRS membership (currently, Robert Brousseau, a retired educator of the Wareham Public Schools); and
- the State Treasurer, who is a member ex officio of both the MTRS Board and the PRIM Board, and who serves as Chairman of the PRIM Board (currently, Deborah B. Goldberg ).