Pensions for Town and School employees are governed by Chapter 32 of the Massachusetts General Laws. The town’s employees are not covered by Social Security. This is significant in that the town is not responsible for paying the employer share of 6.2% of wages earned.
Permanent employees who are hired to work 20 hours or more per week are enrolled in the Middlesex Retirement System (MRS). The age for retirement eligibility is different for public safety and non-public safety employees currently enrolled in the system. In addition to certain age criteria, in order for a person to become eligible (vested) for a MRS pension, the person must have a minimum of 10 years of pensionable service in the Commonwealth. Eligible teachers are enrolled in the Massachusetts Teachers’ Retirement System, which is funded by the state.
Current employees can retire at age 55 with 10 years of service at a rate of 25% of his/her top 3 years of earnings. With 20 years of pensionable service, these employees can retire at any age, but the calculation for determining the amount of the pension will vary based on age. As an example, an employee retiring at age 40 will receive 20% of his/her top 3 years of earnings. The youngest an employee can retire at the 80% maximum is age 52, providing the individual has 37 years of service.
Non Public Safety
Current employees can retire at age 55 with 10 years of service at a rate of 15% of his/her top 3 years of earnings. With 20 years of pensionable service, these employees can retire at any age, but the calculation for determining the amount of the pension will vary based on age. As an example, an employee retiring at age 50 will receive 20% of his/her top 3 years of earnings. The youngest an employee can retire at the 80% maximum is age 60 providing, the individual has 40 years of service.
Recent pension reforms enacted by the legislature affect employees hired on or after April 2, 2012 by increasing the minimum retirement age for non-public safety employees to 60 and changing age factors for pension calculations.
There are currently 226 Town of Weston retirees/surviving spouses collecting a pension. The 226 represent superannuation retirees, surviving spouses and disability retirees.
The annual pensions received by Weston retirees are, for the most part, modest. Superannuation retiree data provided by Middlesex Retirement System shows that, as of December 2009, approximately 66% (109 out of 165 superannuation retirements) of retirees were collecting an annual pension of less than $20,000. Forty-six retirees were collecting an annual pension between $20,000 and $49,999 and 10 retirees were collecting pensions between $50,000 and $79,999.
Pension Contribution by Employees
Employees contribute a percent of their base salaries and other qualified compensation toward their pension. Contribution rates by employees are as follows:
- Teachers hired after July 1, 2001: 11%
- Hired 1996 to present: 9% + 2% of compensation over $30,000
- Hired 1984-1996: 8% + 2% of compensation over $30,000
- Hired 1979-1983: 7% + 2% of compensation over $30,000
- Hired 1975-1978: 7%
- Hired before 1974: 5%
The annual assessment paid to the Middlesex Retirement System by the town is primarily to pay for Weston’s share of the unfunded pension liability for its employees and not to pay for benefits earned by current employees. An actuarial study applicable to FY11 determined that the normal cost for the town is 3.81% of payroll.
If an employee works in various municipalities over the course of his or her career, each municipality has to forward the employee contribution to the town from which s/he was previously employed. In essence, the pension contributions follow the employee from municipality to municipality. Effective January 1, 2011, when the employee retirees and chooses to take health benefits, the cost of the health insurance premium is prorated by the number of years the retiree worked for each town, and each town bears its prorated cost of the retirees health insurance premium. More information can be found on the Middlesex Retirement System’s website.