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BHE settles MTA lawsuit over Optional Retirement Program

The Board of Higher Education has agreed to settle a lawsuit brought in 2001 by the Massachusetts Teachers Association on behalf of its members enrolled in the Optional Retirement Program.

The lawsuit challenged the BHE's failure to make, in a timely fashion, monthly contributions to designated employee retirement investment accounts.

The ORP, established in January 1994, is a defined-contribution plan that provides retirement and death benefits to employees of the BHE with fewer than 10 years of creditable retirement service at the time such employees become eligible to participate in the ORP.

Employees are required to contribute to the ORP through monthly payroll deduction – 8 percent for up to $30,000 of regular compensation and an additional 2 percent for amounts over $30,000 of regular compensation. The BHE is required to contribute into the ORP Trust Fund an amount equal to 5 percent of the regular pay of a participating ORP employee. One percent of the BHE contribution goes into an ORP Life and Disability Account. Costs of administering the ORP are also deducted.

While all required BHE contributions were ultimately made, a delay that occurred in the early months of the ORP's operation could have placed a proper rate of return for the employees in jeopardy. To resolve the issues raised by the lawsuit, the BHE will contribute a sum of money, in addition to regular contributions, to the retirement account of each person who currently maintains an ORP account and who established membership at any time from the inception of the ORP through Dec. 27, 2003.