New law may give members chance to transfer out of ORP
Higher education members enrolled in the Optional Retirement Program may soon have a one-time opportunity to transfer and buy back into the state retirement system, under the terms of a new law.
The ORP bill was among several amendments supported by the MTA that were included in a major pension overhaul passed by the Legislature in November.
While the legislation will officially become law on Feb. 18, there is still a pending technical issue related to tax code. The MTA and Massachusetts Community College Council Vice President Diana “Donnie” McGee, who led the grassroots lobbying effort to get the ORP bill passed, are working with staff members at the Department of Higher Education to resolve the issue with the Internal Revenue Service.
Unless the IRS rules favorably, McGee said, no transfers can take place. The ruling itself could take up to two years.
The ORP bill was first filed in 2009 by the MCCC after a significant number of higher education faculty members said that they weren’t given adequate or accurate information at the time they enrolled. Many reported that they had serious financial concerns and wondered if they would ever be able to retire.
The Optional Retirement Program is a defined-contribution pension plan. That means the plan provides participants with retirement income that, for the most part, is based on the account balance at the time of retirement. This is substantially different from a defined-benefit pension plan, which gives participants a specific amount of money at retirement based on a set of variables including length of creditable service, job classification and the employee’s average annual compensation.
Since 2009, McGee estimated that between 400 and 500 MTA members have lobbied legislators, written letters of support and testified at the State House in support of the ORP legislation. Many of these members, she added, revealed very personal stories about their financial concerns and struggles.
“It’s been an amazing journey,” McGee said. “Our grassroots efforts combined with the experience of MTA and MCCC leadership and lobbyists and the perseverance of union activists really proves that when we all work together, we can effect positive political change.”
MTA President Paul Toner also offered praise for those involved in the effort.
“I commend the MTA members who stepped out of their comfort zone to tell their stories,” Toner said. “That’s not easy to do, but it is incredibly effective and, hopefully, personally rewarding as well.”