Choosing a Retirement Plan

New faculty members and librarians have 180 days from their date of hire to make a choice between the Massachusetts State Employee Retirement System (MSERS) and the Optional Retirement Program (ORP) (contact Human Resources for exact date). If no choice is made members default to MSERS.

This is a very important decision with long-term consequences.  The FSU/MTA strongly encourages you to consult with a financial planner prior to making any decision regarding your retirement benefit option.

The basic difference between MSERS and ORP is:

• MSERS is a defined benefit plan.

This means that upon retirement you will receive a pension determined by a combination of age, years of creditable service, retirement group, and salary.  It requires 10 full-time equivalent years of creditable service to be vested. The Department of Higher Education points out that in a defined benefit plan, the employer bears the investment risk. For more information and to see the list of benefits that are offered with this program go to the MA state Treasurer’s website: http://www.mass.gov/treasury/retirement/ (be sure to look for the Benefit Guide under Publications).

• ORP (which offers you a choice of providers) is a defined contribution plan.

A defined contribution plan provides retirement income that, for the most part, is based on the assets that accrue in your ORP account. While the amount of contributions is prescribed by the plan, the amount of retirement income is not.  In this type of plan, you bear the investment risk. You are responsible for selecting investments for your account from those made available by your Provider. Your future payout may be retrieved in a lump sum or stretched out over time in consultation with your provider. NOTE: After 10 calendar years at any percentage of time as an ORP plan member, ORP members will be eligible to vest in the Group Insurance Commission retiree benefit plan even if they will not receive a pension per MSERS (the GIC is the state body that insures state employees; see below). For more information go to the Department of Higher Education’s ORP website: http://www.mass.edu/forfacstaff/orp/home.asp

IMPORTANT:

• By default, new faculty are automatically enrolled in MSERS.
• New faculty have 180 days from the start of employment to decide to switch into ORP.
• If you sign up for ORP, you can never switch to MSERS and vice versa.

• ORP, SERS Portability Differences

ORP funds may be reinvested by you regardless of when you leave employment. SERS funds are portable should you leave before reaching 10 years of state service. However, should your employment end after 10 years of service, SERS funds and benefits will be frozen, but you can access them upon retirement. 

• Early Retirement laws have not applied to members of the ORP

• Purchase of Prior Service Under MSERS