Q. If I work full-time for the Town of Needham, do I have to join the Needham Retirement System?
A. Membership in the Needham Retirement System, a contributory retirement system, is mandatory for almost all Needham public employees who are regularly employed part-time or full-time. Seasonal, intermittent and those employed less than half-time are usually barred from membership. The Needham Retirement System, along with the 104 other public retirement systems in the Commonwealth, is governed by Chapter 32 of the Massachusetts General Laws.
Q. What does it mean to be a member of the Needham Retirement System?
A. Any public employee of the Town of Needham, who is regularly and permanently employed and contributing to the Needham Retirement System, is considered to be a member-in-service. Each pay period, a member-in-service contributes a percentage (based upon his/her entry into service) of his/her regular compensation.
A member’s contributions go into an Annuity Savings Account created by the Needham Retirement System. Annually, a member of the Needham Retirement System will receive a statement identifying the amount of funds in his/her account.
Once a member has accrued ten years of full-time creditable service, he/she becomes a "vested" member of the system. This means that at some point in time, once he/she fulfills the age requirement, the service requirement, and any other requirements, a lifetime retirement allowance may be granted.
Q. How much am I required to contribute?
A. You are required to contribute a set percentage of your regular compensation, and if applicable, an additional 2% on any regular compensation over $30,000.00 through regular payroll deductions. Your contribution rate is established by the Commonwealth’s retirement law (Chapter 32 of the Massachusetts General Laws) and is determined by the date on which you most recently became eligible for membership in a Massachusetts contributory retirement system and from which you continuously maintained your funds on account. Most of our members will establish membership in a contributory retirement system on the date that they start working as a public employee in Massachusetts.
The contribution rates are...
Before January 1, 1975 5%
January 1, 1975 through December 31, 1983* 7%
January 1, 1984 through June 30, 1996* 8%
On or after July 1, 1996* 9%
* An additional 2% deduction on any regular compensation over $30,000.00 (the "30-plus" deduction) is determined by your date of membership. If the date on which you establish membership in a Massachusetts contributory retirement system and from which you continuously maintained your funds on account is:
Before January 1, 1979..................NOT subject to "30-plus"
On or after January 1, 1979………..….Subject to "30-plus"
How to check your contribution rate:
Look at your pay stub. Divide the amount of your retirement withholding by your gross income, and then refer to the contribution rate chart. If your contribution rate is not correct, confirm your calculation with your payroll office and then contact the retirement system.
Q. Who is subject to the additional 2% contribution?
A. If a member’s date of membership begins on or after January 1, 1979 and his/her annual rate of regular compensation is $30,000.00 or more, then an additional 2% will be withheld from that portion of regular compensation in excess of $30,000.00.
Andy Assessor establishes continuous membership in October of 1993. Currently, his regular compensation is $50,000.00. Deductions in the amount of $4,000.00 (8% of the $50,000.00) will be taken. In addition, deductions in the amount of $400.00 will be taken which is 2% of $20,000.00 or the amount of her regular compensation over $30,000.00 ($50,000.00 - $30,000.00 = $20,000.00). Therefore, the total amount of retirement contributions on her regular compensation of $50,000.00 will be $4,400.00.
Q. Is regular compensation the same as total compensation?
A. No. Regular compensation is the portion of your salary that is subject to retirement contributions. Under M.G.L., Chapter 32, overtime pay, bonus pay, severance pay, any payments made for unused sick time, and several other payments, are not considered regular compensation, are not subject to retirement and cannot be used towards your three-year salary average for the purpose of determining your retirement allowance.
Q. How do I earn creditable service?
A. A member earns creditable service towards his/her retirement for any period of time which he/she contributes a percentage of his/her regular compensation to the retirement system.
Q. Why do I have less creditable service than my co-worker when I started working before he/she did?
A. The Needham Retirement System pro-rates creditable service for those members-in-service who work less than full-time as of January 1, 2015.
Q. I work for the Town of Needham and I also have a job in Newton. Do I get double service credit for my work?
A. Unfortunately, no. A member cannot be credited with more than one year of creditable service during any one calendar year.
Q. If formerly, I was a member of a Massachusetts contributory retirement system, and I withdrew my funds. Now, can I "buy back" that service and enter the retirement system at my earlier—and lower—contribution rate?
A. Unfortunately, no. While you may "buy back" that time in order to increase the total amount of your creditable service, your "buy-back" does not entitle you to your earlier contribution rate. You may purchase your service time only; however, not the benefit of the lower contribution rate.
Q. I need to pay off some bills. Can I borrow from my Annuity Savings Account?
A. Unfortunately, no. The retirement law (M.G.L., Chapter 32) prevents any withdrawals from a member’s Annuity Savings Account unless that member separates from public service.
Q. When I leave my job with the Town of Needham, what happens to my Annuity Savings Account?
A. A member has three options:
1. A member may leave his/her money on account with the Needham Retirement System to preserve his/her contribution rate should he/she return to work for the Town of Needham or for another Chapter 32 system (the Commonwealth of Massachusetts, or a different town, city, or county). Should a member find a job with another Chapter 32 System, the Needham Retirement System, upon notification from the new retirement system, would transfer his/her deductions to that system.
2. If a member is vested, he/she may leave his/her deductions on account with the Needham Retirement System, and he/she may receive a retirement allowance when all the retirement requirements have been met.
3. A member may roll his/her deductions into a qualified retirement plan with no tax penalties. Or, a member may take a lump-sum distribution of his/her accumulated deductions. If a member takes a lump-sum distribution, the Needham Retirement System will withhold 20% for the federal tax payment due on that portion of a member’s retirement contributions made after January 12, 1988. In addition, if a member takes a refund prior to reaching the age of 59 1/2, there may be an additional penalty due at years end.
Q. Do I need to let the Needham Retirement System know if I change my personal information, i.e. my address, my marital status, my beneficiary, etc.?
A. YES! The Retirement System needs to be notified immediately when there has been a change in a member’s address, marital status and/or beneficiary, etc. You must submit your changes in writing so that we may verify your signature.
Q. What is the maximum retirement allowance that I can receive?
A. The maximum retirement allowance that one can receive is 80% of your highest consecutive three or five years of regular compensation.
Q. When I decide to retire, what steps do I need to take?
A. Before a member gives his/her notice to your employer, please visit the office of the Needham Retirement System to verify your creditable years-of-service, to receive an estimate of your retirement allowance, and to make sure that everything is in order.
Once a member decides to retire, the staff of the retirement system will provide to you the necessary paperwork. At any time prior to his/her retirement date, a member may withdraw his/her retirement application. Once your retirement date has passed, no changes will be allowed.
Retirement applications may be submitted up to four months prior to a member’s date of retirement; however, the retirement system suggests submitting your application to our office sixty days in advance of your retirement date.
Q. What are the different ways you can collect a retirement allowance?
A. The retirement law of Massachusetts (M.G.L., Chapter 32) regulates your retirement allowance and allows you to receive the payment of a monthly retirement allowance by choosing one of the three options listed below:
1. Option A: This option provides for a lifetime retirement allowance to the retiree. This retirement allowance would cease upon the death of the retiree. The beneficiary would receive only the pro-rated portion of the last month’s retirement allowance.
2. Option B: This option provides for a lifetime retirement allowance to the retiree. Typically, this retirement allowance is about 1% less than the Option A retirement allowance. In addition, upon the death of the retiree, this option provides for a lump sum distribution of the retiree’s annuity, if any, to the named beneficiary of the retiree. On average, a retiree’s annuity will last 10-12 years into retirement. If the retiree dies within those 10–12 years, the named beneficiary will receive a one-time lump sum distribution of any monies remaining in the retiree’s annuity savings account, if any. If the retiree dies after that 10- 12 years, the named beneficiary will receive only the pro-rated portion of the retiree’s last retirement allowance. * Note: There are no restrictions on whom or how many individuals or entities may be named as the beneficiary.
3. Option C: This option, commonly referred to as the joint and last survivor allowance, provides for a lifetime retirement allowance to the retiree. On average, the retirement allowance that the retiree receives is approximately 9-11% less than the Option A retirement allowance. Upon the death of the retiree, this option provides for a lifetime allowance to a named beneficiary in the amount of 2/3 of the retiree’s Option C retirement allowance. If the named beneficiary should pre-decease the retiree, upon the date of death, the retiree will pop-up to his/her Option A retirement allowance. * Note: Beneficiary must be the member’s parent, sibling, child, spouse or former spouse who has not remarried.
Payments of retirement allowance are made on the last business day of each month.
Q. Will my Health Insurance be covered by the Town?
A. A member should check with the benefits administrator at the Human Resource Office in Town Hall to get details on health benefits in retirement.