CENTRAL MASS CHIEFS OF POLICE ASSOCIATION 2021 CONFERENCE - AUGUST 17, 2021 MICHAEL SACCO, ESQ.
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CENTRAL MASS CHIEFS OF POLICE
ASSOCIATION 2021 CONFERENCE
GARDNER, MASSACHUSETTS
AUGUST 17, 2021
MICHAEL SACCO, ESQ.
CHIEF EXECUTIVE OFFICER
WORCESTER REGIONAL RETIREMENT BOARD
THE IMPORTANCE OF A GOOD PENSION
MASSACHUSETTS PUBLIC PENSION SYSTEM Defined Benefit Plan Contributory Chapter 32, Massachusetts General Laws
MASSACHUSETTS PUBLIC PENSION SYSTEM 104 Retirement Systems 1 Law (Plan) Benefits, Contribution Rates, Accounting and Fund Structure for all Largely regulated by PERAC and Interpreted by Contributory Retirement Appeal Board and Appellate Court decisions
GOVERNANCE
5 Member Retirement Boards
Fiduciary Duty to System
ASSETS
3 Sources
Members’ Contributions
(deductions)
Government Appropriations
Investment Returns
FUNDING THE SYSTEM
Unfunded liability = accrued liability-assets
Normal cost + amortization
Target Date: All systems must be funded by 2040
varies by system – WRRS fully funded by 2036
PRIT FUND ASSET ALLOCATION AS OF DECEMBER
2020
Portfolio Completion
Strategies
9.77% Domestic Equity
Private Equity 22.36%
11.48%
Timberland
3.73%
Real Estate Intern'l Equity
9.26% 14.00%
Value Added Fixed
7.55% Emerging Mkts
Core Fixed Income 6.04%
15.81%
Domestic Equity Intern'l Equity Emerging Mkts
Core Fixed Income Value Added Fixed Real Estate
Timberland Private Equity Portfolio Completion Strategies
RETIREMENT BASICS
Membership
Members’ contributions
Interest, Retirement allowance
Types of Retirement
Payment OptionsMEMBERSHIP
The Retirement System is a “Defined Benefit Plan”
– the retirement benefit is defined by state law
Membership is mandatory
Members are classified by groups:
Group 1
Group 2
Group 3
Group 4GROUP 1
Officials and general employees including
administrative, clerical and technical workers;
laborers, mechanics and all others not
otherwise classifiedGROUP 2
Certain employees with physically demanding or
hazardous occupations such as ambulance
attendants, mental health hospital workers, licensed
electriciansGROUP 3 State Police
GROUP 4
Public safety officers – firefighters, police officers,
and corrections officers
Municipalities can elect to place EMTs in Group 4
Municipal light plant employeesMEMBERS’ CONTRIBUTION RATES
Members contribute a percent of their regular
compensation to the retirement system based on date of
membership
Prior to 01/01/1975 5%
On or After 01/01/1975 7%
On or After 01/01/1984 8%
On or After 07/01/1996 9%
**Members who first became employed after 01/01/1979 contribute
an additional 2% of regular compensation in excess of $30,000**INTEREST
The interest rate for 2020 was .1%
Members’ contributions earn interest on their
deductions in an amount determined by PERAC, in
consultation with the Commissioner of Banks, based
upon a survey of interest rates paid on individual
savings accounts of at least 10 Massachusetts banks
Unless the member leaves the retirement system and
withdraws his/her contributions, the interest rate has
little bearing on the ultimate benefit since the system is
a “defined benefit plan”RESIGNING FROM SERVICE
Upon voluntarily resigning from public service,
a member is entitled to the return of
accumulated deductions. The interest received
depends upon the years of service:
Creditable service Withdrawal
Less than 10 years 3%
More than 10 years Regular interestTYPES OF RETIREMENT
Superannuation
Ordinary Disability
Accidental Disability
SurvivorshipSUPERANNUATION RETIREMENT Based on age and service Must be age 55 with at least 10 years of service, or any age with over 20 years of service – Group 4 has no minimum service requirements Retirement allowance is determined by formula: (average rate of compensation X length of service X percent determined by age and job classification)
SUPERANNUATION RETIREMENT (CONTINUED)
Cannot exceed 80% of highest 3-year average
rate of regular compensation
For Group 1, 80% is earned after reaching
age 65 with 32 years of service
For Group 4, 80% is earned after reaching
age 55 with 32 years of service
Exempt from state taxMEMBERSHIP AFTER 04/02/2012 New age factors increase the age when a member’s allowance will be calculated using the maximum age factor Increase the minimum age at which a member can retire e.g. age 60 for Group 1 High 5 vs. High 3
THE RETIREMENT FORMULA
Creditable service
X Age Factor
X Regular Compensation (Highest
Consecutive 3 Years Average) =
Retirement AllowanceACCIDENTAL DISABILITY RETIREMENT Available to members who are permanently unable to perform their position’s essential duties by reason of a personal injury sustained or hazard undergone while in the performance of his duties Benefit – 72% of the member’s regular compensation, plus a portion of the member’s annuity, not to exceed 75% total Benefit is tax free at state and federal level, except annuity portion is taxable at the federal level
ACCIDENTAL DISABILITY RETIREMENT Police Officers are covered by the so-called “Heart Law” Presumes any permanently incapacitating heart disease or hypertension is presumed to have been sustained in the line of duty Must pass a pre-employment physical that did not reveal any evidence of either condition Rebuttable presumption – if there is medical evidence that the condition was caused by factors unrelated to employment, presumption will be offset
ORDINARY DISABILITY RETIREMENT Available to members who are permanently incapacitated from performing their position’s essential duties for reasons unrelated to employment Must have accrued at least 10 years of service prior to becoming incapacitated Allowance is calculated similar to a superannuation allowance, except age is elevated to 55
ORDINARY DISABILITY RETIREMENT Different calculation for veterans – veterans who have the 10 years of service will receive 50% of their regular compensation for the 12-month period immediately preceding the disability, plus a portion of their annuity Allowance is exempt from state tax, but fully taxable at the federal level
REGULAR COMPENSATION Base Salary or Other Base Compensation – Must be Regular, Recurring, Predictable and Guaranteed What’s In? – Base Pay, Longevity, Education Training/Certification, and Holiday Pay What’s Out? – Everything Else – Overtime, Retirement Incentives/Notice of Retirement, Bonuses, Working Extra Hours or Out-of-Grade, Lump-Sum for Sick or Vacation Time, Travel, Motor Vehicle Use, and Clothing Allowance
PAYMENT OPTIONS Option A – provides the highest payment to the retiree, with no payments to a survivor after the retiree’s death Option B – provides a reduced payment (approximately 2% less than Option A), that terminates at the death of the retiree, with the balance paid to the named beneficiary
OPTIONS Option C – provides a reduced payment (approximately 8%-12% less than Option A) during the retiree’s lifetime, with 2/3 of the allowance then payable to the beneficiary (“Pop-Up” provision) Option D – provides a lifetime benefit to beneficiary if member dies before retiring
POST-RETIREMENT CONSIDERATIONS Superannuation Retiree – only limitations are working in Massachusetts public sector Limits: Calendar year - 960 hours and you cannot earn more than the difference between what the position from which you retired is currently paying and your retirement allowance After you have been retired a full year – you can earn an additional $15,000 the following calendar year
POST-RETIREMENT CONSIDERATIONS Disability Retiree – subject to periodic medical examinations Earnings Restrictions – must annually file financial statement with PERAC, earnings cannot exceed the difference between what the position from which you retired is currently paying and your retirement allowance, plus an additional $15,000
HOT TOPICS
Involuntary Retirement 111F vs. Accidental Disability Post-Traumatic Stress Disorder
INVOLUNTARY RETIREMENT M.G.L. c. 32, § 16(1) - Any head of a department who is of the opinion that any member employed therein should be retired for superannuation, ordinary disability or accidental disability, in accordance with the provisions of section five, six, or seven, may file with the board on a prescribed form a written application for such retirement.
INVOLUNTARY RETIREMENT
Application must contain a fair summary of the facts
upon which the Application is based
Member must be served with the Application via
registered mail, return receipt
Member must be provided with his right to a hearing
before the WRRB, right of appeal
Member must be provided with a summary of
retirement options availableINVOLUNTARY RETIREMENT Right to a Hearing – Must be age 55 with 15 years of service or have accrued 20 years of service Post April 2, 2012 – Group 1 – Must be 60 years old with 15 years of service or have accrued 20 years WRRB policy – we conduct evidentiary hearings on each and every disability to determine the facts and whether a threshold case has been made
INVOLUNTARY RETIREMENT A Couple of Points: Involuntary Superannuation – the subject of the application must be either 55 (if a member before 4/2/12) or 60 (if a member on or after 4/2/12) Fact that employee is receiving injured on duty pay or worker’s compensation does not mean that person will automatically qualify for an accidental disability
INVOLUNTARY RETIREMENT Quick Case Study: Police Officer – suffers back injury opening the back metal door to the station while reporting for duty and is placed on 111F – less than 10 years of service Chief files an involuntary ADR application – we evaluate, determine the injury was not compensable – we don’t process the claim Police Officer will stay on 111F until he accrues 10 years to qualify for an ODR or until he reaches age 55 and he can then be put in for an involuntary superannuation
111F V. ADR M.G.L. c. 41, § 111F - Whenever a police officer or fire fighter of a city, town, or fire or water district is incapacitated for duly because of injury sustained in the performance of his duty without fault of his own M.G.L. c. 32, § 7 - Any member in service classified in …Group 4, … who is unable to perform the essential duties of his job and that such inability is likely to be permanent … by reason of a personal injury sustained or a hazard undergone as a result of, and while in the performance of, his duties at some definite place and at some definite time …, without serious and willful misconduct on his part
111F V. ADR Wormstead v. Town of Saugus, 366 Mass. 659 (1975) Police Officer on lunch break, driving back to the office and a second vehicle rear ends his vehicle Town of Saugus denied 111F benefits – SJC awards 111F benefits, and in doing so, specifically states Section 7’s accidental disability requirements are more restrictive
POST-TRAUMATIC STRESS DISORDER Emotional disabilities are personal injuries and compensable pursuant to M.G.L. c. 32, § 7 Police and Fire – extended exposure to traumatic events not compensable – must be an acute and documented emotional injury Issue – most police officer and firefighters who experience trauma and have an acute emotional response neither report it or have it treated
POST-TRAUMATIC STRESS DISORDER Problem – to qualify for an ADR, the injury or hazard must be properly documented or occurred in the 2-year period immediately preceding the filing of the disability application Documented – there must be either an injury report filed with the retirement board, or with the employer, or the employer must have some written notice that the injury occurred
POST-TRAUMATIC STRESS DISORDER More often than not – by the very nature of the condition, the police officer does not become incapacitated many years after the injury, and since they did not file an injury report, he cannot qualify for an ADR Incident reports are not injury reports – unless the incident report includes that the firefighter suffered an emotional injury or exhibited an emotional reaction, will not qualify
POST-TRAUMATIC STRESS DISORDER What can you do? Mandatory Critical Incident Stress Debriefing Removes the stigma from those who need some assistance May help the police officer to process the trauma and remain on the job Will create a paper trail that will document the incident in the event treatment is unsuccessful
THANK YOU! QUESTIONS?
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