robin1234

My wife & I are planning to retire on or about January 1, 2013, so we are starting to iron out some previously-unresolved pension & retirement income issues.

We moved here in 1991, and I've been in employment that contributes to SS from day one (almost.) However, my wife worked for five years for the school district, for the first year as a substitute teacher then for four years as a classroom assistant. This obviously cuts down on her Social Security record tremendously, since teachers in Massachusetts (and other state and town workers) don't do Social Security, they have their own system. Well, the cash value in her Massachusetts Teachers' Retirement account is $3,400.. a bit meagre for five year's work and missing out on five years of SS.

I'm trying to persuade her to call the school HR/payroll people to get an insight into whether she has other credit beyond the $3,400, that could possibly be rolled over into SS or something. Meanwhile, does anyone in a similar situation have insights into this situation.. i.e. non-SS employment that is too few years to lead to a pension entitlement?

Thanks! I've looked at the Massachusetts Teachers' Retirement site and poked around on the web but can't seem to find anything..

Giantaxe

Well, call them!

I am pretty certain that that money can't be rolled over into SS. They are two entirely separate systems. How many years short is she of qualifying for a teacher's pension? She could presumably work however number of years it would take for her to qualify. Another possibility is buying years of contribution. In CA, you can buy years, but I think the funds must come from another retirement account. And of course MA might not offer such an option. Anyway, the bottom line is that you should be talking to to MA teachers' retirement folks.

Two other points: firstly, if she does get a teacher's pension, her social security will be reduced due to the SS windfall provision. It sucks. And secondly, she may be better qualifying on your SS record. She can get SS equal to 50% of whatever you qualify for (again, subject to the windfall provision).

robin1234

Yes, we know about the WEP .. thanks for the reminder though.

Right now we both have about 23 years credit with SS so have an approximately equal benefit predicted. (She has four or five years in the 1960s and early 1970s that I don't have..) If it wasn't for the "lost MA years" she would have five years more than me though, and would probably get to 30 years by 2013..

nun

I don't think you can buy into SS, but you could roll the money over into an IRA. Here is some info. p24 outlines the refund issues and may explain why the amount your wife is getting is so small

http://archives.lib.state.ma.us/bits...pdf?sequence=1

MA state DB plans are highly biased to long term service. It's a great benefit if you have 20 or 30 years. However, for shorter service the benefit calculation isn't so good and the MA state employee plan (not the same as MTRS) has 10 year vesting. People put in either 9% or 11% of salary and get a 4% match from the state.

robin1234

I think it is a fact of life that short term employees with state plans or defined benefit plans in general subsidise the career employees who are vested in the plans and get a good pension after 20 or more years of service. Having read the document you link to (thanks) I believe the $3,400 balance in her MA Teachers' retirement Plan account is simply her contributions returned to her on leaving, because she did not serve enough years to vest.

It just seems really unfair that this is combined with losing five years of potential SS contributions, because in Mass they don't participate in SS. Fortunately, my wife has worked for New York State for about 13 years and so is vested in that State employee system.. but in NYS they participate in SS as well, so luckily she was able to build up her SS here in NYS.

nun

If your wife ends up with less than 30 years of SS contributions she'll also have her SS payment slightly reduced by the Windfall Elimination Provision for the time she worked for MA. However, as here benefit from MA is so small I bet WEP will be tiny too.

I began working for MA at age 43 and took the option of the state's defined contribution plan rather than the defined benefit pension plan because of the 10 year vesting. I wasn't sure that I'd stay with them for 10 years. I now have almost 10 years service and the longer it goes the more I wish I had the DB plan. But I think there will be some changes to that, either bigger contributions or reduced benefits for current and new employees so having the the DC plan may be a good choice in the end. If I can average a 6% return on my DC investments (by no means easy) I'll be able to buy an annuity that will pay the same as the state pension.....or if I could just keep the money invested.