Under the Social Security law, there are two ways Social Security benefit amounts may be affected: through the Windfall Elimination Provision and the Government Pension Offset Provision. However, Medicare benefits will not be affected. Please refer to Social Security Information Form SSA-1945 (pdf). UMass Lowell employees are not subject to tax on compensation for the Social Security portion of the Federal Insurance Contributions Act (FICA). Employees do contribute to the Medicare portion of FICA taxes.
Massachusetts State Employees’ Retirement System (SERS)
The Massachusetts State Employees’ Retirement System (SERS) is a defined benefit plan. Membership in SERS is mandatory for nearly all UMass Lowell benefited employees. Benefits are calculated using a formula based on age at retirement, years of service contributing into the pension system and average of highest three consecutive years of salary. Vesting is after 10 years of creditable service. Members must make mandatory pretax contributions through payroll deductions. The amount of the contribution is based on when an employee joined the system. Currently, new employees must contribute 9 percent of their regular compensation. In addition, if an employee’s annual salary is $30,000 or more, an additional 2 percent will be withheld from that portion of the regular compensation that is in excess of $30,000; deductions start with the first paycheck. The plan caps contributions on compensation based on the federal compensation limit (for 2013, $255,000). For employees that become members of SERS on or after January 1, 2011, the compensation limit was lowered to 64 percent of the federal compensation limit (for 2013, $163,200). The Massachusetts State Board of Retirement is the SERS plan administrator. Please refer to the Retirement Guide for more information. Additional information on SERS is also available at the State Treasurer’s website.
Optional Retirement Program
The Optional Retirement Program (ORP) is an alternative to the Massachusetts State Employees Retirement System for certain faculty and administrators (excludes classified employees and post-doctoral research assistants) at the Commonwealth's public institutions of higher education. ORP is a defined contribution plan. Participants are immediately 100 percent vested in both employee and University contributions to their individual ORP account. The required participant contribution rates are the same as those under SERS. However, in the OPR plan, the Commonwealth makes a matching contribution of 5 percent of regular compensation, minus certain benefit and plan expenses. The plan caps compensation based on the federal compensation limit (for 2013, $255,000). For employees that became members of ORP after January 1, 2011, the compensation limit was lowered to 64 percent of the federal compensation limit (for 2013, $163,200). The Massachusetts Department of Higher Education is the ORP Plan Administrator. Employees are given 180 days from eligibility date to decide whether or not to participate in the ORP. This decision is irrevocable. For more information on ORP, please visit the Massachusetts Department of Higher Education’s website. Please review the key features of the SERS plan and the ORP plan.
Please note that all state government employees hired after April 1, 1986, are required to pay the Medicare portion of the Social Security tax. This tax is 1.45 percent on earnings up to a certain annual limit.