The Retirement Fund is a private trust, established originally pursuant to a Declaration of Trust, dated January 1, 1948 (the “1948 Trust Agreement”). The Retirement Fund is a contributory defined benefit retirement plan for a single employer, and, as a governmentally sponsored plan, is exempt from the Employee Retirement Income Security Act of 1974 (“ERISA”). The Retirement Fund is governed by two documents: (i) the Amended and Restated Trust Agreement, dated July 19, 2019 (the “Trust Agreement”), by and among the Massachusetts Bay Transportation Authority (the “Authority”), Local 589, Amalgamated Transit Union, AFL-CIO (the “Union”), and the Retirement Board of the Retirement Fund, which superseded the 1948 Trust Agreement and the October 28, 1980 Amended Trust Agreement, and (ii) the Pension Agreement, dated as of July 1, 2014 (the “Pension Agreement”), which is the product of a collective bargaining agreement between the Authority and the Union. Capitalized terms not defined herein have the meanings ascribed to them in the Pension Agreement.
These frequently asked questions (these “FAQs”) are being provided to you for informational purpose only. Nothing in these FAQs is intended to supersede the terms and conditions of the Trust Agreement or the Pension Agreement. Notwithstanding anything to the contrary herein, the Retirement Fund reserves its rights to enforce the Pension Agreement and the Trust Agreement according to its literal terms which shall govern if, and to the extent, those terms differ from anything set out in these FAQs.
Who is eligible to become a member of the Retirement Fund?
Any person regularly employed by the MBTA is eligible to become a member of the Retirement Fund.
How does an employee contribute to the Retirement Fund?
Retirement contributions are deducted from the regular earnings (excluding overtime).
Are the matching contributions made by the Authority applied to the member’s balance in the Fund?
No. The Authority’s contributions are not applied to the member’s balance in the Fund. These contributions become an irrevocable asset of the Fund used for the benefit of its members.
What is the rate of interest earned by the member on his/her contributions? Does the member continue to earn interest after his/her employment with the Authority is terminated by reason of retirement, resignation or discharge?
Interest earned on contributions made on or after July 1, 1967, are compounded annually at a rate of three percent (3%). Note: This rate is set by the Pension Agreement and does not reflect the earnings of the Fund. No. A member stops earning interest on his/her contributions as of the last day of the month prior to his/her separation from the Authority’s service.
What is creditable service?
Creditable service is the total of membership service and prior service. Prior service is service rendered before January 1, 1948. Membership service is the period of service rendered starting January 1, 1948, for which a member made contributions to the Fund, with exceptions as follows:
- The period of time an employee is not working due to an injury on the job and is being paid workers’ compensation.
- The period of time spent in the military service by an employee who was a member of the Fund before leaving for military service, for which a maximum credit of 4 years is allowed, if such time occurs during a period of national emergency or such military service is compulsory.
How do part-time employees accrue creditable service?
For the purpose of determining the amount of retirement benefit, creditable service shall accrue at the rate of one month of creditable service, or fraction thereof, for each 173 pay hours received.
Is the employment date with the Authority the same as the membership date in the Fund?
No. Membership in the Fund begins when contributions are made to the Fund and is usually a short time after the employment date, typically 90 days after being employed.
Who is the Group A Plan?
Employees who became members of the Fund on or before June 30, 2023 are enrolled in Group A unless they elected to join Group B prior to the March 29, 2024 deadline and then accumulates at least 24 months of creditable service after such election.
Who is in the Group B Plan?
Those who are or become members of the Fund on or after July 1, 2023 are automatically enrolled in the Group B Plan and may not elect to join Group A. Employees enrolled in the Group A Plan that elected to join the Group B Plan prior to the March 29, 2024 deadline are enrolled in Group B once they have accrued 24 months of creditable service from the date of their election to join Group B.
When can a member retire?
Group A Plan:
- A member can retire at age 65 or older on a Normal Retirement.
- For a member hired before December 6th, 2012, an Early Normal Retirement is available with 23 years of creditable service.
- A member hired on or after December 6th, 2012, an Early Normal Retirement is available if the member is age 55 or older and has at least 25 years of creditable service.
- An Early Reduced Retirement is available if the member is age 55 or older and has at least 20 years of creditable service; however, the retirement allowance will be reduced by 1/2 of 1% for each month between the age at retirement and age 65.
- The plan provides for a Disability Retirement after 4 years of creditable service for an occupational disability or after 6 years for a non-occupational disability.
Group B Plan:
- A member can retire at age 55 with at least 10 years of creditable service on a Normal Retirement.
- A Group B member who accrues at least 10 years of credible service prior to obtaining 55 years of age may leave the employ of the MBTA and elect to begin receiving a vested retirement allowance anytime between the ages of 55-65. Vested retirement allowances are reduced based upon the number of months a member begins collecting their benefit prior to obtaining age 65.
- The plan provides for a Disability Retirement after 4 years of creditable service for an occupational disability or after 6 years for a non-occupational disability.
How is a member’s normal retirement allowance (non-disability and non-vesting) determined?
Group A Plan: The retirement allowance is determined by using the following formula: The average of the member’s highest three years of pensionable earnings, multiplied by 2.46%, multiplied by years and months of creditable membership service.
Group B Plan: The retirement allowance is determined by using the following formula: The average of the member’s highest three years of pensionable earnings, multiplied by the age multiplier based upon the member’s age at retirement (see Pension Agreement Article IV, Section 2(b)), multiplied by the member’s years and months of creditable service.
What is the date shown on the monthly retirement checks and when are they mailed to the retirees?
The monthly retirement checks are dated for the last day of the month. The checks are mailed 4 or 5 days before the end of the month in order for them to arrive at the retiree’s home by the last day of the month.
If a member leaves the employ of the MBTA, what happens to the Authority’s contributions made to the Fund on the employee’s behalf?
If a retirement benefit is sent direct deposit (ACH – wire transfer) to a bank or credit union, when is the benefit deposited into the retiree’s account and when are the funds available?
Does a member have a decision to make on how the pension will be paid?
Once a member has retired and elected either the maximum benefit or elected an option, can this election be changed?
How does unused sick leave affect the retirement allowance?
Can a member buy any service for which credit is not being received?
Who can an active or retired member contact with specific questions concerning health and life insurance benefits?
Can a member withdraw any money from the Fund and pay it back at a later date with interest?
Can I receive creditable service in the MBTA Retirement Fund for service with any other Federal, State, or local government agency?
If the surviving spouse is eligible to receive a monthly benefit, how soon does he/she begin receiving the benefit? Does he/she have to wait until the member would have reached age 65?
How are changes made in the Pension Plan?
If I leave the employ of the Authority and return at a later date, am I eligible to “Buy Back” my prior service?
How does a member qualify for a benefit under the Vesting Provision of the Fund?
Group A Plan: Under the Vesting Provision of the Fund, a member who has at least 10 years of creditable membership service may qualify for a benefit provided that his/her employment with the MBTA ended through no fault of their own. If a member resigns or is discharged for cause, he/she is not eligible for a retirement benefit under this provision.
Group B Plan: A Member qualifies for a Vested Deferred Retirement allowance if the member accrues at least 10 years of credible service, the member’s employment with the MBTA is terminated for any reason prior to becoming eligible for an immediate allowance per Article IV(2), and the member has not withdrawn their contributions from the Fund.
When is a member eligible to receive a vested retirement benefit?
Group A Plan: A member is eligible to receive a vested retirement benefit the first of the month following the member’s 65th birthday provided that (i) such member has 10 years of creditable membership service in the Fund, and (ii) such member’s employment did not end voluntarily or by termination (e.g., was permanently laid off).
Group B Plan: A member that has 10 years of creditable membership service (and was not eligible for a retirement allowance set out in Pension Agreement Article IV, Section 2) may begin collecting their vested allowance between the ages of 55-65 provided that such allowance will be reduced by one half of one percent (0.50%) for each month prior to their 65th birthday. All vested retirement allowances are calculated using the 2.46% multiplier.
Under what circumstances is the spouse of a member required to sign a spousal consent form?
When a member is about to retire, a spousal consent is required when the member elects to receive his/her benefit in the following manner:
No optional benefit for spouse
33 1/3% without pop-up
25% without pop-up
50% with pop-up
33 1/3% with pop-up
25% with pop-up
5, 10 or 15 years term certain benefits
Are retirement contributions deducted from Workers’ Compensation payments? Does the time out on Workers’ Compensation count as creditable membership service?
No. There are no retirement contributions deducted from Workers’ Compensation payments. As a result, it may exclude that year as a high year in calculating the high 3 year average.
Yes. When a member is out of work and receiving Workers’ Compensation payments, it does count as creditable membership service.
Workers’ Compensation Offset: Does my receipt of Workers’ Compensation payments affect my disability retirement benefit?
Possibly: If the payments that you receive under Workers’ Compensation are based on the same injury that qualified you for disability retirement, your pension benefit will be offset against your Workers’ Compensation for the same injury.
This means that your pension benefit will be directly reduced by the amount of the Workers’ Compensation benefit that you receive.
Workers’ Compensation payments that are based on an injury different from the injury that qualified you for a disability pension will not affect your disability retirement benefit.
Can taxes be withheld from my pension benefit?
Federal taxes can be withheld from your pension check each month. The amount of federal tax withheld from your monthly benefit can be changed at any time by filing a new W-4P form with the Retirement Fund.
The MBTARF Pension is not taxable in the state of Massachusetts. Retirees residing in Massachusetts should not include their pensionable earnings from the MBTA Retirement Fund as income on their Massachusetts return.
If a member has a question concerning the Fund or would like to obtain an estimate of his/her retirement benefit, whom should he/she contact for the correct answer?
All questions should be directed to the MBTA Retirement Fund at One Washington Mall, Boston, MA 02108 (617) 316-3800 or (800) 810-6228
