PERAC Memo #14 - 1999: Noncontributory COLA
Noncontributory COLA
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This memo announces Chapter 456 of the Acts of 1998, effective April 15, 1999, which allows a local option COLA for noncontributory pension recipients (requiring local legislative body acceptance of both Chapter 456 and Chapter 17 of 1997), and a separate local option permitting uncompensated library trustees to purchase creditable service by paying into the annuity savings fund as if compensated at $2,500/year plus interest.
No immediate action is required of retirement boards themselves, since acceptance of the COLA provision rests with the local legislative body (Town Meeting, City Council, or County Advisory Council); boards should be prepared to implement the COLA for noncontributory retirees—including the FY1999 retroactive adjustment to July 1, 1998—once local acceptance occurs, and should be aware of the library trustee creditable service option if applicable.
Full Text
PERAC MEMO #14/1999 M E M O R A N D U M TO: All Retirement Boards FROM: Joseph E. Connarton, Deputy Executive Director RE: Noncontributory COLA DATE: February 23, 1999 The Governor has now signed Chapter 456 of the Acts of 1998. This Act, which adds G.L. c. 32, § 102(g) and § 103(h), grants by local option a cost of living adjustment (COLA) to individuals receiving a noncontributory pension. As the Act does not have an emergency preamble, it will become law on April 15, 1999. On or after April 15, 1999, the legislative body of a city, town or county can vote to approve this Act and grant a COLA to former employees who are receiving noncontributory pensions paid for by the governmental unit. In a town, this Act must be approved by the Town Meeting, in a city by the City Council in accordance with its charter and in a county by the County Retirement Board Advisory Council. A town which has a Town Meeting which concludes its meetings before April 15, 1999 must wait for the spring meeting or schedule a special town meeting to vote on this Act. In this first year, the legislative body must have accepted both Chapter 17 of the Acts of 1997 and Chapter 456 of the Acts of 1998 in order for recipients of a noncontributory pension to receive a COLA. Once both chapters have been accepted, recipients of a noncontributory pension will receive the same COLA as contributory retirees are currently receiving. As is the case with COLAs granted pursuant to Chapter 17, the noncontributory COLA for Fiscal Year 1999 will be retroactive to July 1, 1998. In future years in towns, cities and counties which have accepted Chapters 17 and 456, recipients of a noncontributory pension will automatically receive a COLA upon the granting of a COLA to contributory retirees upon the vote of the retirement board. Also in Chapter 456 is a separate local option that allows library trustees who did not receive compensation for their services to receive creditable service. This section inserts § 4(1)(o½) into Chapter 32. In order to receive such creditable service, a library trustee must deposit into the annuity savings fund an amount equal to what they would have paid if they had been compensated at a rate of $2,500.00 per year plus regular interest. We trust the foregoing is of assistance. If you have further questions or concerns, please contact this office.