PERAC Memo #33 - 1999: Retroactivity of the Change in Contribution Rates of Dual Members, Cavanaugh v. MTAERB and CRAB

Retroactivity of the Change in Contribution Rates of Dual Members, Cavanaugh v. MTAERB and CRAB

Summary

This memo addresses the Cavanaugh v. MTAERB and CRAB Superior Court ruling, which requires that the correction of contribution rates for dual members (established in Woburn v. Crocker and PERAC Memo #11/1995) be applied retroactively to each member's original enrollment date, rather than only prospectively from February 3, 1995.

Boards must review records to identify dual members active before February 3, 1995 who overpaid contributions due to dual membership status—these are the same individuals whose rates were adjusted in 1995—and issue refunds (without interest) for the excess contributions collected between their dual-membership start date and February 3, 1995.

Full Text

PERAC MEMO #33/1999 M E M O R A N D U M TO: All Retirement Boards FROM: Joseph E. Connarton, Acting Executive Director RE: Retroactivity of the Change in Contribution Rates of Dual Members, Cavanaugh v. MTAERB and CRAB DATE: September 9, 1999 In PERAC Memo #11/1995, the Commission instructed retirement boards to change the contribution rate of dual members who were contributing at different contribution rates. This was the result of a 1995 CRAB decision, Woburn v. Crocker, which held that dual members were entitled to the contribution rate that was in effect when they first became a member of a retirement systems in all retirement systems of which they were members. CRAB determined that this decision should only be applied prospectively. The Commission instructed the boards to refund the resulting excess contributions prospectively from the date of the CRAB decision. The Superior Court in the case of Cavanaugh v. MTAERB and CRAB has now ruled that retirement boards must apply that decision retroactively to the date the member joined the first retirement system. This decision is final and will not be appealed further. In 1995, all retirement systems refunded any extra contributions from February 3, 1995 until the member’s contribution rate was corrected, but did not refund the extra amounts contributed between the date the member became a member of the second retirement system and February 3, 1995. Retirement boards must now refund that amount to affected dual members. Retirement boards must review their records to find any dual members who were members of two systems before February 3, 1995 and made extra contributions because of their dual membership status. These individuals should be the same individuals whose contribution rates were adjusted in 1995. A payment of the amount of extra deductions made between the date of the start of their dual membership and February 3, 1995 must now be made to those individuals (without interest). We trust the foregoing is of assistance. If you have further questions or concerns, please contact this office.