PERAC Memo #18 - 2009: Impact of Furloughs on Creditable Service and Regular Compensation
Impact of Furloughs on Creditable Service and Regular Compensation
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This memo clarifies that under G.L. c. 32, § 4(1)(c), retirement boards may—at their discretion, via board action—grant up to one month of creditable service for a member's unpaid furlough/leave period, regardless of how many separate leave periods occur. It also explains that if such service is granted, the member's pre-furlough regular compensation rate (per § 5(3)(b)) must be used for that period when calculating three-year average compensation, without requiring actual contributions, but only if that period falls within the averaging window. No mandatory board action is required beyond ensuring any discretionary creditable service grants and compensation calculations comply with this guidance.
Full Text
MEMORANDUM #18, 2009
M E M O R A N D U M
TO: All Retirement Boards
FROM: Joseph E. Connarton, Executive Director
RE: Impact of Furloughs on Creditable Service and Regular Compensation
DATE: April 14, 2009
Pursuant to G.L. c. 32, § 4(1)(c), when a member takes an unpaid leave (or furlough), the retirement board has the
option of granting up to one-month of creditable service to that member. The board is limited to granting up to one
month of creditable service and may not grant more than one month if a member has more than one period of unpaid
leave. The granting of such creditable service would require board action.
When a member takes a furlough and receives creditable service for that period, the member will be entitled to have
the regular compensation that they would have received but for the leave included in their three year average
compensation. G.L. c. 32, § 5(3)(b) allows the rate of regular compensation in effect immediately preceding the period
of absence to be used as the rate for the period of absence. The member need not actually make retirement
contributions for this period in order to receive this benefit. If the period of absence is not during the period used to
calculate the three-year average compensation, then G.L. c. 32, § 5(3)(b) is not relevant for retirement purposes.
We trust the foregoing is of assistance. If you have further questions or concerns, please contact this office.