PERAC Memo #7 - 2013: Follow up to PERAC Memorandum # 4/2013

Follow up to PERAC Memorandum # 4/2013

Summary

PERAC Memo #7/2013 follows up on Memo #4/2013 (buyback/make-up interest calculations and worksheet for 2013) by reminding boards that, per G.L. c. 32, §3(8)(b) as amended by Ch. 176 of the Acts of 2011, some service purchases must instead use actuarial assumed interest rather than buyback interest, depending on specific factors. Boards should read Memo #4/2013 alongside Memo #23/2012 for guidance on applying these rules, and should anticipate a forthcoming March memorandum clarifying the transition, since as of April 2, 2013, all purchases of prior non-membership service must be calculated using actuarial assumed interest. No immediate action is required beyond continued use of current guidance until the March memo is issued.

Full Text

PERAC Memo # 7 / 2013

M E M O R A N D U M TO: All Retirement Boards FROM: Joseph E. Connarton, Executive Director RE: Follow up to PERAC Memorandum # 4/2013

DATE: January 15, 2013

On January 9, 2013, PERAC issued Memorandum #4/2013 to the Retirement Boards.
This memorandum provides guidance and a worksheet for the Boards to use in calculating buybacks/make-ups, and cumulative interest for the calendar year 2013 using buyback interest.

The retirement boards are reminded that, pursuant to G.L. c. 32, § 3(8)(b), as amended by Section 9 of Chapter 176 of the Acts of 2011, depending upon a number of factors, the purchase of time pursuant to any part of Section 3 may have to be calculated using actuarial assumed interest. This change in the law will be reflected in a memorandum which PERAC will issue in March, just ahead of April 2, 2013, when all purchases of prior non-membership service will have to be made using actuarial assumed interest.

In the meantime, Memorandum #4/2013 should be read in conjunction with Memorandum #23/2012, which provides a detailed analysis of Service Purchases pursuant to G.L. c. 32, § 3 in the wake of Chapter 176 of the Acts of 2011.