PERAC Memo #9 - 2016: Buyback and Make-up Repayment Worksheets

Buyback and Make-up Repayment Worksheets

Summary

PERAC Memo #9/2016 transmits the updated 2016 buyback/make-up repayment worksheets and cumulative interest factor sheets for calculating service purchases under the various G.L. c. 32 provisions referenced in Memos #13/2005 and #28/2008. It clarifies that buybacks under §§4(1)(g½), 4(1)(l), 4(1)(l½), 4(1)(l¾), 4(1)(n), 4(1)(n½), 4(1)(p), 4(1)(r), 4(1)(s), and 4(2)(c) must use buyback interest only, while those under §§3(3), 3(4), 3(4A), 3(5), 3(6)(c), 3(6)(d), and 3(8)(b) may use either buyback or actuarial interest per Chapter 176 of the Acts of 2011 (see Memo #23/2012). Boards should begin using the new 2016 worksheets—selecting the correct version based on interest type and applicable investment return assumption—for all relevant buyback/make-up calculations going forward.

Full Text

PERAC MEMO # 9/2016

M E M O R A N D U M TO: All Retirement Boards FROM: Joseph E. Connarton, Executive Director RE: Buyback and Make-up Repayment Worksheets

DATE: January 21, 2016

Enclosed are the worksheets for calculating buybacks/make-ups and the cumulative interest factor sheets for calendar year 2016. These worksheets are to be used for buybacks and make- ups to be calculated under G.L. c. 32, §§ 3(3), 3(4), 3(4A), 3(5), 3(6)(c), 3(6)(d), 3(8)(b), 4(1)(g½), 4(1)(l), 4(1)(l½), 4(1)(l¾), 4(1)(n), 4(1)(n½), 4(1)(p), 4(1)(r), 4(1)(s) and 4(2)(c) as referenced in PERAC Memos #13/2005 and #28/2008.

Any buyback/make-up to be made under §§ 4(1)(g½), 4(1)(l), 4(1)(l½), 4(1)(l¾), 4(1)(n), 4(1)(n½), 4(1)(p), 4(1)(r), 4(1)(s) or 4(2)(c) will be calculated exclusively with buyback interest.

Any buyback/make-up to be made under §§ 3(3), 3(4), 3(4A), 3(5), 3(6)(c), 3(6)(d) or 3(8)(b) is subject to the provisions of Section 9 of Chapter 176 of the Acts of 2011 and as such could be calculated under either buyback interest or actuarial interest. Boards should refer to PERAC Memo #23/2012 for an explanation on when to use each rate.

Note that due to the number of unique investment return assumptions there are two repayment worksheets for buyback interest and two repayment worksheets for actuarial interest.

If you have any questions or need assistance in using this form, do not hesitate to call John Boorack at 617-666-4446 ext. 935.

Enclosures