definitions

Section 1 establishes the definitions for all key terms used throughout Sections 1–28 of Chapter 32, the Massachusetts public employee retirement law. It defines over 60 terms including member classifications, types of deductions, compensation concepts, retirement allowance components, and system-specific vocabulary. Retirement board administrators rely on this section to correctly interpret and apply every other section in the chapter, as terms such as 'regular compensation,' 'creditable service,' and 'accumulated total deductions' appear throughout and carry precise statutory meanings.

PERAC announces amendments to two regulations — 840 CMR 4.00 (Financial Operations/Standard Method of Accounting) and 840 CMR 25.00 (Field Examinations) — effective March 29, 2024. Key changes to 840 CMR 4.00 include a new definitions section, requirements for daily transaction entry and monthly Trial Balance/General Ledger runs, a chart of cash book submission deadlines, and a new mandate that board staff share monthly cash books and quarterly budget comparisons with all board members. Changes to 840 CMR 25.00 clarify the triennial examination process and how PERAC may incorporate CPA examination work while still conducting its own required examination.

The HERO Act (Chapter 178 of the Acts of 2024), signed August 8, 2024, makes substantial changes to veterans' creditable service buybacks under Chapter 32. It replaces the old 180-day window with a new deadline of within one year of vesting (effectively 11 years of creditable service), and creates a one-year grace period — until August 8, 2025 — for active members who missed their original opportunity. Most urgently, boards must send written notice to all active members by November 6, 2024, using the sample notice attached, and must begin providing veterans' buyback information to all new members at enrollment.

Chapter 149 of the Acts of 2024 (effective October 29, 2024) creates a new enhanced accidental disability benefit under G.L. c. 32, § 7 for firefighters, police officers, EMTs, and licensed health care professionals who suffer a catastrophic, life-threatening or life-altering permanent physical injury as the direct result of an intentional violent attack with a dangerous weapon. Qualifying members receive 100% of their regular compensation (reduced to 80% upon reaching mandatory retirement age), rather than the standard 72% pension, with prescribed survivor benefits for spouses and children. Boards must include Findings of Fact with every Violent Act Injury application submitted to PERAC for the required 30-day review.

This memo announces the 2023 federal compensation and benefit limits that apply to Massachusetts public retirement systems under Chapter 46 of the Acts of 2002, which brought G.L. c. 32 into compliance with IRC requirements. The general compensation limit under IRC § 401(a)(17) for 2023 is $330,000, and the annual benefit limit under IRC § 415 is $265,000 for members retiring at age 65 (reduced for earlier retirement). These limits affect only the highest-paid employees and no board action is required beyond awareness that they are in effect.

This memo announces the 2023 regular compensation cap applicable to members who joined a retirement system after January 1, 2011, as established by Section 23 of Chapter 131 of the Acts of 2010. Because the federal IRC § 401(a)(17) limit for 2023 is $330,000 (per Memo #2/2023), the 2023 cap on regular compensation for post-2010 members is $211,200 (64% of $330,000). Boards must ensure that compensation above this threshold is excluded when calculating retirement benefits for affected members.

This memo addresses a change in Massachusetts Paid Family and Medical Leave (PFML) law — effective November 1, 2023 under Chapter 55 of the Acts of 2023 — which now allows employees on PFML to supplement their benefits with accrued paid leave (sick, vacation, PTO, etc.), up to the employee's Individual Average Weekly Wage. Despite this change, PERAC clarifies that neither PFML benefits nor supplemental accrued leave payments constitute "regular compensation" under Chapter 32, relying on SJC precedent from Vernava I and Vernava II, because the employee is not performing services during leave; therefore, the period of PFML with supplemental pay does not generate creditable service. No board action is required beyond ensuring that retirement benefits are not enhanced based on income received while on PFML leave.

This memo announces the 2022 federal compensation and benefit limits applicable to Massachusetts public retirement systems under Chapter 46 of the Acts of 2002. The general compensation limit under IRC § 401(a)(17) is $305,000 for 2022, while the § 415 benefit limit is $245,000 per year for members retiring at age 65 (reduced for retirement before age 62). These limits affect only the highest-paid employees and are indexed annually.

This memo establishes the 2022 regular compensation cap for members who joined a Massachusetts retirement system after January 1, 2011, pursuant to Section 23 of Chapter 131 of the Acts of 2010. Because the federal § 401(a)(17) compensation limit for 2022 is $305,000, the 2022 cap on regular compensation for post-2010 members is $195,200 (64% of $305,000). Boards must apply this limit when calculating retirement benefits for affected members.

Following the SJC's February 4, 2022 decision in Vernava II (Worcester Regional Retirement Board v. PERAC), this memo provides comprehensive, action-required guidance directing all retirement boards to immediately implement the ruling that supplemental payments of any kind made concurrently with Workers' Compensation benefits do not constitute "regular compensation" under any section of Chapter 32. Boards must identify all active members, inactive members, and retirees who received such supplemental payments, remove previously awarded regular compensation and creditable service for periods of concurrent Section 35 Workers' Compensation receipt, recalculate allowances, and return all deductions taken on those supplemental payments. The memo includes detailed step-by-step instructions for active members, retired members, and their beneficiaries, and notes that PERAC is pursuing legislative relief for affected retirees.

Chapter 80 of the Acts of 2022, signed June 7, 2022, waives the post-retirement earnings and hours restrictions of G.L. c. 32, § 91(b) and (c) for superannuation retirees working in the public sector for calendar year 2022, effective retroactively to January 1, 2022. The waiver will remain in place through December 31, 2022 or up to 90 days after the end of the declared Public Health Emergency, whichever comes first, and does not apply to disability retirees. Compliance with post-retirement restrictions remains the statutory responsibility of the employee and the employer.

This memo advises retirement boards that the COVID-era Open Meeting Law waivers permitting fully virtual meetings were set to expire on July 15, 2022, and instructs boards to prepare to resume in-person meetings with a physical quorum, including the chair, present. Boards that have adopted remote participation policies under 940 CMR 29.10 may still allow some members to participate remotely, but a quorum must be physically present and all votes in such meetings must be taken by roll call. PERAC notes that competing legislative proposals to extend the waiver are pending and commits to notifying boards immediately if the waiver is extended.

This memo updates Memo #18 of 2022 to inform retirement boards that the Legislature and Governor extended the Open Meeting Law virtual meeting waivers through March 31, 2023, via Section 4 of Chapter 107 of the Acts of 2022. Until that date, retirement boards may continue to hold meetings without a physical quorum or the chair physically present, provided remote participation and adequate alternative means of public access are utilized. Boards that choose to meet in a publicly accessible location without alternative means of access must have a physical quorum present.

This memo provides a critical update to Memo #14 of 2022, informing boards that Section 149 of Chapter 126 of the Acts of 2022 (the FY2023 budget), signed July 28, 2022, protects all retirees who retired prior to July 1, 2022 from any reduction, modification, or recoupment of allowances due to the Vernava decisions. As a result, the instructions in Memo #14 regarding retired members and their beneficiaries are hereby superseded, and no retiree who retired before July 1, 2022 will lose their allowance, lose health insurance, or be required to reimburse the retirement system. All instructions in Memo #14 concerning active and inactive members who have not yet retired remain in full effect.

This comprehensive memo addresses the regular compensation status of vacation buyback payments following the enactment of G.L. c. 32, § 106 (Chapter 147 of the Acts of 2022) and the SJC's August 2022 decision in O'Leary v. CRAB. Under the new law, existing retirees whose allowances included vacation buyback payments are protected and their allowances will not be reduced; active members who were participating in such programs as of May 1, 2018, and whose retirement systems accepted contributions on those programs, may continue to have qualifying payments treated as regular compensation going forward. Boards are given detailed implementation instructions covering retirees, active members, and the interaction with CRAB's November 2018 partial stay order, which is now superseded.

PFML leave under G.L. c. 175M is not creditable service and PFML payments are not regular compensation for Chapter 32 purposes. The Act applies only to municipalities and political subdivisions that adopt it by majority vote; charter school employees are always covered. Boards should treat PFML leave the same as unpaid FMLA leave when computing creditable service.

Chapter 20 of the Acts of 2021 (signed June 16) extends two COVID emergency measures: (1) fully remote Open Meeting Law participation is permitted through April 1, 2022; (2) virtual notarization for annual affidavits is extended through December 15, 2021. Updates and supersedes portions of Memo #16/2021.

Announces the 2021 Pension Fraud Prevention Campaign ("Help Take a Bite Out of Pension Fraud!") and distributes posters, brochures, and Referral Report forms for display. The PERAC fraud hotline is 1-800-445-3266; reports can also be submitted to PensionFraud@per.state.ma.us or at mass.gov/pensionfraud.

Follow-up to Memo #11/2020 (Gomes/Plymouth decision) addressing three board questions: (1) detail pay counts toward the $5,000 annual compensation threshold; (2) the "same department" requirement applies only to firefighters, not police; (3) members ineligible for § 4(2)(b) service are not barred from purchasing prior service on a day-for-day basis under other provisions such as G.L. c. 32, § 3(5), depending on their employment status.

This memo informs boards of the CRAB decision in O'Leary v. Lexington Retirement Board (CR-15-30), which rejected PERAC Memo #39/2012 and held that vacation buyback payments can never constitute regular compensation. Because both PERAC and the member have appealed to Superior Court, the CRAB decision is not final, and boards must continue evaluating vacation buyback plans under Memo #39 during the pendency of those appeals; no current allowances based on such payments should be recalculated in the interim. Payments for unused sick time remain excluded from regular compensation under Fair v. Middlesex County Retirement Board (2016).

This memo supersedes Memo #26/2018 and Memo #39/2012 in light of CRAB's November 6, 2018 partial stay in O'Leary v. Lexington Retirement Board. Under the partial stay: retirees who retired on or before November 6, 2018 are unaffected; active members must no longer have contributions withheld on unused vacation pay going forward (but no refunds of prior contributions pending judicial review); and members retiring on or after November 6, 2018 must have vacation buyback payments excluded from their benefit calculation, with any contributions taken on such payments refunded at retirement. PERAC confirms the Order applies to all 104 retirement boards, not just Lexington.

This memo announces the federal compensation and benefit limits applicable to Massachusetts retirement systems for 2017 under Chapter 46 of the Acts of 2002, which brought state law into compliance with IRS requirements. For 2017, the Section 401(a)(17) compensation limit is $270,000 and the Section 415 annual benefit limit is $215,000 for members retiring at age 65. These limits affect only the highest-paid employees and boards should contact PERAC's actuary with questions.

This memo announces the 2017 regular compensation cap for members who joined a retirement system after January 1, 2011, under pension reform provisions of Chapter 131 of the Acts of 2010. The cap is set at 64% of the federal IRC § 401(a)(17) limit, resulting in a maximum regular compensation of $172,800 for 2017. Boards must apply this limit when calculating contributions and benefits for post-2011 members.

This memo summarizes revisions to the retirement board election regulations (840 CMR 7.00), effective March 11, 2016, which update terminology (e.g., defining "member in service," "member inactive," and "retiree"), clarify voting/eligibility rules (inactive members may vote but not serve; board staff cannot be elected to their own board absent grandfathering), and revise notice requirements—including a 90-day notice deadline with an exception process, mandatory copying of PERAC on election notices, and provisions for future use of electronic notification. Boards should review the attached full regulation text and their election procedures for compliance, particularly regarding notice timing/content and eligibility rules, and must contact PERAC in writing if seeking an exception to the 90-day notice requirement or if planning to use electronic notification methods.

PERAC Memo #23/2015 announces the 2015 fraud prevention poster campaign, "Stop Pension Fraud. It is not a Game," which promotes PERAC's fraud reporting hotline and email address, and encloses posters, brochures, and "Referral Report of Potential Fraud" forms. Boards should display the enclosed posters and brochures prominently in their offices and make the referral forms available to staff and the public for reporting suspected pension fraud, contacting PERAC's Communications Director for additional copies if needed.

PERAC Memo #17/2014 informs boards of an IRS Private Letter Ruling (dated August 20, 2013) clarifying the federal (not state) tax treatment of Chapter 32 disability retirement allowances and related survivor/death benefits, covering ordinary and accidental disability pensions, dependent allowances, and benefits under Sections 9, 94/94A/94B, and 100. Boards should apply these tax-status determinations prospectively from August 20, 2013 (the PLR's effective date) and correct the tax reporting/withholding treatment of any affected benefits paid on or after that date accordingly; no retroactive corrections prior to that date are required.

PERAC Memo #26/2013 announces this year's fraud-awareness poster campaign, "Pension Fraud! Let's Cut it Out!", promoting the fraud hotline and PensionFraud@per.state.ma.us email address, and encloses posters, brochures, and "Referral Report of Potential Fraud" forms. Boards are asked to display the posters prominently in their offices and other high-visibility locations, ensure staff use the referral forms to report suspected fraud to PERAC's Fraud Prevention Unit, and make the forms available to the public; additional copies can be requested from PERAC's Communications Director.

This memo clarifies that the IRS Form 5300 "participant" count (Line 4e) prepared by Ice Miller only included active and retired members, but per IRS instructions, the definition also requires including non-retiree inactive members with nonforfeitable vested benefits and beneficiaries of deceased employees entitled to benefits. Boards must review their IRS Determination Letter packet and hand-write the corrected total participant count (adding any applicable inactives/beneficiaries) on page 4, box 4e, before returning it to Ice Miller; boards that already submitted their packets should instead email Judith Corrigan or Patrick Charles at PERAC to coordinate the correction.

PERAC Memorandum #34 (2013) announces the Commission's adoption of final regulations (840 CMR 3.07 and 3.10), effective November 22, 2013, implementing the federal HEART Act. These regulations require that members who died or became disabled on or after January 1, 2007 while performing qualified military service be treated as if reemployed immediately before death/disability, entitling them (or their beneficiaries) to accelerated vesting, survivor benefits, and creditable service up to the date of death or disability. Boards must proactively search their records (manually or electronically) to identify all members who died or were disabled during military leave, or who were previously denied creditable service or benefits for such leave, and contact those members or their beneficiaries to determine eligibility for additional benefits, including potential recalculation of §12(2)(d) survivor benefits or reinstatement of withdrawn deductions to qualify for disability or superannuation retirement.

**Summary:** This memo explains that Chapter 198 of the Acts of 2011 restores the validity of "Evergreen Clauses" in collective bargaining agreements, allowing contract terms to remain in effect beyond three years until a successor agreement is negotiated. As a result, payments that qualified as "regular compensation" under the Chapter 21 (2009) grandfather clause—and were included in a contract in effect on May 1, 2009—may continue to be treated as regular compensation (through June 30, 2012) if the underlying contract remains in effect via its stated term or an Evergreen Clause, provided the payment is for "services" rather than a "tool" (per the *O'Brien v. CRAB* decision). **Action required:** Boards should review affected collective bargaining agreements to confirm whether Evergreen Clauses apply, verify whether specific payments (e.g., clothing allowances) qualify as compensation for services versus tools, and adjust regular compensation determinations accordingly for reporting/withholding purposes through the June 30, 2012 cutoff.

This memo transmits the newly required 2011 Statement of Financial Interests form and instructions, issued under new G.L. c. 32, §20C (as added by Chapter 176 of the Acts of 2011), which mandates financial disclosure by retirement board members. Boards must ensure every member serving as of February 16, 2012 files the statement by 5:00 PM on May 1, 2012, and that any member newly appointed/elected on or after that date files within 30 days of taking office; note that "immediate family" is defined narrowly as a spouse and dependent children residing in the household.

This memo explains that Chapter 176 simplified PERAC's investment review process: the detailed "Application for Exemption" is eliminated, and PERAC now issues an "acknowledgement of receipt" rather than an exemption/waiver for manager and consultant investments. Boards must submit specific documentation before investing with a manager or retaining a consultant—including procurement and vendor certifications, disclosure forms (placement agent, conflict of interest, compensation), prohibited investment compliance certification, consultant report certification, and individual board member certifications—and obtain PERAC's acknowledgement before proceeding, which PERAC may withhold if not in the system's best interest. Boards should also review this memo alongside related PERAC memos (#22, #15, #7/2012 and #35, #34/2011) for full context on the reform law's investment and disclosure requirements.

This memo explains the anti-spiking provisions in Sections 14 and 18 of Chapter 176 of the Acts of 2011, which cap the regular compensation used to calculate retirement allowances for members retiring on or after April 2, 2012. Boards must review every applicable retirement calculation under both sections (as a benefit could violate either or both), and must confirm to PERAC that this anti-spiking review was performed—either through submission for approval or, for boards with waivers, via attestation. PERAC notes it is developing calculation worksheets to assist boards and will notify boards once these are available.

PERAC Memo #39/2012 clarifies the treatment of payments made when employees sell back unused vacation leave (distinct from payments for unused sick, personal, or other event-based leave, which are excluded from this analysis), superseding Memos #25/2000 and #26/2000. It directs boards to apply the two-part regular compensation threshold test—whether payments constitute base/"other base compensation" and whether they represent "services performed"—consistent with Chapter 21 of the Acts of 2009 and 840 CMR 15.03(3), and to only treat such buy-back payments as regular compensation (subject to retirement deductions) if both prongs are satisfied. Boards must review applicable collective bargaining agreements and vacation buy-back provisions to make this individualized determination for each payment arrangement, and are also reminded of their obligation under Chapter 176 of the Acts of 2011 to retain and review CBAs for Chapter 32 compliance.

PERAC Memo #51/2012 clarifies the requirements of G.L. c. 32, §23B, which mandates that contracts with investment service providers include specific fiduciary, disclosure, and indemnification terms: providers must be designated fiduciaries, must annually disclose compensation arrangements and conflicts of interest to the board and PERAC, and contracts may not contain provisions indemnifying the contractor by the retirement board. The memo explains how these requirements apply particularly to complex structures like partnership/trust agreements (e.g., general partners in limited partnerships) where the "contractor" and indemnification language must be carefully identified. **Action required:** Boards must review and ensure all investment service contracts—including partnership and trust agreements—comply with §23B's fiduciary, disclosure, and no-indemnification requirements, and should consult legal counsel to properly apply these terms to non-standard investment vehicles.

PERAC Memo #54/2012 reminds retirement boards that all "investment service providers" (managers, consultants, custodians, trusts, proxy/litigation services, and related vendors) must file annual disclosure forms with both the board and PERAC by January 1 of each year, and as part of any RFP process, per c. 32 §23B and 840 CMR 17.04(7)-(8). Disclosures must cover compensation arrangements (paid or received, directly or indirectly) related to services provided to the board or any other client, as well as any potential conflicts of interest. Boards are asked to forward this notice to their vendors to ensure compliance and confirm required disclosures are filed on time.

This memo summarizes the SJC's decision in Boston Housing Authority v. NCFO (2010), which invalidated automatic "evergreen clause" extensions of collective bargaining agreements beyond the three-year term set by G.L. c. 150E, §7(a), while still permitting bridge agreements negotiated after expiration. PERAC flags that this ruling may impact Section 23 of Chapter 21 of the Acts of 2009 (the regular compensation "grandfathering" provision tied to CBAs in effect on May 1, 2009): members whose CBA coverage on that date relied solely on an evergreen clause—rather than an actual contract term or bridge agreement—may not qualify for continued regular compensation treatment through June 30, 2012. Boards should carefully review affected members' CBA status as of May 1, 2009 when determining regular compensation eligibility, and monitor the pending Picone v. City of Leominster appeal, which addresses this issue directly.

This memo announces PERAC's initiation of the process to revise its Investment Regulations, consolidating existing guidance (e.g., Hedge Fund Guidelines, Placement Agent Policy, Mandate Modification, and Futures/Options rules) into formal regulation, updating procurement requirements, and removing outdated provisions. The draft is not final—public hearings and a comment period will follow before any changes are adopted—so boards need not take immediate action but should monitor the process and may wish to submit comments or attend hearings.

PERAC Memo #21, 2011 announces an update to the "Notice of Potential Benefits Pursuant to G.L. c. 32, § 4(1)(h)" form, revised to remove references to the "Massachusetts" National Guard, consistent with the 2005 statutory amendment allowing members of any state's National Guard (not just Massachusetts) to purchase past veteran's service credit if otherwise eligible. Boards should begin using this updated form going forward to ensure accurate notice of benefits to members with National Guard service.

This memo announces PERAC's new pension fraud prevention poster campaign, which introduces a dedicated email address (PensionFraud@per.state.ma.us) for reporting suspected pension fraud in addition to the existing toll-free hotline (1-800-445-3266). Boards should display the enclosed posters prominently in their offices, distribute the accompanying brochures and "Referral Report of Potential Fraud" forms as needed, and ensure staff use these forms to report suspected fraud to PERAC's Fraud Unit.

This memo summarizes the Attorney General's regulations (940 CMR 29.10) permitting remote participation at public meetings, and explains how retirement boards may adopt this practice by simple majority vote. No action is required, but if a board chooses to allow remote participation, it must follow specific procedural requirements: a physical quorum (including the Chair or authorized substitute) must be present, remote participation is limited to specified reasons (illness, disability, emergency, military service, or geographic distance), all votes must be by roll call, and detailed documentation of the reason and procedures must be reflected in the minutes.

**Memorandum #33, 2011 – Regular Compensation** This memo consolidates guidance on determining "regular compensation" for retirement purposes following Chapter 21 of the Acts of 2009, the amended 840 CMR 15.03 regulations, and relevant case law (Pelonzi and O'Brien decisions). It provides retirement boards with consolidated lists of characteristics that make payments includable (e.g., base salary, non-discretionary payments for services) versus excludable (e.g., overtime, bonuses, in-kind payments, severance) from regular compensation calculations. Boards should apply this framework when reviewing compensation determinations for members retiring on or after July 1, 2009, though no new filing or reporting action is required beyond ensuring compliance with existing law when calculating regular compensation.

PERAC Memo #36/2011 summarizes the non-governance provisions of Chapter 176 of the Acts of 2011 (Pension Reform and Benefit Modernization), covering changes to regular compensation definitions, Group 2/4 classification requirements, creditable service buyback deadlines, and an increase in the Group 1 minimum retirement age to 60 for members entering service on or after April 2, 2012. Boards must take action on several fronts: they may adopt local options (effective after February 16, 2012) to raise the minimum monthly allowance under G.L. c. 32, §12 and increase board member stipends, and they must act immediately to implement Section 55's option-change provision for certain same-sex marriage retirees given its tight implementation timeframe. Boards should also review member counseling practices in light of the new age-60 restriction and buyback deadlines taking effect April 2, 2012.

This memo transmits the final version of 840 CMR 15.03, PERAC's amended regulation defining "regular compensation," effective May 28, 2010, and instructs boards to disregard earlier drafts. Boards must apply the regulation's criteria and statutory exclusions when determining whether payments made on or after July 1, 2009 qualify as regular compensation, noting that excluded items may still count as regular compensation through the end of existing collective bargaining agreements or contracts in effect on May 1, 2009 (but no later than June 30, 2012). Boards should hold off on finalizing determinations regarding clothing allowances pending possible legislative action, and should expect further PERAC guidance related to implementation and the O'Brien v. CRAB decision.

PERAC Memo #14/2009 clarifies that G.L. c. 32, §20 (and analogous statutes for the State and Teachers' Retirement Boards) requires that all four other board members be present and vote when selecting the fifth (or seventh, for MTRS) member; a vote taken without full participation of the other members is invalid, though the outcome need only reflect a simple majority. Boards must notify PERAC in writing upon selection of the fifth/seventh member, including a record of the vote confirming that all required members were present and voted.

**PERAC Memorandum #24, 2009 – Summary** This memo transmits Chapter 21 of the Acts of 2009 ("Pension Reform Act"), signed June 16, 2009, and outlines its major provisions, including a new, narrower statutory definition of "regular compensation" (effective July 1, 2009, limiting it largely to base salary and excluding overtime, bonuses, buyouts, and similar payments, with limited grandfathering for collective bargaining agreements through June 30, 2012); elimination of automatic full-year creditable service credit for elected officials serving partial years (for retirements after July 1, 2009); and repeal of the ability to purchase creditable service for uncompensated positions. **Action required:** Boards should review the attached bill text, update payroll/compensation reporting practices to conform to the new regular compensation definition by the applicable effective dates, and await further PERAC guidance on implementation details.

PERAC Memorandum #42/2009 announces proposed regulations implementing Chapter 21 of the Acts of 2009, which narrowed the definition of "regular compensation" for payments received after July 1, 2009, and lists specific exclusions (e.g., overtime, bonuses, severance payments, in-kind payments). Until final promulgation (expected after June 2010), boards should continue treating previously-qualifying compensation as regular compensation unless it falls under one of the enumerated exclusions, while noting that certain grandfathered items covered by collective bargaining agreements or contracts in effect on May 1, 2009 remain includible only through June 30, 2012. No immediate board action is required beyond applying these transitional rules pending final regulations.

PERAC Memorandum #48/2009 announces proposed amendments to 840 CMR 15.03, which sets forth the revised definition of "regular compensation" (following up on Memo #42/2009). The memo schedules a series of public hearings across the state between January 5 and January 14, 2010, and invites written public comment through January 19, 2010, in advance of the Commission's January 26, 2010 discussion. Boards should review the proposed regulation and may wish to attend a hearing or submit comments, but no other action is required at this time.

This memo notifies boards that the Probate and Family Court's Standing Order 3-08 now requires Domestic Relations Orders (Mangiacotti Orders) involving public employees to be impounded and kept confidential from public inspection. PERAC is seeking a formal advisory opinion from the Supervisor of Public Records on whether boards may withhold these Orders from public records requests, and pending that guidance, boards should not release copies of Domestic Relations Orders unless both parties to the Order authorize disclosure.

This memo is PERAC's annual compliance reminder covering disclosure practices and conflict-of-interest safeguards. It directs boards to incorporate Disclosure Statements into RFP processes, cross-check vendor disclosures against ADV forms and other retirement boards, verify compliance with 840 CMR 1.03 (including the specific prohibition on Clarke Blizzard and affiliated entities), ensure familiarity with Chapter 268A conflict-of-interest requirements, and review all investment contracts for compliance with 840 CMR 16.02(5) documentation standards. Boards should treat this as an action item requiring internal review of procurement, disclosure, and contract practices to confirm ongoing compliance.

**PERAC Memorandum #22, 2008 — Summary** This memo reports the SJC's decision in *Pelonzi v. Beverly Retirement Board & CRAB* (May 21, 2008), which definitively holds that the monetary value of an employee's personal use of an employer-supplied vehicle is **not** regular compensation for retirement purposes, since the SJC characterized it as a benefit rather than compensation. This ruling supersedes prior PERAC guidance (Memoranda #3/2001, #25/2001, #41/2001, #38/2002, and #18/2006) that had directed boards to include such value as regular compensation. **Action required:** Retirement boards must return all contributions collected from members and retirees on the monetary value of personal use of employer-supplied vehicles, and must cease treating such value as regular compensation in calculating retirement allowances going forward.

PERAC Memo #29/2008 announces amendments to 840 CMR 10.12 and 10.14 governing retirement board hearings on excess earnings or failure to file annual earned income statements under M.G.L. c. 32, §§91, 91A, or 91B. Key changes require boards to give 30 days' notice of hearings (with the Commission entitled to attend and present evidence but not cross-examine retirees), to allow retirees 15 days to request a hearing upon notice of excess earnings, to schedule any requested hearing within 45 days (with at least 30 days' notice), and to notify the member of the decision within 30 days after the hearing. Boards must update their hearing procedures to conform to these revised notice and timing requirements and ensure the Commission is copied on all related correspondence.

This memo announces the release of the 2006 Annual Statement materials (now distributed primarily via CD, resized for standard printing) and requires boards to complete, sign, and return the Annual Statement to PERAC by May 1, 2007. Boards must also submit their pre-closing cashbook and trial balance for December 2006 to PERAC before February 28, 2007, and may register staff for regional PERAC Auditor presentations/workshops on preparing the Annual Statement using the attached registration form.

This memo summarizes Chapter 68 of the Acts of 2007, which authorizes PERAC to annually evaluate each retirement system's funded ratio and investment performance and mandate transfer of assets to PRIT for systems that are under 65% funded and have underperformed PRIT by 2%+ annually over 10 years, subject to a limited appeal/exemption process. Boards should be aware that PERAC will conduct its initial review using January 2007 data (or the most recent valuation if none is updated by October 1, 2007) and will directly contact any systems identified as potentially subject to mandatory transfer; no immediate action is required beyond awaiting that notification, though boards should understand the appeal process and local approval requirements should their system be flagged.

Memorandum #37/2007 explains IRC §402(l), added by the Pension Protection Act of 2006, which allows eligible retired public safety officers (those retired for disability or at normal retirement age) to exclude up to $3,000 annually from gross income for health or long-term care insurance premiums withheld directly from their retirement allowance and paid to the insurer; this exclusion is not available to survivors and must be self-reported by retirees on IRS Form 1040 (not shown on the 1099R). Boards have no mandated administrative role but should be prepared to inform members of the amounts withheld and paid to insurers, and should refer specific tax questions to members' personal tax advisors. The memo also notes PPA §829, which permits non-spouse beneficiaries to make direct trust-to-trust rollovers of inherited benefits, provided the receiving account properly identifies both the deceased member and the beneficiary.

This memo announces the 2005 Annual Statement package, now distributed primarily via CD (containing the Annual Statement, sample, preparation guide, and an "Updates and Changes" document), with printed copies available on request; PERAC auditors are available for assistance and training sessions will be offered in March. Boards must complete, sign, and return the Annual Statement to PERAC by May 1, 2006, and must submit their pre-closing December 2005 cashbook and trial balance to PERAC before February 28, 2006.

This memo explains Chapter 157 of the Acts of 2005, which allows Group 1, 2, and 4 accidental disability retirees who are veterans to receive an additional yearly allowance ($15 per year of creditable service, up to $300), with Section 2 permitting retroactive payment to the date of retirement for living retirees. Both sections require local acceptance by the retirement board and legislative body, and veteran status is determined under the G.L. c. 4 §7 cl. 43 definition (per Memo #21/2004). **Action required:** If a board and its legislative body accept Section 1, Section 2, or both, the board must proactively notify all living accidental disability retirees of potential eligibility and send the appropriate application(s) (enclosed with the memo); if neither section is accepted, no applications should be sent. If Section 2 is accepted, retirees have 120 days from acceptance to apply, and the board must pay any resulting benefit within one year of receiving the application.

This memo implements Judge Riley's decision in Shafer v. CRAB, confirming that the personal use value of an employer-supplied motor vehicle may qualify as regular compensation under G.L. c. 32, §1, subject to specific eligibility criteria established by the court. Boards should use the attached revised Worksheet and Questionnaire to evaluate members' documentation against the four criteria; if all four are satisfactorily answered, boards should calculate the personal use value using the Worksheet, and if not, boards must seek additional documentation and hold hearings as needed before making a determination.

This memo clarifies implementation of Chapter 157 of the Acts of 2005, which grants Section 7 accidental disability retirees an additional veteran's allowance, focusing on timing issues when a retiree dies before or during the application/acceptance process. It explains that the benefit only becomes effective upon local legislative body acceptance, and no allowance is payable if a retiree dies before that acceptance date or before submitting/postmarking an application (for Section 2 benefits). Boards must notify all living accidental disability retirees of potential eligibility once Section 1 (or Sections 1 and 2) is accepted, process applications promptly, and are encouraged to complete verification and voting procedures expeditiously to maximize the number of retirees who qualify before death forecloses eligibility.

PERAC Memo #36/2006 reports on the CRAB decision in Flynn v. PERAC, which affirmed that G.L. c. 32 does not permit a retirement board to accept a discounted portion (e.g., 20-25%) of a workers' compensation lump sum settlement in full satisfaction of the amount subject to offset under §14. Boards must offset the full statutorily mandated amount attributable to weekly benefits—though they may accept that full offset amount in a single lump-sum payment—and must immediately discontinue any policy of accepting reduced settlement amounts in lieu of the full offset.

This memo addresses concerns raised by retirement boards about rising costs and vendor changes in software/IT applications, noting PERAC endorses no specific product or vendor. Boards upgrading with their current vendor need not competitively bid, but those seeking new vendors or better pricing are encouraged to use a competitive RFI/RFP process to evaluate options and pricing. No mandatory action is required, but boards should clearly define their system needs and are encouraged to share experiences with peer boards.

PERAC has distributed a CD containing its 2004 Publications Library—educational manuals, regulations, form templates, annual reports, and memos issued from January 1997 through November 2004—along with a booklet of tips for using Adobe Acrobat Reader 6. This is intended as a space-saving, cost-effective archive and reference tool, with future annual editions planned based on board feedback. No action is required of boards beyond reviewing the CD and optionally submitting suggestions to Sarah Kelly in PERAC's Communications Unit.

**Memorandum 34/2005 Summary:** PERAC is proposing amendments to 840 CMR 15.03 to clarify the definition of "regular compensation" under G.L. c. 32, specifically addressing salary augmentation/enhanced longevity plans that provide temporary, multi-year salary increases (often tied to sick leave buybacks or retirement notice requirements) rather than permanent compensation increases. While the regulation is pending public comment and hearings, boards should carefully scrutinize existing compensation plans against the listed disqualifying factors (e.g., retirement-notice requirements, bonuses, sick leave reductions, or plans creating outsized systemic liabilities), since collective bargaining agreements cannot override G.L. c. 32's definition of regular compensation. Boards are encouraged to share this memo with employers and unions and should reassess any such plans accordingly, though no immediate compliance deadline is imposed beyond the December 13, 2005 comment period.

This memo is a follow-up to Memorandum #34/2005, reminding boards of the scheduled public hearing dates/locations for proposed regulations clarifying the definition of "regular compensation," and noting that PERAC has extended each hearing's duration through 6:00 P.M. to allow for maximum stakeholder participation. No specific board action is required beyond attending or encouraging affected members/employees to attend if interested in commenting on the proposed regulations.

This memo explains Chapter 157 of the Acts of 2005, which grants Section 7 accidental disability retirees in Groups 1, 2, and 4 an additional annual allowance ($15/year of service, up to $300), subject to local acceptance, with an optional retroactive component (Section 2) requiring a separate majority vote. Boards must vote separately on Section 1 (establishing the benefit) and, if desired, Section 2 (retroactivity)—Section 2 cannot be accepted without Section 1—and both require approval by the applicable legislative body. If Section 2 is accepted, boards must notify all accidental disability retirees to determine veteran eligibility and process applications within the specified timeframes; in all cases, boards must send PERAC written notice of their vote(s) and legislative approval status within 120 days of voting.

This memo reports the SJC's decision affirming PERAC's definition of "earned income" under G.L. c. 32, §91A, confirming that distributions from a closely held corporation constitute earned income when a disability retiree contributes labor, management, or supervision to their production. The Court also upheld PERAC's authority to issue such interpretive guidance without formal rulemaking and confirmed PERAC's statutory power under §21(4) to review and reverse local board determinations. Boards should continue applying PERAC's established §91A earned income standard (per Memo #64/1998) when evaluating disability retirees' outside earnings, understanding that PERAC's determinations on such matters are legally enforceable.

This memo notifies boards of a legislative change (effective 90 days after signature) broadening the definition of "veteran" under G.L. c. 32, §§4(1)(h) and 5(2)(b): members of the Army, Navy, Air Force, Marines, or Coast Guard with at least 180 days active duty under honorable conditions now qualify without wartime service (with the 180-day requirement waived for service-connected disability or death in service), and full-time (activated) National Guard members with at least 90 days duty and one day of wartime service also qualify. Boards should apply this expanded definition going forward when evaluating military buyback and veteran's bonus eligibility, continue calculating National Guard service purchases at the existing five-years-to-one-year ratio, and continue requiring DD214 forms to verify service; PERAC will issue a revised Notice of Potential Benefits form shortly.

This memo summarizes FY05 State Budget provisions affecting G.L. c. 32, including: (1) an expanded public records exemption now shielding all public employees' (not just public safety) home addresses/phone numbers, requiring boards to apply the prior public safety protocol universally; (2) new statutory requirements for the Attorney General/District Attorneys and employers to notify PERAC and boards of member indictments, suspensions, and convictions, requiring boards to monitor such cases and act under G.L. c. 32, §15 once notified; and (3) new definitions ("accumulated assumed actuarial deductions" and "actuarial assumed interest") added to §1, the latter of which affects the interest rate applied when reinstating retirees to membership. Boards must update their public records practices, establish monitoring procedures for indictment/conviction notices, and apply the new actuarial assumed interest rate where relevant; no action is needed yet on the "accumulated assumed actuarial deductions" definition pending further legislative action.

PERAC issued a revised Notice of Potential Benefits form under G.L. c. 32, §4(1)(h), reflecting Chapter 116 of the Acts of 2004's updated definition of "veteran" for military service purchase eligibility, effective August 30, 2004. Boards must use this new form and should note that only active members in service may purchase military service credit (no retroactive application to retired or inactive members), while National Guard/reserve service purchases remain on the existing 5-to-1 year basis.

This memo announces new Option C actuarial equivalent factors, based on the RP-2000 Combined Healthy Table (50% male/50% female) and a 7.0% interest rate, as authorized by the FY2005 State Budget, effective December 27, 2004. Boards should use the enclosed factors to counsel members retiring under Option C going forward, and should note that corresponding Option A and B annuity factors will change too, though those figures are still pending and will be issued separately.

This memo announces that Chapter 468 of the Acts of 2002 eliminates the prior ten-year creditable service requirement for purchasing military service credit under G.L. c. 32, § 4(1)(h), effective April 1, 2003; any member in service qualifying as a "veteran" may now purchase up to four years of military service credit regardless of tenure, with the definition of "veteran" unchanged. Boards must review new enrollment forms and existing member records to identify veterans—especially those with fewer than ten years of service—and notify all eligible members of this purchase option, giving them 180 days to decide, with certified mail or signed acknowledgment recommended as proof of notice.

This memo clarifies that under Chapter 268A, retirement board member positions can be designated as "special municipal employees" (or "special county employees" for county systems), which provides greater flexibility under the Ethics Law than the default "municipal employee" classification—but only if the local governing body (city council, board of selectmen, etc.) has expressly made that designation for the retirement board position. Boards should request from their city/town a listing of positions already classified as "special municipal employees"; if the retirement board position is not among them, the board is urged to initiate proceedings—with counsel's assistance—to obtain that designation, and members must also make required disclosures/filings to secure the associated protections.

This memo warns that e-mail is not a secure medium and advises retirement boards not to transmit confidential or personally identifiable member/retiree information (e.g., Social Security numbers, birth dates, addresses, bank/credit card data) via e-mail, since PERAC cannot guarantee its security. Boards should specifically avoid sending actuarial valuation data files containing such identifiers by e-mail, pending PERAC's development of a secure transmission method (e.g., VPN); no other action is required beyond adopting safer transmission practices.

This memo announces emergency regulation 840 CMR 15.05, effective under EGTRRA, which authorizes retirement boards to accept direct pre-tax roll-overs from eligible retirement plans (457, 408(a), 401(a)/(c), and 403(b) plans) to fund members' purchases of creditable service; it does not create any new service-purchase eligibility. Boards must advise members to consult a tax professional regarding potential state tax implications and must maintain records tracking the source/destination of such roll-overs for accurate reporting on the 2002 Annual Statement.

Chapter 46 of the Acts of 2002 aligns Massachusetts retirement law with federal IRC limits on compensation used in calculating retirement allowances (e.g., the $200,000 cap for 2002 under 26 U.S.C. §401(a)(17)), and applies to members joining on or after February 28, 2002 regardless of pay level. Action is required only for boards whose membership includes highly compensated employees exceeding these federal limits—such boards should contact PERAC for assistance adopting and administering the Act's excess benefit provisions; most systems and members will be unaffected.

PERAC Memo #28/2001 provides guidelines for retirement boards on how to handle back pay awards resulting from Civil Service Commission or court-ordered settlements involving wrongful termination or failure to reinstate an employee. It outlines a five-step process boards must follow: determining the covered period and creditable service, calculating the regular compensation the member would have earned, accounting for any mitigation earnings, requiring repayment of any retirement allowance received during the award period, and collecting retirement contributions on the full regular compensation amount. Boards should apply these steps when evaluating such settlements, though the memo is guidance only and does not endorse the settlements themselves.

PERAC Memo #39/2001 explains that under the federal USERRA statute, members called to active military duty must retain member-in-service status regardless of the length of their leave and must receive full creditable service for their period of military service, notwithstanding G.L. c. 32's usual one-year limit on unpaid leaves. Boards must ensure the employer (Commonwealth or political subdivision) makes the corresponding retirement contributions on behalf of these members and must include this information in the annual data submitted to PERAC's Actuary under G.L. c. 32, §22(7) for pension fund appropriation purposes.

PERAC Memo #1/2000 announces proposed amendments to 840 CMR (including revisions to the disclosure/privacy rules under 840 CMR 6.00) filed with the Secretary of State, along with a schedule of four public hearings held between January 14–21, 2000 in Springfield, Plymouth, Somerville, and Boston. Boards are encouraged, though not required, to attend or submit written comments on the proposed regulations to PERAC by the February 4, 2000 deadline. No mandatory board action is required beyond optional participation in the comment process.

PERAC Memo #25/2000 clarifies that payments for unused vacation and personal days may be classified as regular compensation if they are regular, recurring, and made under a written policy or collective bargaining agreement, are based on days actually earned in the year of purchase (excluding sick days), are not tied to retirement notice, are available non-discriminatorily, and are reasonable in amount so as not to burden the system. Boards are required to review all relevant employer policies and contracts to determine, on a prospective basis only, whether such payments meet these criteria for treatment as regular compensation.

PERAC Memo #27/2000 announces the Governor's signing of Chapter 123 of the Acts of 2000 (effective September 28, 2000), which removes age limitations in G.L. c. 32 that violated the federal ADEA/OWBPA. Key changes eliminate the maximum age concept for non-public safety employees, remove age restrictions on return of accumulated deductions, Section 10 allowances, and ordinary disability retirement applications. Boards should review these changes and update their administrative practices accordingly, as no member will face age-based denial of these benefits (except public safety employees, who retain maximum age provisions).

PERAC Memo #40/2000 directs retirement boards to implement the EEOC v. Commonwealth settlement addressing age discrimination found in the former accidental disability retirement provisions of G.L. c. 32, §7(1) (the maximum age limits and "3/2" rule). Boards must search records to identify all individuals who, since October 16, 1992, began receiving a superannuation allowance, received a refund of contributions, or ceased contributing but retained funds on deposit, compile a list of these "potentially eligible individuals" (with limited allowable exclusions), and submit the list(s) to PERAC by November 4, 2000; boards excluding certain individuals must also prepare and submit a separate "excluded list" with supporting details for EEOC review.

This memo reminds boards that PERAC's investment staff is available to assist in evaluating investment manager performance as year-end 1998 reports are issued. It reiterates existing compliance obligations under Investment Regulations: managers must send PERAC a quarterly comprehensive investment review (16.07(2)), ideally the year-end report, managers must annually submit Form ADV Part II (16.02(6)), and boards must notify PERAC of any changes to their Statement of Investment Objectives (18.03). Boards should ensure their managers meet these reporting requirements and should promptly report any objective changes to PERAC.

This memo announces that PERAC's Retirement Guide, Disability Retirement Guide, and Survivor Benefits Guide are now available on PERAC's website, allowing boards to print copies as needed rather than requesting them from PERAC. Boards are encouraged (though not required) to notify member personnel offices of the guides' availability and to use the website as a resource for keeping members informed of up-to-date retirement information.

PERAC Memo #13/1998 transmits proposed regulations (840 CMR 10.00) establishing standard rules and procedures for disability retirement proceedings, including applications, medical panel examinations, hearings, rehabilitation, and modification of allowances. Boards are encouraged to review the draft regulations and may attend one of three scheduled public hearings (April 2, 6, or 9, 1998) to comment; written comments will also be accepted through April 20, 1998, but no immediate compliance action is required until final regulations are issued.

This memo addresses the practice of some retirement boards transmitting data files to PERAC via email attachments. PERAC asks boards to refrain from this practice and instead continue submitting tapes and diskettes via U.S. Mail until PERAC establishes security protocols and internal procedures for handling electronic transmissions. No other action is required; boards should expect electronic transfer to become standard practice once appropriate safeguards are developed.

This memo urges retirement boards to press their local legislators to pass H.5020, which would clarify and formalize the Early Intervention Program before its July 1, 1998 implementation deadline. Without this legislation, boards implementing the program using retirement trust funds could be committing a fiduciary breach, since trust assets cannot be used for active-employee benefits or unrelated activities. Boards are asked to have their members contact legislators urging favorable action, using the talking points provided, given the bill's expected review by the House Ways and Means Committee.

PERAC Memo #36/1998 explains Section 288 of Chapter 194 of the Acts of 1998, which extends the Option (C) "pop-up" benefit—restoring a member's allowance to the maximum amount if their designated beneficiary predeceases them—to members who retired before January 12, 1988. This provision is not automatic: it requires local acceptance through a majority vote of the retirement board **and** approval by the applicable legislative body (as defined for the relevant governmental unit), with certified copies of both votes submitted to PERAC. Boards should note that any resulting benefit adjustments may only be applied prospectively from July 1, 1998, and no retroactive payments are permitted for the period between a beneficiary's death and that date.

PERAC Memo #64/1998 clarifies that "earned income" under G.L. c. 32, §91A—used to determine whether a disability retiree is over-earning—is not statutorily defined but is interpreted by PERAC to include profits from operating a business through the retiree's own labor, management, or supervision, regardless of how such income is characterized for tax purposes (e.g., as dividends). Boards should apply this substance-over-form standard when evaluating disability retirees' earnings for §91A compliance, rather than relying solely on the retiree's tax classification of income. No further action beyond this clarified interpretation is required.

This memo transmits PERAC's Early Intervention Program guidelines, required under Chapter 306 legislation, and notes the revised implementation timeline (programs operational by July 1, 1997). Boards must develop, in consultation with local officials and union representatives, a general plan addressing employee assistance, safety education, hazard elimination, and accommodation of injured employees, along with a detailed risk management/workplace safety report; this plan with cost projections was due to PERAC by March 15, 1997 for approval before PERAC's required filing with legislative committees on March 19, 1997.

This memo notifies boards of the settlement of the EEOC's lawsuit challenging G.L. c. 32, §90F (mandatory physical exams for members working past age 70), which was found to violate the ADEA; under the settlement, affected members who paid for such exams between August 22, 1987 and March 30, 1993 are entitled to $35 per exam (or more with proof of higher cost). Boards must identify and compile the names and addresses of members who took the required §90F physical exam or who worked past age 70 during that period, and submit these lists to PERAC by May 5, 1997 so PERAC can forward them to the EEOC by May 13, 1997.

Memo #22/1997 explains Chapter 17 of the Acts of 1997, which reforms the COLA process by giving state/teacher COLA decisions to the Legislature and Governor, while local systems must separately accept Section 103 (via board vote and legislative body approval) to grant annual COLAs on the same CPI-based formula, now calculated on a $12,000 base. Boards considering acceptance should note that the decision is irrevocable and requires establishing, with PERAC, a funding schedule to amortize the added liability; PERAC will also send annual COLA reports to accepting systems each April 1 and will issue a cost study to municipalities and boards by 12/31/97. No immediate action is required unless a board chooses to adopt Section 103, in which case it must follow the specified acceptance and funding procedures.

This memo announces PERAC's plan to launch an internet home page, initially offering downloadable information (legal opinions, memos, guidelines, regulations, staff directory) with future plans for e-mail, interactive forms, and eventual secure data file exchange with boards. No formal action is required, but boards are encouraged to submit suggestions on desired content/features to Sarah Kelly by August 15, 1997.

PERAC Memo #35/1997 transmits an initial draft of proposed revisions to the 840 CMR 1.00 investment regulations, updated to reflect PERAC's thirteen years of oversight experience and intended to improve process efficiency. This is a preliminary, non-exhaustive draft that will be reviewed by the Massachusetts Public Pension Advisory Council before the formal rulemaking process (further comment periods and public hearing) begins. No formal action is required of boards at this time; PERAC is simply requesting that boards review the draft and submit comments or raise unaddressed concerns.

PERAC Memo #45/1997 transmits draft regulations (840 CMR 10.00) establishing standard, uniform rules and procedures governing ordinary and accidental disability retirement proceedings, medical panel examinations, re-examinations, rehabilitation, and related matters. Boards are not required to take formal action at this stage, but are encouraged to attend one of three MPPAC input sessions (Plymouth, Worcester, or Boston in December 1997/January 1998) to review the draft and provide comments before the regulations are finalized.

PERAC Memo #53/1997 announces that the Commission has finalized draft revisions to 840 CMR (the investment regulations governing fiduciary duty, prohibited holdings, and investment standards for public pension systems) and is filing them with the Secretary of State as part of the formal promulgation process. Two public hearings will be held (February 4 and 6, 1998) with a written comment period open through February 20, 1998. Boards should review the enclosed draft regulations and are encouraged, though not required, to submit comments or attend the hearings to ensure their concerns are considered before final adoption.