Massachusetts State Plans

Useful Information Concerning M.G.L. Chapter 32 Plans

Please contact Attorney Ehrmann, LLC. for assistance in preparing separation agreement language to divide a Chapter 32 plan.

A useful link to online retirement guides is: https://www.mass.gov/guides/perac-retirement-guides

Employees of retirement systems in Massachusetts, are eligible for participation in a public pension plan governed by state law, Massachusetts General Laws (M.G.L.) Chapter 32.

These pensions are often referred to as “Chapter 32 plans”. The employees are classified into groups 1 to 4 depending on their job.

Employees contribute to their benefits as a deduction from their salary, and deductions plus annual interest are tracked for each employee by the retirement systems in an “annuity savings account”.

The “annuity savings account” is only a record of the value of the accumulated contributions plus interest; it is not the actual value of the retirement benefit, and cannot be divided as if it were a savings plan such as a 401(k) plan.

An actuary can estimate the retirement pension’s value. Therefore, a Separation Agreement should not be written to award an immediate dollar amount to a former spouse from the “annuity savings account” because this is not possible. Agreements to divide Chapter 32 plans should state a percentage to transfer to a former spouse if, as and when the employee retires.

At retirement, the retirement board calculates the retiree’s lifelong pension, and determines a monthly amount to be paid under the retirement option elected. The retirement options are:
  • A

    (unreduced benefit with no survivor benefit)

  • B

    (slightly reduced benefit with a lump sum payment at retiree’s death of remaining amount in the “annuity savings account” – if anything)

  • C

    (reduced benefit with a payment to a single designated survivor of the retiree equal to 2/3 of the monthly payments for the survivor’s lifetime).

A portion of the “annuity savings account” along with an amount from the general pension fund are paid monthly to the retiree in the determined amount. Over time, the funds in the “annuity savings account” are used up, and eventually become entirely depleted, but the monthly amount will still continue to be paid for the retiree’s lifetime. Only if an employee leaves service before retiring, the employee may elect to cash out the “annuity savings account” in lieu of receiving a pension.

A domestic relations order to divide a Chapter 32 plan is called a “Domestic Relations Order” (not a “Qualified Domestic Relations Order” which term applies to private employer plans). The benefits are paid only as a shared stream of payment, based upon the retiree’s lifetime at the time of retirement. The former spouse can only commence the assigned share when the retiree commences benefits.

Please contact Ehrmann & Associates for further information.