PAC Publications: State Workers Report

POLICY CONSIDERATIONS


	•	Massachusetts provides a good pension (80% of the worker's highest three-year average salary) for a single person who works his or her full career with the state. However, married workers must reduce their monthly benefit in order to provide a pension for their spouse after the worker’s death. If they don't, and the spouse has little or no work history of her or his own, the spouse would have no pension and no Social Security after the worker’s death.

	•	Massachusetts’s high vesting requirement of 10 years works against the employee’s economic security in retirement as does the policy of crediting part-time on a pro rata basis for vesting purposes (an individual can work up to 20 years part-time without any credit toward retirement). These requirements particularly affect women, who typically spend significant time outside the workforce to care for family members. The lower vesting rates of women as reflected in the State Retirement Board’s statistics may be attributed to the vesting requirements in Massachusetts.

	•	Participation in Social Security would benefit certain workers. Workers who work for the state for less than 10 years lose significant retirement benefits because they neither vest in the state system nor do they earn credit toward Social Security. Participating in Social Security would ensure some coverage for those years. Also, Social Security provides a spousal benefit and survivor benefit without a reduction in the worker’s benefit, so the spouse is guaranteed some protection. It also is weighted to benefit lower-wage workers unlike the state retirement plan.

These issues could be addressed without the state joining the Social Security system but, since the federal government is considering mandating Social Security participation for all new state and local employees, it seems wise to explore the cost and benefit implications for all employees. Finally, the state comparisons indicate that the level of benefits in Massachusetts should be examined.