EXECUTIVE SUMMARY

The workforce has significantly changed since the Commonwealth of Massachusetts’s retirement system was instituted in 1946. Workers change jobs more often, more women are in the workforce, and people are retiring earlier and living longer. This study examines the benefits under the Commonwealth’s pension system and the implications for state employees of not being part of the Social Security system. It concentrates on comparing the benefits and contribution rates in the Commonwealth’s system to other public pension plans that combine a public plan with Social Security.

Three policy questions were examined: a) Are there structural elements of the Massachusetts system that result in inadequate pensions for its workers? b) How do the benefits compare to those of other states? and c) Would the Commonwealth’s retirees benefits be better in a system combined with Social Security?

THE STUDY

In order to answer the questions above, data from the Massachusetts State Retirement Board on active, terminated, and retired employees from 1991 through 1995 were examined to determine patterns of employment. The structures of Massachusetts’s public pension system and Social Security were also examined, both of these as a backdrop to the state comparison component of the study. Massachusetts is one of only seven states in which a majority of state employees do not participate in Social Security. It is typical for states to supplement Social Security with a public pension plan; therefore, three states with supplemental plans were chosen for the comparative study.