Public Employee Retirement Administration Commission (PERAC)
Tax Status of Pension Contributions
Management of Retirement Funds
Investment of Retirement Funds
Treasurer Designated Custodian of Investments/Securities
Treasurer’s Duties when Custody of Investments Is Designated to Others
Procedures for Handling Pension Fund Receipts
Application for Membership in System
Contributions from Members of Municipal Retirement Systems
Municipal Pension Reserve Fund [40:5D]
Recording Cash Receipts of Retirement System Funds
Disbursements of Retirement System Funds
Handling Withholdings from Pensions
Recording Disbursements [840 CMR 4.01]
Reconciliation to Bank Records
Compensation for Treasurer’s Duties
County and Regional Retirement Systems
County and Regional Retirement Boards and Advisory Councils
Contributions from Members of County or Regional Retirement Systems
Payroll Deductions for Employees Who Work for Multiple Units
Semiannual Payments to County or Regional System
The Treasurer’s Monthly Retirement Deduction Report
Symbols Designating Non-Members of the Retirement System
The many responsibilities of municipal treasurers generally include deducting employees’ retirement contributions and transmitting them to the applicable retirement system. Public school teachers, except in Boston, receive their retirement benefits from the Massachusetts Teachers’ Retirement System; other municipal employees receive their retirement benefits from their respective municipal, county or regional retirement systems.
Public Employee Retirement Administration Commission (PERAC)
The Public Employees Retirement Administration Commission (PERAC) regulates public employee retirement systems in Massachusetts. In this role, the agency oversees the accountability, financial condition, legal compliance, rights and equities of each system.
PERAC consists of seven members, three appointed by the governor, three by the state auditor, and a final member, who acts as chairman, chosen by the other six members. Of the governor’s appointees, one is the governor or the governor’s designee, another is a representative of a public safety union, and the third is a person proficient in the investment of funds. Of the state auditor’s appointees, one is the auditor or the auditor’s designee, another is the president of the Massachusetts AFL-CIO or his designee, and the third is a representative of the Massachusetts Municipal Association. (7:49)
An executive director, selected by PERAC, plans, directs, coordinates, and executes administrative functions of the agency in conformity with the commission’s policies and directives. PERAC promulgates whatever rules, regulations, directives and guidelines it deems necessary for the efficient administration of public employee retirement systems. Ch. 7 §50 sets out PERAC’s powers and duties. Among those duties is investigating fraud, monitoring the earnings of disability retirees to ensure that excess earnings are recouped by the retirement systems, and evaluating disability retirees for possible restoration to active service. Treasurers should address technical questions concerning public employee retirement systems to PERAC.
Ch. 697 of the Acts of 1987, denominated the Pension Reform Act of 1987, made extensive changes to existing the public employee retirement system and to other employment law. Several provisions of the act apply to all contributory retirement systems. Other provisions apply automatically to state employee and teacher retirement systems and apply to other systems only upon local acceptance. While the method of acceptance of these latter provisions may vary, it generally requires at least a majority vote of the legislative body (town meeting, city council, etc.).
One of the most significant provisions of the 1987 Act mandated an amortization of the state’s unfunded pension liability through a schedule of payments over a period of 40 years. At the same time, the act afforded to municipal and county systems a local acceptance option to adopt a funding schedule to amortize their unfunded liabilities. (32:22D) The time period for voting such acceptances has now expired. Any previous acceptance cannot be revoked.
Municipal and county systems that have opted through the local acceptance process to amortize their unfunded liabilities are deemed to have accepted all of the following provisions of the pension reform act. [32:22D(4)(e)] [Retirement systems that have not so opted may, nonetheless, accept any particular provision(s) by carrying out the acceptance procedure specified in the relevant statutory section(s).] Once accepted, a provision cannot be revoked.
Other changes instituted by the Pension Reform Act of 1987 that take effect without the necessity of local acceptance include requirements that persons retired due to disabilities undergo reexamination for possible return to employment (32:8) and that public safety officers hired after January 1, 1988 refrain from the use or tobacco products. (41:101A) Additionally, the act enables an employee to elect a retirement option, denominated Option C, whereby the employee takes a decreased lifetime retirement allowance with the condition that two-thirds of that allowance be paid to the employee’s surviving beneficiary during that beneficiary’s lifetime. (32:12)
Tax Status of Pension Contributions
Under Internal Revenue Service law, an employee’s pension contributions are not subject to federal income tax. Massachusetts law, however, allows a more limited exclusion. Only an amount up to $2,000 that an employee contributes to a Massachusetts retirement fund is not subject to state income tax. If an employee is married and the couple file jointly, each spouse may claim up to $2,000 of contributions.
Ch. 32 §5B requires that employers establish an early intervention plan for the formulation of programs and procedures to assist injured employees, to furnish educational programs that encourage workplace safety, and to identify workplace hazards. This statute seeks to reduce accidental disability retirements by promoting wellness and fitness activities in the workplace.
Each city and town retirement system must be managed and supervised by a five-member retirement board. Two, separate statutes provide alternative procedures for selecting the membership of the retirement board. Under the first statute, Ch. 32 §20(4)(b), the accountant or auditor serves as an ex officio member. The remainder of the board consists of one member appointed by the chief executive officer, two members elected by the members and retirees of the retirement system for terms not exceeding three years, and one member, not an employee, retiree, or official of the governmental unit, chosen by the other four board members for a three-year term. The second statute, Ch. 32 §20(c), is a local acceptance provision. In communities that accept this statute, the board is made up of two members appointed by the chief executive officer and two other members elected by the members and retirees of the retirement system for terms not exceeding three years. The fifth member is appointed by PERAC after having been nominated by the other four members. However, if these four cannot agree on a nominee, each member must submit a list of three names of individuals ready and willing to serve, and the commission then appoints the fifth member from the list. This member cannot be a current or former member of the retirement system or an official of the governmental unit.
Ch. 32 §20(5) sets out the general powers and duties of municipal retirement boards.
Funding the System [32:22]
In general, municipal pension systems are funded by:
PERAC must annually determine the amount of each municipality’s required contribution to the pension system for the fiscal year, based on actuarial calculations. [32:22(7)(c)(i)] Following its receipt of PERAC’s determination, the retirement board must certify this amount to the mayor or selectmen and to the treasurer for appropriation and payment to the treasurer of the retirement system. [32:22(7)(c) (iii)] If the municipality fails to include any certified amount in its appropriations for a fiscal year, the assessors must nevertheless include the amount in the next tax levy. [32:22(7)(c)(iv); see Everett Retirement Board v. Assessors of Everett, 19 Mass. App. Ct. 305 (1985), for a discussion of a municipality’s obligation to pay retirement board costs.]
A municipality may elect, pursuant to Ch. 32 § 22(8), to participate in the Commonwealth’s Pension Reserve Investment Trust (PRIT) fund. In any community so electing, the Pension Reserves Investment Management (PRIM) board holds and manages pension monies. Ch. 32 §23(2A) outlines the powers and duties of the PRIM board, which generally possesses a broader investment authority than that of a municipal retirement board.
In any community that does not elect to participate in the PRIT fund, the municipal treasurer is the custody of retirement system monies. Such custody confers upon the treasurer the responsibility for the physical safeguard and control of all of the system’s resources, whether they are cash, cash equivalents or securities. The treasurer should treat the pension fund monies as trust funds. These monies must be segregated from other municipal funds in order to ensure proper control, administration and accountability.
Management of Retirement Funds
The retirement board possesses jurisdiction over the management of retirement system monies and must designate one or more banks or trust companies in which the treasurer must deposit the sums required for current disbursements. [32:23(2)(c)] The treasurer must invest any monies not required for current disbursements pursuant to the instructions of the retirement board. [32:23(2)(b)]
Investment of Retirement Funds
PERAC has promulgated extensive regulations governing the investment of retirement system funds. (840 CMR 16.00 et seq.) A unit within PERAC, known as the Pension Investment Advisory Unit, advises retirement boards on investments of these monies. (7:50)
Retirement boards may invest system funds only in the securities and instruments enumerated in Ch. 32 §23(2)(b)(i-vii) unless they have been determined by PERAC, pursuant to Ch. 32 §23(2)(g), to have a record of investment management that merits broader investment powers. Permitted investments include those which may be made by Massachusetts savings banks, except mortgages or collateral loans, with the limitations set forth in Ch. 32 §23(2)(b)(i)(A-E). Other permitted investment options are deposits in banks, mortgage-pass-through securities and mortgage-backed bonds, annuity contracts and shares of investment funds. The retirement board must designate one or more banks in which securities of the system are to be kept under the name of the retirement system in one or more safe deposit boxes. [32(23)(2)(c)] The board may cause securities to be in the name of one or more nominees for the purpose of facilitating security trading, money management and certificate delivery. In such circumstances, the nominees must be covered by a fidelity bond in a form and an amount determined by PERAC. [32:23(2)(c)]
Treasurer Designated Custodian of Investments/Securities
The treasurer’s duties with respect to retirement fund investments and securities include:
Treasurer’s Duties when Custody of Investments Is Designated to Others
The treasurer possesses very limited duties and responsibilities respecting retirement fund investments and securities when the retirement board designates custody of those assets to a custodian other than the treasurer. In such a case, the treasurer’s duties are generally confined to receiving investment monies, usually cash or cash equivalents, transferred by the custodian to the retirement system, pursuant to an authorization from the retirement board.
Procedures for Handling Pension Fund Receipts
The treasurer ordinarily possesses the responsibility to:
Pension fund cash receipts allocated to the treasurer’s custody generally include, but are not limited to, the following:
Application for Membership in System
The treasurer is responsible for ensuring that new employees complete an application for membership in the retirement system at the same time that they fill out tax withholding and group insurance benefit forms. (See sample enrollment form, pp. 8-22 & 8-23.) The retirement board must then determine the new employee’s eligibility for membership, based on statutory provisions and on local board rules, which must be approved by PERAC. [840 CMR 14.00] Ch. 32 §3(2) explains the eligibility rules the board must follow. Clause 3(2)(d) of this statute treats the eligibility of part-time, provisional, temporary, seasonal and intermittent employees. Elected officials may opt not to belong to the retirement system, pursuant to Clause (2)(a)(vi).
An actively employed individual may not withdraw from a contributory retirement system established under Ch. 32. Any employee who, while a member of such a system, becomes employed in a position in any other governmental unit in which such a system is operative, must thereupon have the membership transferred to the second system. [32:3(8)]
A former employee who returns to active employment may buy back time in the retirement system by paying the amount withdrawn, together with regular interest, from the accumulated regular deductions made during the time of earlier employment. Upon tendering this payment, either in one sum or in installments, upon whatever terms and conditions the board prescribes, the employee will be entitled to all of the creditable service that resulted from the previous employment. The retirement board must calculate both the buy back sum and the amount of the creditable service. An employee may make buy back payments through payroll deductions if the board so approves. [32:3(6)(d)]
Contributions from Members of Municipal Retirement Systems
Ch. 32 §22(1)(b) sets out the various percentages that the treasurer must withhold from the regular compensation of municipal employees for deposit into the retirement fund, depending on the date each particular employee began service with the municipality, and Ch. 32 §1 defines “regular compensation,” i.e., the salary, wages or other compensation to which these percentages must be applied. In determining the amount to deduct from each employee for retirement contribution, the treasurer should take the following steps:
Regular compensation, however, does not include:
The treasurer must initiate retirement withholdings upon “written notice from the [retirement] board….” [32:22(1)(b)] All employees are deemed to have consented and agreed to such withholdings. [32:22(1)(f)]
The percentage of an employee’s regular compensation that the treasurer must withhold for retirement contribution depends on the date that employee began service with the municipality. If an interruption occurs in an employee’s service and the employee’s retirement contributions remain on deposit in the retirement system during the interruption, the employee’s contribution rate will remain at the pre-interruption rate upon the employee’s returning to service. On the other hand, if an employee withdraws retirement contributions upon leaving service and later returns to service, that employee’s contribution rate will be determined by the date of reentry to service. [See 840 CMR 15.02(2)(b); Johnson v. Teacher’ Retirement Board, Contributory Retirement Appeal Board, Case CR-88-082. (7/25/ 89)]
Contribution rates range from 5% to 9%, as follows: 5% for an employee who began service on or before January 1, 1975; 7% for an employee who began service on or after January 1, 1975, but before January 1, 1984; 8% for an employee who began service on or after January 1, 1984, but before July 1, 1996; and 9% for an employee who began service on or after July 1, 1996. Moreover, in any community which has accepted the local option provision contained in paragraph (1)(b½) of Ch. 32 §22, for every employee who entered service with the municipality on or after January 1, 1979, the treasurer must withhold an additional 2% of the amount of that employee’s regular compensation that exceeds $30,000.
An exception to these percentages exists in the case of teachers participating in the alternative superannuation retirement benefit program, set out in Ch. 32 §5, as amended by Ch. 68 §12 of the Acts of 1999. The treasurer must withhold 11% of their regular compensation, pursuant to a list of participating teachers submitted to the treasurer by the school committee, board of trustees or other employing authority.
Each retirement system must establish an “annuity savings fund,” described in Ch. 32 §22(1) as “the fund provided for the accumulation of the regular deductions and additional deductions of the members of the system and into which such deductions shall be paid as they are made and to which regular interest shall be transferred to be credited to the accounts of such members.” Upon withholding retirement contributions, the treasurer must transfer these monies “forthwith” to the annuity savings fund of the retirement system, accompanying them with a statement or voucher itemizing the deductions. The retirement board must then credit the amounts to the accounts of the respective members for whom the deductions were made. [32:22(1)(h)] The treasurer must transmit monthly all amounts withheld from teachers’ salaries to the secretary of the teachers’ retirement system by the 10th day of the succeeding month. [32:22(1)(i)]
Municipal Pension Reserve Fund [40:5D]
Governmental pension programs have frequently been underfunded, raising a significant concern for many communities. Ultimately, a community with an underfunded pension program will have to expend substantial resources to fund pension entitlements. To alleviate unfunded liability problems, a number of communities have begun to appropriate extra monies into a “Pension Reserve Fund,” provided for in Ch. 32 §22, to offset future projected increases and to achieve a fully-funded system from an actuarial basis. Ch. 40 §5D permits an annual appropriation to the pension reserve fund in an amount not exceeding 5% of the preceding year’s real and personal property tax levy. The treasurer is the custodian of the fund, as well as of all other retirement systems funds, and may invest pension reserve fund monies in the manner set forth in Ch. 32 §23(2) for other retirement funds, as discussed above. Accrued interest remains with the fund. Ch. 32 §22(6A) sets out procedures for transferring monies to the pension reserve fund. Transfers require the usual treasurer’s warrant process. Their timing depends upon cash flow and other town obligations. Until monies have been transferred, they are part of the general fund. Once transferred, they become funds of the retirement system to be invested as set forth above. The treasurer should make transfers promptly since appropriations to the reserve fund constitute an important funding source for the retirement system.
Counties may establish pension reserve funds for county systems under Ch. 35 §32A, and they may annually appropriate to those funds an amount not exceeding 5% of the amount they raised in the preceding year from their assessments under Ch. 32 §22(7)(c). These monies must be obtained through an additional assessment upon the member municipalities.
Neither municipal nor county pension reserve funds may be expended for current pension liabilities or for other retirement board obligations without a funding schedule to amortize the unfunded liability of the system and approval by the state actuary. [32:22(6A), (7)(c) & (9); 32:22D(3)]
Recording Cash Receipts of Retirement System Funds
The treasurer should take the following steps when recording cash receipts:
Disbursements of Retirement System Funds
Treasurers may only disburse retirement system funds upon the authority of a warrant previously authorized by the retirement board and signed by two persons designated by that board. The designated persons must provide specimen signatures prior to their signing any warrant authorizing the disbursement of retirement system funds. Furthermore, no warrant may be drawn unless it has been previously authorized by majority vote of the board.
Purposes for which disbursement may be made include the following: [32:23(2)(a)]
Handling Withholdings from Pensions
Deductions may only be made from an annuity, pension or retirement allowance if expressly authorized by statute. Ch. 32 §19A-C permits deductions for premium payments for medical insurance, life insurance, income tax withholdings and child support payments. As the custodian of retirement funds, the treasurer is responsible for withholding designated amounts and for disbursing payments to the proper agencies.
To make deductions for medical insurance and tax withholdings, the treasurer must have previously received written authorization from the retiree. A retired employee may also authorize the treasurer to make deductions for child support payments. However, even if a retired employee does not provide such written authorization, the treasurer must, nonetheless, make child support deductions following the receipt of notice from the Child Support Enforcement Division of the Department of Revenue that a retiree is subject to a lien, notice or order for child support. (119A:6, 12:209D) The treasurer must continue to make such child support deductions until receipt of notice from DOR that the lien, notice or order has terminated and all arrears have been paid.
To disburse monies withheld from an employee’s compensation to a company or agency, the treasurer must take the following steps:
Recording Disbursements [840 CMR 4.01]
The treasurer should record disbursements of retirement system funds in the cash book separate from receipts. Each disbursement entry should contain the date, warrant number and amount of the disbursement. The treasurer should foot the totals after each warrant entry through the end of the month and should also foot and carry forward annual, year-to-date totals.
The treasurer should inform the retirement board about (a) members entitled to returns of their accumulated total deductions and (b) beneficiaries of deceased members entitled to benefits from the pension fund. Ch. 32 §11 provides details about making such returns.
The treasurer should maintain a separate cash book for the retirement system and should summarize cash balances of the system in that book. If the treasurer utilizes multiple depositories for municipal cash, the treasurer should maintain a separate cash ledger for monies of the retirement system. (See example bank ledger in Chapter 3.) The treasurer should regularly reconcile the cash balances for each cash book with the cash balances in depositories and should promptly resolve all variances.
Reconciliation to Bank Records
A conscientious management of a municipality’s pension fund, just as a proper management of all of a municipality’s cash, requires prompt and frequent cash reconciliations. Reconciling the retirement system cash to bank statements entails the same procedure as that outlined in Chapter 4 for all municipal revenues. The treasurer should transmit reconciliations of all cash to the retirement board on a monthly basis.
In conducting a reconciliation, the treasurer should promptly research and resolve all variances. The treasurer should reconcile treasury records with the accountant or auditor on a monthly basis. The treasurer should research outstanding checks within 90 days and may replace checks determined to be “lost” after payments on those checks have been stopped. The treasurer should return all other outstanding checks to the retirement board for disposition pursuant to Ch. 32 §11.
Compensation for Treasurer’s Duties
Ch. 32 §20(4)(g) authorizes treasurers to receive compensation in an amount not to exceed $1,500 for their services as custodian of retirement funds. Ch. 32 §20(4)(h), a local option statute, permits communities accepting its provisions to compensate treasurers in an amount up to $3,000. The treasurer’s compensation is payable from the expense fund (investment earnings) of the system, subject to the approval of the board.
County and Regional Retirement Systems
In communities belonging to a county or regional retirement system, the treasurer’s responsibilities include three major functions: (1) serving on the retirement board advisory council, (2) withholding and transferring employee contributions to the retirement system and (3) completing and submitting a Treasurer’s Monthly Report to the retirement board. A number of counties have been abolished under the provisions of either Ch. 34B or Ch. 151 of the Acts of 1996. Notwithstanding a county’s having been abolished, the cities, towns, districts and other governmental units that belonged to that abolished county’s retirement system remain as members of that retirement system. (34B:18) Regional retirement boards, structured as set out in Ch. 34B §19, manage the retirement systems of abolished counties.
County and Regional Retirement Boards and Advisory Councils
County retirement systems are managed by five-person boards, each composed of the county treasurer, who serves as chairperson, two members elected by the membership of the system, one member appointed by the county commissioners to an unspecified term, and one member elected by the county retirement board advisory council. [32:20(3)(b)] A county retirement board advisory council is made up of all the treasurers, elected or appointed, of each town, unit or district belonging to the county retirement system and the county treasurer. [32:20(3)(g)] Regional retirement systems are also managed by five-person boards, structured as set out in Ch. 34B §19B. A regional retirement board advisory council is made up of all the treasurers, elected or appointed, of each town, unit, or district belonging to the prior county retirement system. [34B:19(g)] The members of the regional council elect a chairman from among the members.
Annually, each county retirement board and regional retirement system must submit to the council, at a meeting specifically called for the purpose, a proposed budget of the anticipated expenses of administering the system in the ensuing year. After collaboration, the council and board must certify their consensus expense budget to PERAC’s actuary. [32:20(3)(g)] The actuary, by December 15th, must specify in writing the amounts that will be allocated to each governmental unit for these expenses. Payment amounts to each member unit are allocated in the proportion that the aggregate regular compensation of the members of each unit, as of September 30th of the preceding fiscal year, bears to the aggregate regular compensation of all members of the system on that date, as set forth in an actuarial evaluation of the system. [32:22(7)(c)(i)]
Contributions from Members of County or Regional Retirement Systems
Ch. 32 §22(1)(b) places in the municipal treasurer the responsibility to withhold retirement contributions from eligible county or regional employees. Procedures whereby the treasurer must calculate the appropriate amount of such contributions are set out on pages 8-6 through 8-8, above. For employees who receive compensation for services in more than one department, the treasurer must calculate and show the amounts separately in the Treasurer’s Monthly Report. The treasurer must transmit all pension contributions to the county or regional retirement system at least once a month.
Payroll Deductions for Employees Who Work for Multiple Units
In municipalities that have accepted the local option provision contained in paragraph (1)(b½) of Ch. 32 §22, whereby the treasurer must withhold an additional 2% of the amount of an employee’s regular compensation that exceeds $30,000, the treasurer must be certain to withhold the additional amount from the compensation of an employee who works for more than one governmental unit in the same retirement system and whose combined compensation exceeds $30,000. Accordingly, in such situations the retirement system must contact each of the units for which the employee works and obtain from them the necessary information to determine the amount of the employee’s combined compensation. In cases in which the combined compensation exceeds $30,000, the retirement system must then notify the governmental unit from which the employee receives the largest compensation and instruct this unit to withhold the additional 2%. The governmental units involved must subsequently notify the retirement board of any change in the employee’s salary rate or employment status. When a change occurs, the retirement system must notify the unit making the additional withholding in order for that unit to make any appropriate adjustment.
Semiannual Payments to County or Regional System
The treasurer is responsible for make certain that the amount certified by PERAC as the municipality’s fiscal contribution to the pension system is transmitted to the retirement board. Payments must be made in two, equal, semiannual installments, on July 1st and January 1st of the fiscal year. [32:22(7)(c)(ii)] Since this assessment must be raised in the tax rate if it has not been appropriated [32:22(7)(c) (iv)], the treasurer must notify the assessors before the tax rate is set if the and insufficient amount has been appropriated.
The Treasurer’s Monthly Retirement Deduction Report
Treasurers must transmit retirement contributions to the retirement system using either the Treasurer’s Monthly Retirement Deduction Report (pg. 8-24) or, with the board’s approval, some other form, either manually or computer generated.
The following list contains general instructions for completing a transmittal report. (Retirement boards may differ with regard to the specific employee information desired.)
Symbols Designating Non-Members of the Retirement System
| • | E.O. | Elected Official |
| • | E. | Emergency Employee |
| • | N.E. | Not eligible for membership |
| • | W.C. | Workmen’s Compensation |
| • | M.S. | Military Service credit |
The following descriptions clarify the applicability of these symbols:
The Teachers’ Retirement System is managed by a 7-member board consisting of the Commissioner of Education or his designee, who serves as an ex officio member and chairs the board, the state auditor or his designee, the state treasurer or his designee, a retired public school teacher appointed by the governor for a 4-year term, two members elected by the active and retired members of the retirement system for terms not exceeding 4 years; and one member selected by the other six members for a 4-year term. (15:16)
The Teachers’ Retirement Board determines the eligibility for membership in the teachers retirement system in accordance with statutory provisions. [See definition of “teachers,” 32:1; see also 32:3(2)(a)(iv) & 3(2)(d).] Each school district or collaborative must (a) generate the requisite documentation for retirement purposes (i.e., enrollments, retirements, resignations, leaves of absence) as well as the other pertinent data required for administration of the retirement system and (b) prepare the Monthly Deduction Report and Deduction Summary Report. (See pages 8-25 & 8-26.)
The treasurer is responsible to deduct retirement contributions from school employees’ compensation and to transmit the monies deducted to the retirement board. Although the treasurer must initiate retirement withholdings from other municipal employees upon written notice from the retirement board, the notice in the case of retirement holdings for school employees comes from the local school department. Upon receiving notice, the treasurer should make retirement deductions for school employees in the same manner as for other municipal employees. The deduction percentage, however, differs for teachers participating in the alternative, superannuation, retirement benefit program, set out in Ch. 32 §5. The treasurer must withhold 11% of their regular compensation, pursuant to a list of participating teachers submitted to the treasurer by the school department. Other minor differences relating to school department deductions are set out on pages 8-6 to 8-8, above.
The Teachers’ Retirement Board, in accordance with statutory provisions, must determine the contribution rates for retirement deductions, as well as the types and limits of compensation subject to those deductions. The board must transmit this information to the municipal treasurer via the school department through the internal payroll process.
The treasurer, as custodian of municipal funds, is responsible for the payment of teacher retirement contributions. Generally, the school district or collaborative prepares the deductions report and summary. The treasurer must transmit retirement contributions to the secretary of the Teachers’ Retirement Board on or before the 10th day of the next succeeding month. [32:22(1)(i)] All disbursements for teachers’ retirement deductions must utilize the warrant process.
Upon receiving retirement contributions, the secretary must credit members’ accounts with their respective deductions and pay the contributions to the state treasurer for deposit in the retirement system’s annuity savings fund.
The treasurer must accompany retirement contribution payments with a Monthly Deduction Report and a Deduction Report Summary, setting out compensation amounts and deduction totals. The Teachers’ Retirement System, in Chapter 5 of its Employer’s Manual, has set out helpful information about acceptable formats for these transmittal reports. The Monthly Deduction Report must contain each employee’s social security number, name, contribution rate, contract term, monthly regular compensation, regular retirement contribution, additional 2% contribution and service code. Service codes denote full time or part time service: 1 = full time, .5 = half time, .75 = three-quarter time, etc. The Deduction Report Summary must include the following:
The treasurer should direct questions concerning deduction turnover forms and calculations to the Teachers’ Retirement Board.
[1] IGR 90-106, entitled Pension Charges to Federal Grant Funds, sets out guidelines for recovering pension costs from of federal grant monies, as required by Ch. 40 §5D and Ch. 35 §32A. (See pp. 8-19 through 8-21.)
Table of Contents | Forward | Contributor’s List | Chapter 1 | Chapter 2 | Chapter 3 | Chapter 4 | Chapter 5 | Chapter 6 | Chapter 7 | Chapter 8 | Chapter 9 | Chapter 10 | Chapter 11 | Chapter 12 | Appendix