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Departments: Retirement Board

Frequently Asked Questions

Q: Why do I have to contribute to the Hingham Retirement Board?

A: All permanent full-time and part-time employees have a mandatory deduction withheld from their regular compensation. You do not pay into social security.

Q: What do you do with my contributions?

A: These contributions are a source of income to the Hingham Retirement Board to help fund a lasting resource of pension benefits.

Q: Do you invest my money?

A: Yes, the funds are fully invested by the Pension Reserves Investment Board (PRIM) based on the rules and regulations set by legislation.

Q: What is the most I can get as a retirement allowance?

A: The most anyone can collect as an annual retirement allowance is approximately 80% of his or her average three high consecutive years of regular salary.

Q: Does a member's contribution to the Retirement System earn interest? If so, how is the interest calculated?

A: Your contributions are placed in an individual annuity savings fund where it earns annual interest at a statutory rate comparable to that of a passbook savings account. The interest rate is determined by the Public Employee Retirement Administration Commission and the Commissioner of Banks. This annual interest rate is independent of that earned on the Retirement System's investments.

Q: Are employee contributions used to fund the administrative expenses of the Retirement System?

A: No. Employee contributions are never used to fund administrative expenses. The System's operating expenses, including all fees associated with actuarial and audit services, investment management, consultant and custodial fees, are funded solely through the system's investment income.

Q: What does it mean to be vested?

A: When you are vested, you have earned the right to a retirement allowance at a later date. You no longer have to remain in service to be eligible to collect it.

Q: When is retirement an option?

A: You are eligible to retire at age 55 or older if you have at least ten years of creditable service or at any age with 20 years or more of service.

Q: What is the retirement allowance based on? How is it calculated?

A: Because the Hingham Retirement Board is a defined benefit plan, your benefits are determined by a formula and are not affected by the amount of money in your annuity account at the time of retirement. The factors used to determine your benefit are: your age at the time of retirement, your amount of creditable service, your group classification and an average of your three consecutive years of regular compensation.

Q: Can I purchase creditable service earned in another Massachusetts public retirement system?

A: If you were a member of another retirement system subject to the provisions of Chapter 32 of the General Laws, and you withdrew your retirement funds, it is possible to buy back your prior creditable service. The Retirement Office will verify your prior service then calculate the amount of your buyback. You must repay the amount withdrawn, plus interest to the date of repayment. You may complete a buy back as a lump sum payment or a payment plan up to the number of years you wish to buy back, but not more than five years.

Q: Will prior creditable service affect my membership date or contribution rate in the Hingham Retirement Board?

A: If you have retirement contributions from a previous public employer directly transferred to our system, you are entitled to maintain the level of contribution you were paying in your previous employment. If you received a refund of retirement contributions from your previous retirement system and later became a member of the Hingham Retirement Board, your contribution rate with Hingham Retirement Board will be at the new member rate, regardless of what you were paying in the prior system. If you should later purchase your prior creditable service through a buyback, your contribution level will remain at the new member rate and will not be reduced to your previous rate.

Q: Is regular compensation the same as total compensation?

A: No. Regular compensation is the portion of your salary that is subject to retirement contributions. Overtime, bonus pay, severance pay, payments made for unused sick time, and certain other payments, are not considered regular compensation, are not subject to retirement and cannot be used towards your three-year average for the purpose of determining your retirement allowance.

Q: Does my participation in a deferred compensation plan affect my Hingham Retirement Board's retirement benefit in any way?

A: No. Your retirement benefit is separate from and not related to participation in the deferred compensation plan. The plan is an optional savings vehicle, which allows you to supplement your retirement savings on a tax-deferred basis. It is strongly recommended that this plan be considered as an option by members.

Q: If I leave my job, what happens to my contributions?

A: If you leave your job and are not going to work for another governmental unit which comes under the provisions of Chapter 32, you may be eligible to receive a refund of your contributions. If you are leaving to accept a position with a Massachusetts political subdivision subject to Chapter 32, you must transfer your retirement contributions directly to your new retirement system.

Q: If I leave my job and decide to withdraw my contributions, will I receive all my interest?

A: Effective July 1, 2010, members who first joined the retirement system after January 1, 1984 and who have less than 10 years of creditable service, and voluntarily withdraws his contributions, are entitled to annual interest of 3% upon withdrawal of their accumulated total retirement deductions. Members who established an earlier date of membership, or who have more than ten years of service, will receive 100% of the rate of regular interest upon withdrawal of their accumulated deductions. "Regular interest" is defined as interest at a rate established by PERAC obtained from the average rates paid on individual savings accounts by no less than 10 financial institutions.

Q: Is there any time limit after your termination for requesting a refund of your contributions?

A: No. You may request a refund of your funds at any time after termination. If you leave your funds on deposit, however, and later seek a refund, your deductions will only earn interest for two years after termination. The prior answer outlines the criteria used to determine your interest eligibility.

Q: Can a member who is vested and who terminates employment still be eligible for a refund?

A: Any member who terminates employment may be eligible to withdraw retirement funds. If the member is vested and has earned the right to a retirement allowance at a later date, careful consideration should be given to the value of the retirement benefit he or she may be forfeiting in exchange for a refund.

Q: If I terminate my employment and leave my money in the retirement system, can I retire at a later date?

A: If you are vested and terminate employment, you can choose to "defer" your retirement by leaving your money in the system until you are ready to retire.

Q: Can a member withdraw or borrow money from his or her account in the retirement system without resigning or retiring?

A: No. There is no loan provision in this plan. An active member cannot withdraw or borrow any contributions from the fund under any circumstances.

Q: What are the tax consequences if I take a refund of my retirement contributions?

A: Your contributions and all the interest you receive from your account are subject to federal income tax (with exception of any contributions made prior to January 12, 1988). When processing a refund of retirement contributions, the Retirement Office is required to withhold 20% of the taxable portion of your refund for federal tax. The 20% tax payment is required only if the refund is made directly to the member. To defer tax payments, you must make a direct rollover of your retirement funds to an Individual Retirement Account (IRA) or another type of retirement account with a financial institution. With a direct rollover, no tax is withheld and the entire taxable portion of your refund is transferred. If you have both taxable and nontaxable contributions, you may accept receipt of the nontaxable portion of your refund without tax consequence and the taxable portion may be rolled over.

Q: If I die before retirement, what happens to my money?

A: If you are married and die before you retire, your surviving spouse will have the option of collecting a monthly benefit, including a monthly allowance for children under the age of 18 or if a student in an accredited institution until age 22, or receiving a lump sum payment of your contributions. Contact the Retirement Office for more information.

Q: I want to retire, what do I do?

A: Call the retirement office at 781-741-1478 for an appointment. If you are married, your spouse should accompany you. The forms can also be mailed.