Two interest rates are used to calculate service purchases.
Buyback interest is 4%.
Actuarial assumed interest if 8%.
Interest is compounded annually on service purchases.
Chapter 176 of the Acts of 2011 amended the interest rate used to calculate purchases of creditable service that are defined under MGL Chapter 32, s.3.
- An individual who became a member prior to April 2, 2012 has until April 2, 2013 to apply for and enter into a payment agreement to qualify for buyback interest (4%). If the individual defaults on any payment plan, actuarial assumed interest (8%) will be charged on any balance.
- An individual who returns to service after April 2, 2012, has until April 2, 2013 or one (1) year from the date of re-entry, whichever is later to apply for and enter into a payment agreement to qualify for buyback interest (4%). If the individual defaults on any payment plan, actuarial assumed interest (8%) will be charged on any balance.
- An individual who first becomes a member after April 2, 2013 is subject to actuarial assumed interest (8%) on all service purchases which fall under MGL Chapter 32, s.3.
Service purchases defined under MGL Chapter 32, s.3 include:
- Prior non-membership service provided to a city, town, county or other system. This includes CETA service and eligible part-time or provisional service provided to a municipality.
- Out of State Teaching service
- Refunded service from any of the 105 retirement systems
- Credit for Teachers for Nonpublic School Service (aka Nun’s Bill)*
Purchases of creditable service under MGL Chapter 32, s. 4 are calculated using buyback interest – 4%
- Probationary, seasonal, part-time or temporary service provided to the Commonwealth
- Contract service provided to the Commonwealth
- Intermittent Police and Call Firefighter service*
- Certain elected official service*
- Service to the Peace Corp*
* These service purchases only apply in certain situations. Please contact the Buyback Unit for more detailed information on these types of service purchases.
Veterans Creditable Service does not include interest, therefore, the interest rules do not apply to this particular service purchase
You can contact the Buyback Department via e-mail: firstname.lastname@example.org