Legislation adopted in 2011 requires all Retirement Systems in Massachusetts to review the earnings history of new retirees. This is done to prevent situations in which a member might attempt to enhance a retirement benefit by negotiating a substantial pay increase, and increasing his/her average pay for the three years immediately preceding retirement. This regulation does not affect members who are granted an Accidental Disability retirement allowance.
Normally, new retirees have their benefit calculated by averaging the three highest, consecutive years of earnings (for members who began service after 4/1/2012, the five highest years are averaged). In applying the antispiking law, we review the last five years of pay. If at any point during this period, the member’s annual salary increases more than 10% over the average salary for the preceding two years, this would be a violation of the statute. In case of a violation, the salary is calculated based on the previous FIVE years of pay, rather than three (or, in the case of a post-2012 member, based on SEVEN years of pay, rather than five).
It will not be considered a violation if the pay increase was due to an increase in the number of hours worked, or due to a promotion, or was negotiated by a collective bargaining unit.
It is also a violation of the statute if a member’s annual salary more than doubles in consecutive years. In this case, the benefit must also be calculated using two additional years of salary history as described above. However, in situations where the salary doubles, there are NO exceptions for hours changes, promotions or collective bargaining.