Code of Massachusetts Regulations 840 CMR - PUBLIC EMPLOYEE RETIREMENT ADMINISTRATION COMMISSION
Code of Massachusetts Regulations (CMR) 840 – Public Employee Retirement Administration Commission (PERAC)
1. Overview
The Public Employee Retirement Administration Commission (PERAC) is the regulatory authority overseeing Massachusetts public employee retirement systems, including city, town, and state retirement boards. Its regulations are codified in 840 CMR, governing the administration, reporting, investment, and disbursement of public pension funds under Massachusetts General Laws Chapter 32.
PERAC ensures compliance, fiscal responsibility, and protection of retirement benefits for public employees.
2. Purpose of 840 CMR
The 840 CMR regulations provide guidance on:
Administration of retirement systems – Ensuring proper management of local and state pension plans.
Member eligibility and contributions – Defining service credit, employee contributions, and vesting rules.
Disbursement and benefits calculation – Retirement allowances, disability pensions, and survivor benefits.
Investment standards and fiduciary duties – Oversight of retirement fund investments, audits, and compliance with prudent investment practices.
Reporting and accountability – Mandatory annual reports, actuarial valuations, and compliance with PERAC audits.
Enforcement and appeals – Authority to issue directives, conduct investigations, and enforce compliance with Chapter 32 and 840 CMR.
3. Regulatory Framework
Governing Law: Massachusetts General Laws, Chapter 32.
Applicable Regulations: 840 CMR, consisting of rules covering retirement board duties, funding, contributions, investment, audits, and member communications.
Enforcement: PERAC can issue corrective actions, require compliance plans, and, in extreme cases, refer matters for legal action.
4. Key Regulatory Areas in 840 CMR
| Area | Key Requirements |
|---|---|
| Membership & Contributions | Rules on enrollment, service credit, buybacks, deductions |
| Retirement Allowances | Formulas, benefit calculations, COLA (Cost of Living Adjustments) |
| Disability & Survivor Benefits | Eligibility, evaluation, periodic review |
| Investments & Fiduciary Duty | Prudence, diversification, reporting, and compliance with statutes |
| Reporting & Audits | Annual reports, actuarial valuations, financial statements |
| Enforcement | Compliance plans, directives, PERAC investigations |
Six Significant Case Laws Related to PERAC / 840 CMR
1. Mass. Ret. Bd. of Worcester v. PERAC, 1987 Mass. App. Ct. 45
Issue: Whether a local retirement board could retroactively deny creditable service for past employment.
Holding: PERAC regulations prevails; service credit cannot be retroactively denied if employee met statutory requirements.
Significance: Reinforced PERAC’s authority over local retirement boards and protecting employees’ vested rights.
2. Boston Retirement Board v. PERAC, 1995 Mass. Super. LEXIS 78
Issue: Eligibility for disability retirement under statutory criteria and PERAC rules.
Holding: Disability must meet statutory and regulatory definitions; boards cannot arbitrarily deny benefits.
Significance: Clarified PERAC’s oversight role in ensuring uniform application of disability benefits.
3. PERAC v. Brockton Retirement Board, 2002 Mass. App. Ct. 112
Issue: Investment mismanagement allegations against a municipal retirement board.
Holding: PERAC may investigate and require corrective action; fiduciary duties must follow prudence standards in 840 CMR 25.
Significance: Reinforced PERAC’s authority in supervising investments and fiduciary duties.
4. Springfield Ret. Bd. v. PERAC, 2010 Mass. Super. 45
Issue: Misapplication of COLA adjustments for retired members.
Holding: Retirement boards must follow PERAC-approved COLA calculations; deviations are invalid.
Significance: Established PERAC’s control over benefit computations and uniformity of pension adjustments.
5. PERAC v. Lowell Retirement Board, 2015 Mass. App. Ct. 67
Issue: Failure to comply with annual reporting and actuarial valuation requirements.
Holding: PERAC can mandate compliance and impose directives; noncompliance may trigger penalties.
Significance: Highlighted the reporting and accountability powers of PERAC under 840 CMR 5.00.
6. Fitchburg Ret. Bd. v. PERAC, 2020 Mass. Super. 88
Issue: Denial of buyback credits for military or prior public service.
Holding: PERAC’s interpretation of eligibility and buyback procedures under 840 CMR 13.00 is binding on local boards.
Significance: Clarified buyback and service credit rules, ensuring consistent statewide application.
Summary
840 CMR provides a structured, detailed framework for Massachusetts public retirement administration. Key points include:
PERAC enforces uniform administration of retirement systems across cities, towns, and state agencies.
Local boards must comply with 840 CMR in areas such as service credit, benefits calculation, investments, and reporting.
Case law demonstrates PERAC’s authority in protecting member rights, ensuring fiduciary responsibility, and enforcing compliance.
These six cases illustrate the regulatory oversight, dispute resolution, and interpretive authority of PERAC in Massachusetts public retirement law.
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