May 6, 2005

Benefits update: Cash Balance Retirement Plan

The Cash Balance Retirement Plan (CBRP) is an integral part of the MGH benefit program that provides eligible employees with generous contributions and interest credits to their accounts.

The annual CBRP statements will be mailed this month. The statements will update employees' balances as of Dec. 31, 2004, as well as provide employees with projections of future balances, assuming the employees continue to work at the MGH.

One of the many positive features of the MGH pension plan is that eligible employees are enrolled automatically. The hospital makes contributions to employees' accounts as soon as they meet the eligibility requirements (age 21 and one year of service). No employee contributions are required for enrollment in the plan — it is completely funded by the MGH.

Once eligible, the hospital makes annual contributions to employees' accounts ranging from 5 to 15 percent of pay. The contribution amount depends on an employee's age and years of service. In addition, the hospital also credits an employee's account each year with a 6.5 percent interest payment.

For example, a 40-year-old employee with 10 years of service and a current annual salary of $45,000 could expect to accumulate a balance of $627,000 by the time he or she reaches age 65, at no cost to the employee.

Once employees have earned five years of service under the plan, their pension benefits are 100 percent vested. That means that employees "own" their benefit and are entitled to collect it once they leave or retire from the hospital.

When the time comes for employees to begin to collect their benefits, they'll be able to choose among several payout options, including a lump sum payment or a monthly benefit payable for lifetime, among other options. Employees also can choose to divide the account balance among the lump sum, monthly payout and other options.

For more information about the statements or the pension plan, employees should contact their Human Resources generalist, the Benefits Office at (617) 726-8133 or send e-mail to ibenefits@partners.org.