How the UMass Memorial pension works
The UMass Memorial Health Care Pension Plan is a defined benefit plan funded by the employer. You do not contribute to it or choose its investments. Instead, the plan calculates your benefit using formulas based on factors such as your pay and years of service.
For participants in the main UMass plan, the calculation generally has two parts. Benefits earned through 2016 are based on one formula, while benefits earned from 2017 forward are calculated using a different formula tied to each year’s pay. For SHARE-represented employees at the Medical Center, for example, the amended plan description credits the greater of $452 or 1.25 percent of that year’s pensionable earnings for each year worked after 2016, and counts up to 30 years of benefit service toward the earlier piece. Your own provisions may differ. You do not need to calculate either amount yourself. Your benefit estimate will show what the plan expects to pay based on your employment history and proposed retirement date.
One pension, two formulas
You do not calculate either piece yourself. For SHARE-represented employees at the Medical Center, the amended plan description credits the greater of $452 or 1.25 percent of that year’s pensionable earnings for each year worked after 2016. Your own provisions may differ.
Start by confirming which provisions apply to you
Not every UMass Memorial employee participates in the same pension arrangement. The current plan includes different provisions for the main UMass group and for participants from legacy plans that were merged into it, including the former Marlborough Hospital Retirement Plan. Some employees also made earlier benefit elections that affected their pension eligibility.
Your hire date, employing entity, service history, and past elections can, therefore, matter. Before making retirement decisions, request a current written estimate and the plan information that applies specifically to you. A coworker with a similar career may still have a different benefit.
Turning the pension into retirement income
When you are ready to begin receiving the pension, you may have several payment options. Depending on the provisions that apply to you, these may include monthly income for your lifetime, joint-and-survivor options, payments guaranteed for a specified period, and a lump sum.
Monthly payments can create a dependable source of income that continues throughout your life. Survivor options can continue a portion of that income to a spouse after your death. Other payment forms may address different beneficiary needs.
A lump sum gives you control over how the money is invested and withdrawn. It also shifts responsibility for investment decisions, market risk, taxes, and making the money last to you. The better choice depends on your retirement expenses, health, other income, assets, risk tolerance, and the people or priorities you want the benefit to support.
Request estimates showing every payment option available to you. It can also be helpful to compare more than one possible retirement date, as the amount may change depending on when payments begin.
What each payment option does
| Option | What it provides | What it asks of you |
|---|---|---|
| Lifetime monthly income | A dependable payment that continues throughout your life. | Nothing. The plan carries the investment and longevity risk. |
| Joint and survivor | Continues a portion of the income to a spouse after your death. | A lower monthly payment in exchange for the survivor benefit. |
| Period certain | Payments guaranteed for a specified number of years. | Matching the guarantee period to the beneficiary need it exists for. |
| Lump sum | Control over how the money is invested and withdrawn. | Investment decisions, market risk, taxes, and making the money last. |
How the pension fits into your retirement plan
Retirement income often comes from several places. Your pension may cover part of your regular expenses, while Social Security and withdrawals from retirement accounts provide the rest. Looking at these sources together helps answer the larger question: when can you retire with the income and flexibility you need?
Begin with the expenses you expect to have in retirement. Then compare them with the income available from your pension and Social Security. Your 401(k), 403(b), IRAs, and other savings can be used to fill the remaining gap, fund larger expenses, and provide flexibility when your needs change.
Confirm whether your benefit includes a cost-of-living adjustment. Private pensions generally do not, which means the monthly payment does not rise with inflation. Your retirement savings can help address rising costs and preserve flexibility later in retirement.
Where retirement income comes from
Start with the expenses you expect, then compare them against pension and Social Security income. Savings cover what is left. Private pensions generally do not carry a cost-of-living adjustment, so the monthly payment does not rise with inflation.
Coordinating the pension with your workplace savings
Depending on your employing entity and eligibility, you may also have access to the UMass Memorial 401(k), 403(b), or both. The 401(k) includes an employer match for many employees, making the contribution rate an important part of retirement planning. For SHARE-represented employees, the match is 50 cents on each dollar contributed, up to the first 4 percent of pay. Confirm the match that applies to your position.
Your savings accounts serve a different purpose from the pension. You control how much you contribute, whether contributions are pre-tax or Roth when available, and how the money is invested. These accounts can provide growth, liquidity, inflation protection, and assets that may remain for beneficiaries.
Some employee groups may also have access to a 457(b) deferred compensation plan. Availability is inconsistent across the workforce, so confirm the plans offered for your position before building them into your retirement strategy.
Coordinating the pension with Social Security
The date you begin Social Security can significantly affect your retirement income. You may claim as early as age 62, but claiming before full retirement age reduces the monthly benefit, while delaying beyond full retirement age increases it by 8 percent a year until age 70.
Your pension may give you more flexibility in choosing when to claim. For example, pension income and planned withdrawals from savings could help support the first years of retirement while you delay Social Security. In other situations, beginning Social Security earlier may reduce the amount you need to withdraw from investments.
The goal is not simply to maximize one benefit. It is to coordinate pension, Social Security, and investment withdrawals to support your spending needs, manage taxes, and create a reliable income throughout retirement.
What the claiming date does to the benefit
Full retirement age depends on the year you were born, not the year you retire. The figures above are for a 1959 birth year, which covers everyone reaching full retirement age during 2026. For anyone born in 1960 or later, full retirement age is 67, claiming at 62 pays 70% of the full benefit, and waiting until 70 pays 124%. Birth years 1955 through 1958 fall between 66 and 2 months and 66 and 8 months. Check your own year on the Social Security Administration’s retirement age chart, or on your Social Security statement.
The delayed credit is 8% a year for anyone born in 1943 or later, but it is credited monthly and it does not compound. The rate is two-thirds of 1%, or 0.667%, for each month past full retirement age, so a partial year still counts: six months of delay is a permanent 4% increase, and 38 months is 25.3%. Credits stop at 70. If you file before 70, credits earned in the year you file may not appear until the following January.
Accounting for taxes and healthcare
Pension income is generally taxable for federal purposes, and Massachusetts taxes income from most private pensions. The timing and form of your pension can therefore affect your taxable income, along with Social Security and retirement account withdrawals.
If you choose an eligible lump sum, a direct rollover to an IRA or another eligible retirement account generally allows you to defer taxation until withdrawals begin. A lump sum paid directly to you is generally subject to mandatory federal withholding of 20 percent.
Healthcare also belongs in the calculation, particularly if you plan to retire before becoming eligible for Medicare. Premiums, deductibles, and out-of-pocket costs can materially change the amount of income you need during the first years of retirement.
A lump sum paid directly to you is generally subject to mandatory federal withholding of 20 percent. A direct rollover to an IRA or another eligible retirement account generally defers taxation until withdrawals begin.
Pension income is generally taxable federally, and Massachusetts taxes income from most private pensions. The timing and form of the benefit therefore affect your taxable income alongside Social Security and account withdrawals.
What to gather before making a decision
Start with a written pension estimate showing the monthly and lump-sum options available to you. Ask for estimates at the retirement dates you are considering, along with the current plan description that applies to your employment group.
Bring that information together with:
- Your most recent 401(k), 403(b), 457(b), and IRA statements
- Your Social Security estimate
- Your expected retirement expenses
- Information about other income and assets
- Your anticipated healthcare costs
- Your beneficiary and estate-planning priorities
Together, these details provide a much clearer picture than any pension election viewed by itself.
How Finivi can help
Finivi can help UMass Memorial employees understand how their pension fits into a complete retirement strategy. We can evaluate the available payment options, model different retirement and Social Security dates, coordinate investment withdrawals, consider the tax impact, and identify how much income your plan may provide over time. Our UMass Memorial Employees page outlines how we approach the pension, 401(k), and 403(b) together.
The result is not simply a pension election. It is a coordinated plan for turning your benefits and savings into the retirement income you need.
Ready to make the most of your UMass Memorial benefits?
We work with UMass Memorial employees on how the pension, the 401(k), and the 403(b) fit together. There is no cost and no obligation to talk.
A conversation typically covers:
- The payment options on your written estimate, compared side by side
- Different retirement dates and Social Security claiming ages, modeled
- How withdrawals from savings coordinate with pension income
- The tax impact, including healthcare costs before Medicare
Sources
- SHARE and UMass Memorial Collective Bargaining Agreement, October 1, 2022 to September 30, 2026: Retirement Benefits and amended Summary Plan Description, pages 31 to 35
- SHARE at UMass Memorial: Retirement Benefits
- Social Security Administration: Early or Delayed Retirement
- Massachusetts Department of Revenue: Massachusetts Tax Information for Seniors and Retirees
- Internal Revenue Service: Rollovers of Retirement Plan and IRA Distributions
Finivi Inc. is a registered investment adviser. Finivi Inc. is not affiliated with, endorsed by, or sponsored by UMass Memorial Health Care, Inc., UMass Chan Medical School, the University of Massachusetts, or any affiliated entity. UMass Memorial is named here only to identify a group of employees the firm serves. This article is provided for educational purposes and is not individualized investment, tax, or legal advice. Pension provisions can vary by employing entity, legacy group, hire date, union representation, and employment history. The dollar amounts, accrual rates, and matching formula cited here are drawn from the SHARE collective bargaining agreement and the amended summary plan description appended to it, which govern SHARE-represented employees at UMass Memorial Medical Center. Employees who are not represented by SHARE, and employees of other UMass Memorial entities, may be subject to different provisions and should not rely on these figures. The official plan documents that apply to your own employment govern in all cases. Request your individual benefit information from UMass Memorial and consult appropriate tax or legal professionals regarding your circumstances.
