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The Tech published a letter to the editor on Oct. 30, 2009, to correct a mischaracterization of MIT's retirement plans that occurred in a Oct. 23, 2009 Tech article. Here is a clarification for those who might have read that article and were confused. MIT provides all retirement eligible employees with both a defined contribution and a defined benefit retirement plan. MIT currently matches up to the first 5 percent contributed by an employee to the 401(k) plan — a defined contribution plan that establishes individual accounts for each participant. Each participant decides how to invest contributions and these accounts are subject to fluctuations in the financial markets, like any other individual investment. The full value of this account is available to the participant upon termination or at retirement and can be withdrawn or can remain invested.
MIT is one of a small number of employers who also provides a defined benefits pension plan for our retirement eligible employees. Employees do not contribute to this plan, but accrue a benefit across their entire working career at MIT. This is a complex, federally regulated plan that allows employees to accrue benefits using two different formulas, with the formula that provides a larger benefit used when an employee retires. At retirement, this account is converted to a monthly benefit payment that will continue for the employee's lifetime or that can continue to a spouse or other beneficiary (upon the employee's death) at an employee's discretion. Every three years following age 65 after retirement, a cost of living increase is added to the monthly pension amount.
For additional information on MIT's retirement programs and the other benefits that make up a generous and highly competitive package of employee benefits, explore www.hrweb.mit.edu/benefits