Presentation on theme: " There is no reason to rush into a decision! › Active members have from Sept. 4 th through October 26 th to decide Have you registered for online access."— Presentation transcript:
There is no reason to rush into a decision! › Active members have from Sept. 4 th through October 26 th to decide Have you registered for online access to the Retirement System website through miAccount? › http://www.michigan.gov/orsschools http://www.michigan.gov/orsschools › Look for this Need Member ID
Two primary “voluntary” decisions to make › Pension Election – Only applies to active members who became a member before July 1, 2010. › Retirement Healthcare Election – Applies to all active members with service credit earned in 12 months ending Sept. 3, 2012
Were you a member before July 1, 2010? Do you know what pension type you are? › Basic, MIP-Fixed, MIP-Graded and MIP-Plus – Current contributions to the pension system vary based on when you started work, or made the election be in Basic or MIP-Fixed. Do you know how your pension amount is calculated? Choice of four options
Option 1 Want to retain the 1.5 percent pension factor for all years earned until retirement. › Basic members: 4% contribution to pension fund (0% now) › All MIP types: Flat 7% contribution to pension fund (Current contributions range from 3.9% to 6.4%)
Option 2 Very similar to Option 1 Retain the 1.5 percent factor until reach 30 years of service Contributions increase like Option 1 until reach 30 years Years earned after 30 years would use a 1.25 percent factor Contributions would then return to current levels
Option 3 Member does not want to increase their contribution for their pension At retirement, pension formula will use years of service earned through Dec. 1, 2012 at the 1.5% factor. The pension formula for service after that date would include a 1.25% pension factor.
Option 4 Elect to no longer contribute to the pension fund At retirement, pension formula will use years of service earned and final average compensation as of Dec. 1, 2012 at the 1.5% factor. Switched to a Defined Contribution plan as of Dec. 1, 2012. Receive a 4 percent employer contribution. Can choose to contribute up to IRS maximum.
So how is this a “voluntary” election? › Members who don’t make an election will be defaulted into Option 3
Members have a choice of two options Premium Subsidy (a percentage of the premium cost is paid for by the retirement system healthcare fund) Personal Healthcare Fund (establish a portable, tax-deferred fund that can be used for paying healthcare expenses in retirement)
Premium Subsidy Option Continue to contribute 3% of compensation to Healthcare Fund and retain the retiree health insurance premium subsidy “offered by the state upon their retirement” Could be maximum subsidy or graded premium subsidy, depending on date first worked Maximum subsidy is 80% as of Jan. 1, 2013 (90% for Medicare eligible and enrolled)
Personal Healthcare Fund No premium subsidy upon retirement Stop paying the 3% Healthcare Fund contribution as of Dec. 1, 2012 Automatically enrolled in a 2% employee contribution into a 457 account, which earns a 2% employer match into a 401(k) Prior contributions will be deposited into their 401(k) by Feb. 1, 2013