1. Make the Rest of Your Life the Best of Your Life Understanding your MPSERS Benefits and Retirement Planning No part of this presentation may be copied or reproduced in any form or by any means, without the expressed written permission of MARSP Retirement Planning Services, LLC

2. MPSERS (Michigan Public School Employees Retirement System) MPSERS Provides Two Benefits to the Retiree 1.Pension Benefits (Income) 2.Health Insurance (Master Medical, Prescription, Dental, Vision, Hearing)

3. Retirement Income Goals: From Where Could I Receive Income? Income Previous to Retirement 100% Retirement Income Goal 70% - 90% MPSERS 35 - 45%

4. How MPSERS Calculates your Benefits Total Number Years of Service X Average Salary X Multiplier Annual Income from Option 1 (No Survivorship Benefit)

5. Pension Qualifiers (for employees hired pre 7/1/2010) Full Retirement Early Reduced Deferred Age 60 and up

6. MPSERS (Option 1 Defined Benefit Calculation) Multiplier

7. Post 2008-2011 Changes Impact of buying years of service on insurance subsidy Increase in MIP Contributions Working after Retirement Creation of Pension Plus 3% Contribution to Health Care Trust

8. 2012 Changes New Michigan Tax Laws The effects are different depending on age Born before 1946 –No pension tax impact Born 1946 – 1952 –Until age 67, will have a pension exemption of $20,000 for single, $40,000 for married –After age 67, will have an income exemption of $20,000 for single, $40,000 for married Born after 1952 –Until age 67, will have no exemptions –After age 67, will have an income exemption of $20,000 for single, $40,000 for married

9. Different Multipliers: Choice of one of four options 1.Maintain 1.5% multiplier with added cost 2.Maintain 1.5% multiplier until you reach 30 years then switch to 1.25% 3.Reduce your multiplier to 1.25% for the balance of your career with no added increase 4.Freeze Pension - 4% deposited in a retirement account 9 2012 Changes Pension Reform

10. 10 2012 Changes New Cost To Keep The 1.5% Multiplier: MIP Members will pay 7% Basic Members will pay 4% Pension Plus employees have no changes

11. Total Number Years of Service X Average Salary X 1.5% Annual Income from Option 1 (No Survivorship Benefit) How MPSERS Calculates your Benefits If you elected 1.5%

12. 12 How MPSERS Calculates your Benefits If you elected 1.25%

13. 13 How MPSERS Calculates your Benefits If you elected 4% DC Plan Benefits under the defined benefit system are frozen and starting in 2012 you will be in a defined contribution plan. You have a 4 percent employer contribution going to a 401k. Employees would qualify for a 1.5 percent multiplier on all existing accrued benefits.

14. Different Multipliers: You picked one of four options 1.Maintain 1.5% multiplier with added cost 2.Maintain 1.5% multiplier until you reach 30 years then switch to 1.25% 3.Reduce your multiplier to 1.25% for the balance of your career with no added increase 4.4% deposited in a retirement account 14 2012 Changes Pension Reform This is the default if you didn’t elect a choice on Miaccount

15. If hired before 2008, you will have a maximum of 80% Healthcare subsidy and pay 3% into the Retiree Healthcare Fund If you chose to opt out of the retirement healthcare you do not pay 3% in Retiree Healthcare Fund and receive a matching contribution (2% employee / 2% employer) into a personal healthcare fund 15 2012 Changes Healthcare

16. Hired since July 2008, you will have a graded subsidy, 10 years 30% with an additional 4% each year worked, maximum of 80% If you are retired and age 65 or older on January 1, 2013 no change in subsidy – maximum 90% 16 2012 Changes Healthcare

17. Member ID: ____________________ R0009C (Rev. 7/2008) - 2 - ORS Public School Employees Retirement Application (continued) Section IV: Election of Pension Option and Beneficiary Pension Option: Read about each option in the instructions and the Retirement Readiness. Be sure you understand how this choice will affect your pension amount and any potential survivor benefits. Select your desired option. No corrections or visible erasures are permitted on this page. If you make a mistake, you can print a new page at www.michigan.gov/ORSschools. I elect the following pension option (select one): Straight Life 100% Survivor 75% Survivor 50% Survivor Equated Option: I wish to combine the above pension option with the Equated Plan. I understand I will receive a larger pension until age 62 when it will be permanently reduced. I have enclosed a Social Security estimate with this application. Beneficiary Designation: If you selected a survivor pension option above, you MUST name a beneficiary. You can only name one person as beneficiary. See instructions for eligible beneficiaries. If you selected a straight life option above, your beneficiary named below will receive a one-time refund of contributions, if any. Beneficiary Name: _______________________________________ Relationship: ____________________________________ Beneficiary’s SSN: _______________________________________ Birth Date: ___________ Male Female STOP Do not sign until you are in front of a Notary Public. All signatures must be notarized AT THE SAME TIME. R0009C (Rev. 7/2008) - 2 - ORS Public School Employees Retirement Application (continued) Section IV: Election of Pension Option and Beneficiary 4 OPTIONS Pension Options

18. Who can be my Pension Beneficiary? Spouse (If someone else is elected, spouse must sign off) Child Parent Brother Sister (Dependency is not required)

19. MPSERS Retirement Options Which is Best for You??? Monthly benefits are based on a retiree who has 30 years of service and an FAC of $40,000, Benefits will vary depending on each individuals circumstance. Straight Life Option 1 100% Survivorship Option 2 75% Survivorship Option 3 50% Survivorship Option4 YOU $1,500 $1,100 $1,200 $1,300 BENEFICIARY $0.00 $1,100 $900 $650 BENEFICIARY PERCENTAGE 0% 100% 75% 50% BENEFICIARY HEALTH No Yes Pop Up No Yes

20. The pension option selected for your spouse at retirement is permanent. What option would you choose?

21. Compared To Straight Life, You Are Reducing Your Pension Benefit By: $400.00 Per Month $4,800. Per Year $144,000 In the First 30 Years of Retirement! 100% Survivorship Option the “Honey I Love You Option”

22. “New Spouse” Benefit (Jan 01, 2009) Allows you to add a new spousal beneficiary if your spouse at retirement dies before you or you are single at retirement and marry later. 179 days-1 year to enroll new spouse after marriage Not available for non- spouse beneficiary

23. Retirement Income Goals: From where could I receive income? MPSERS 35 - 45% SS/E-Opt 10% - 15% Income Previous to Retirement 100% Retirement Income Goal 70% - 90%

24. The Equated Difference Should I Take Equated or Not?

25. ORS Public School Employees Retirement Application (continued) Section IV: Election of Pension Option and Beneficiary Pension Option: Read about each option in the instructions and the Retirement Readiness. Be sure you understand how this choice will affect your pension amount and any potential survivor benefits. Select your desired option. No corrections or visible erasures are permitted on this page. If you make a mistake, you can print a new page at www.michigan.gov/ORSschools. I elect the following pension option (select one): Straight Life 100% Survivor 75% Survivor 50% Survivor Equated Option: I wish to combine the above pension option with the Equated Plan. I understand I will receive a larger pension until age 62 when it will be permanently reduced. I have enclosed a Social Security estimate with this application. Beneficiary Designation: If you selected a survivor pension option above, you MUST name a beneficiary. You can only name one person as beneficiary. See instructions for eligible beneficiaries. If you selected a straight life option above, your beneficiary named below will receive a one-time refund of contributions, if any. Beneficiary Name: _______________________________________ Relationship: ____________________________________ Beneficiary’s SSN: _______________________________________ Birth Date: ___________ Male Female The Equated Option

26. MPSERS Straight Life (Example) Retirement Income Without Equated Plan: Social Security $1,100 Age 55 Retirement Income With Equated Plan: Initial Pension + Equated $2,000 AGE 62 Social Security $1,100 Initial Pension $1,500 Pension Amount Unchanged at 62 Pension Reduced to $900 Age 55

27. Social Security 1.Three significant ages for collecting Social Security 2.Reduced Benefits 3.Full Retirement Age

28. Significant Ages Regarding Social Security Reduced benefits as early as age 62 Full benefits at full retirement (ages 65 to 67) Increased benefits, if benefits are delayed beyond full retirement age to as late as age 70

29. Retirement Income Goals: From where could I receive income? MPSERS 35 - 45% SS/E-Opt 10% - 15% Personal Savings 25 - 30% Income Previous to Retirement 100% Retirement Income Goal 70% - 90%

30. MPSERS $14,000 - $18,000 SS/E-Opt $4,000 - $6,000 Personal Savings $10,000 - $12,000 Retirement Income Goals: Where Will My Income Come From? Income Previous to Retirement Income Goal $40,000$28,000 - $36,000

31. Personal Retirement Savings What is a 403(b)? How much can I contribute?

32. 403(b) Deferral Limits for 2012 100% of Compensation Up To $17,000.00 403(b) Catch-up Provisions Over Age 50 Catch-up $5500 per yr *15 Yrs of Service - $3,000 for 5 Yrs Amounts withdrawn from a 403(b) account are included in taxable ordinary income in the year distributed. Distributions prior to age 59 1/2 may be subject to a 10% IRS penalty. *Assumes participant is eligible for catch-up

33. Purchasing Years of Service Why would you want to purchase years of service? 1.To increase your pension 2.To retire early

34. Methods of purchasing years of service 1.Pay by check (after tax) 2.Tax Deferred Purchase (TDP ) 3.Transfers from Qualified Accounts ( 8% simple interest of the unpaid balance as of July 1 st of each year)

35. Purchasing Time Must have two years of service completed before you can purchase. Employees hired after September 4, 2012 can no longer purchase years

36. Purchasing Time CAUTION: If a member retires early as a result of purchasing time, the member pays 100% of the health insurance premium from the time of retirement until the member would have been normally eligible to retire.

37. Example of Health Insurance cost for a retiree & spouse who purchase one year of service credit after 7/1/08 and retires one year early Monthly cost of MPSERS Master Medical Plan MPSERS Dental & Vision Total monthly Premium Annual Premium 2012 Premiums $ 1,198.69 $ 72.64 $ 1,271.33 $15,255.96

38. Retirement Income Goals: From where could I receive income? MPSERS 35 - 45% Income Previous to Retirement 100% Retirement Income Goal 70% - 90% Income of 1/3 FAC Working for a Public School

39. Retirement Income Goals: From where could I receive income? MPSERS 35 - 45% Income Previous to Retirement 100% Retirement Income Goal 70% - 90% Other Income

40. Working After Retirement (retirement date on or after 7/1/2010) Retirees employed by a reporting unit earning over 1/3 of their final average compensation will forfeit their pension and retiree healthcare benefit. Retirees employed via a third party or independent contractor will have pension and retiree health care benefits suspended.

41. MPSERS Information www.michigan.gov/ors Or call 800-381-5111

42. MPSERS Master Health Care Plan Your retirement health care benefit is very different from what you have today

43. Health Care Benefit If you will receive a pension check from MPSERS, you will qualify for a Health Care Plan, which includes: 1.Major Medical}Sign up in two parts: 2.Prescriptions}Part 1 is MM/P, and 3.Hearing }Hearing 4.Dental] 5.Vision]Part 2 is D,V

44. Major Medical and Prescription (MM/P), or HMO MPSERS retirees have choices –MM/P is BCBSM: Traditional PPO for under age 65; or Medicare PLUS Blue Group PPO after age 65; includes Catamaran (formerly Catalyst Rx) for prescriptions –HMOs: Blue Care Network; HAP; Priority Health HMOs each have own prescription plan –Insurance Options Summary Comparison sheets are on the www.michigan.gov/orsschools website

45. Master Health Care Program Blue Cross/Blue Shield & Catamaran (formerly Catalyst Rx) PPO Plan – See any provider, but if out of network, you pay a higher percentage. Annual deductible must be paid before benefits are paid (2012 deductible is $500/Individual). No coverage for routine/preventive care.

46. Master Health Care Program Blue Cross/Blue Shield & Catamaran (formerly Catalyst Rx) cont. 46 The only option if you permanently move out of Michigan. Deductible and out-of-pocket maximums may be reduced by $100 by participating in Living Well program. Prescription program provided by separate company –Catamaran (formerly Catalyst Rx.)

47. Key differences between traditional and HMO plans Preventative services Deductible Office/medical copay Prescription copay Network availability Other

48. Same Monthly Premiums MM/P and HMO premium (Medicare Part B) 2012 pre-Medicare = $99.90 deducted from MPSERS check Add spouse for $55.35 ($24.87/Medicare) Prescription premium $12.00 per contract for Catamaran (formerly Catalyst Rx) prescription plan with BCBSM (pre- and post-Medicare), otherwise $0.00 $0.00 for HMO prescription plan Dental/Vision = $3.63 per person

49. Prescription co-pay (2012) Health Care Benefit BCBSM & Catamaran (formerly Catalyst Rx) Blue Care Network Health Alliance Plan Priority Health Prescription copay 20% copay - $7 min/$36max retail (1 mo.); $17.50 min/$90 max mail in (3 mo); add’l charge on maint. drug on/after 4 th fill, if don’t use most cost- effective venue. $1,000 indiv drug copay max - formulary drugs; 40% out-of-pocket non-formulary drugs $10 generic copay; $40 brand copay; inc. contraceptives; sexual dysfunction drugs 50% co-ins. Mail order copay: 2x normal copay (up to 90 day supply) Copay $15 generic; $45preferred brand; $70 non- preferred brand and speciality drug-ded N/A. Up to a 3 mo supply for 2 copays through mail order and select retail pharmacies Copay Generic $10;pref brand $40 at retail pharmacy (1 mo); Non-pref brand: $70; Specialty 20% co-ins max $100 per Rx Mail order copay: 2x normal copay (up to 90 day supply).

50. In Summary 1.Pension Benefits (Income) 2.Comprehensive Health Insurance (Master Medical, Prescription, Dental, Vision) Michigan Public School Retirees have one of the best programs in the country!

51. www.marsp.org staff@marsp.org 517-337-1757 – phone 888-960-4022 – toll free 517-337-8560 – fax PO Box 23214 Lansing MI 48909 Contact MARSP at: