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Changes to Michigan Public School Employee Retirement System SB 1040 As passed by the Senate and the House Committee 8/15/2012 *It is not intended to be interpreted as current law. GLP & Associates, Inc. and its affiliated companies do not provide legal or tax advice. Action Taken. BASIC.
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Changes to Michigan Public School Employee Retirement System SB 1040 As passed by the Senate and the House Committee 8/15/2012 *It is not intended to be interpreted as current law. GLP & Associates, Inc. and its affiliated companies do not provide legal or tax advice.
Action Taken BASIC • 0% Contribution • Years of Service through Dec. 2012 Multiplier = 1.5% • Years of Service after Jan 1st, 2013 Multiplier = 1.25% No Change • Pay 4% of Salary • 30 years of Service Multiplier = 1.5% • After 30 years Multiplier = 1.25% Maintain 1.5% Multiplier • Years of Service through Dec. 2012 Multiplier = 1.5% Deferred until age 60 • Jan. 1st 2013 – Flat employer contribution of 4% to DC Benefit Freeze Opt out pension(to) Defined Contribution
Action Taken Opt in prior to July 1st 2008 M I P • 3.9% Continues without change • Years of Service through Dec 2012 Multiplier = 1.5% • Years of Service after Jan 1st 2013 Multiplier = 1.25% No Change • Pay 7% of Salary • 30 Years of Service Multiplier = 1.5% • Over 30 years Multiplier = 1.25% Maintain 1.5% Multiplier • Years of Service through Dec. 2012 Multiplier = 1.5% Deferred until age 60 • Jan. 1st 2013 – Flat employer contribution of 4% to DC Benefit Freeze Opt out pension(to) Defined Contribution
Action Taken Start Date July 1st 2008 M I P Plus • 6.4% Employee Contribution Continues • Multiplier drops from 1.5% to 1.25% Jan 1st 2013 No Change • Employee pays 7% of salary • 30 Years of Service Multiplier = 1.5% • Over 30 Years of Service = 1.25% Maintain 1.5% Multiplier • Years of Service through Dec. 2012 Multiplier = 1.5% Deferred until age 60 • Jan. 1st 2013 – Flat employer contribution of 4% to DC Benefit Freeze Opt out pension(to) Defined Contribution
Action Taken July 1st 2010 Pension Plus • 6.4% Employee Contribution Continues • Multiplier drops from 1.5% to 1.25% Jan 1st 2013 • DC Continues No Change • Employee pays 7% of salary • 30 Years of Service Multiplier = 1.5% • Over 30 Years of Service = 1.25% Maintain 1.5% Multiplier • Years of Service through Dec. 2012 Multiplier = 1.5% Deferred until age 60 • Jan. 1st 2013 – Flat employer contribution of 4% to DC Benefit Freeze Opt out pension(to) Defined Contribution
Employeesnewly hired after 9/4/2012 • Choice Between • 1 - Pension Plus • 2 – Defined Contribution with 50% match from employer, up to 6% of • salary. No retiree health insurance It is replaced with 401(k) or 457 with a match up to 2% plus $1,000/$2,000 lump sum at retirement
Retiree healthcare fund Personal healthcare fund • 3% Contribution continues and goes to prefund retiree health care • If employee not eligible for retiree health care at retirement, contributions are refunded monthly over 5 years after age 60 • Opt out of 3% contributions and forego all retiree health care benefits to take 2% DC matching contributions
Revised Medical costs • Increase retiree health care premiums from 10% to 20% after Jan. 1st, 2013 • Cost stays the same if retiree is 65 or older as of Jan. 1st, 2013
Questions, Comments, Suggestions Welcomed Alex Kocoves President & CEO GLP & Associates, Inc. alex@glpwins.com Michael McEvilly Vice President of Operations GLP Strategic Administrative Group, LLC mike@glpwins.com