June 2012 Retirement Times Newsletter

JUNE 2012 • Volume 8 Issue 2

Retirement Times

SB 1040 Signals Changes to MPSERS

Since it was first introduced March 22, 2012, ORS, teacher unions, and nearly every public school reporting unit, have been carefully watching the progress of Senate Bill 1040. The bill seeks to address MPSERS’ $45 billion in unfunded liabilities by, among many things, modifying retirement plan options for public school employees, increasing retiree health insurance premiums, and shifting from a pay-as-you-go method of funding retiree healthcare to prefunding with a combination of employee contributions, employer contributions, and state funding. It’s a complicated issue and one that has resulted in revisions, amendments, and substitute bills. You can track the bill’s progress at the Michigan Legislative Website.
Meanwhile back at the ORS ranch, Director Phil Stoddard and staff have been coordinating with the state budget director to work with legislators, providing data and estimates for the various versions of the bill, working to ensure that draft bill language is technically correct, and testifying at committee hearings. Letters and emails were sent to all MPSERS members encouraging them to register in miAccount. In addition, process teams have been tracking the bill, discussing what system changes might be required, how they would be implemented, and how it would all be communicated to members and employers.
“We can’t initiate any system changes until the legislation is finalized and signed, but we expect to be able to build upon the changes that we implemented for the recent reform of the State Employees Retirement System,” said Stoddard. “Given our success in past reforms, we’ve established a solid framework for moving forward quickly to educate and serve our members.”

It’s likely that we’ll see some quick action on the bill, so stay tuned.

Help New Retirees Receive Their Pensions Timely

The summer months bring an increased number of retirements each year and we need your help to make sure that their financial transition into retirement goes smoothly and timely.
100 percent posted reports: In order for ORS to finalize a new retiree’s pension, your reports must be 100 percent posted. In some cases, we can process an estimated initial pension payment for a retiree during the first month of retirement but that retiree’s pension cannot be adjusted to the full amount until your reports are completely posted. In other cases, ORS cannot provide any pension payment to the retiree until all wages have posted. In the event of missing data ORS will contact your reporting unit as necessary until the information can be seen on the member account.
In addition, the information from the reports is reflected in the wage and service data that members see in miAccount. If your reports are 100 percent posted your employees will be able to make informed decisions about their careers based on the up-to-date information they can see online.
Final Payroll Detail: It is imperative that Final Payroll Detail (FPD) reports are completed on time for the following reasons:
  • It certifies the member’s last year of wages
  • It ensures we have the accurate termination date
  • It gives us the last day worked so we can calculate service credit
  • It provides accurate carryover information so benefit amounts are correct
Retirees listed under Initial Pension will receive an estimated pension in the month of their retirement date. Please complete their FPD when all wages are submitted to ORS.  The completed FPD will be used to determine their final pension amount.  Retirees listed under Regular Retirement will not receive a pension until the FPD is submitted to our office. Please complete these FPD’s as soon as possible after the employee’s name becomes an active link in the Retirement Applicants page of the reporting website. For more information, see Chapter 11 in the Reporting Instruction Manual.
Most reporting units are doing an excellent job of keeping their reports posted and submitted in a timely fashion--thank you. Remember that it will be essential to maintain this practice especially in the upcoming months.


Summer Spread  Reporting

It is important to change the wage code to 08 for employees who are receiving summer spread wages with no hours; making the change may require consulting with your software provider. Using the 08 wage code ensures the employees earnings are in the correct fiscal year. When the employee returns for the first pay of the new school year you will have to change the wage code back to 01. If the 08 wage code is not used properly used, it could cause errors with balancing the employee’s Final Payroll Detail (FPD) report at the time of retirement. For details, see Chapter 7.17 in the RIM.

New RIM is Live, Employer Website Updated

Report Manual
Previously, the RIM was a 247 page PDF document that had to be re-uploaded to the web each time even simple edits were needed. The new RIM is an online knowledgebase tool wherein employers can check out a table of contents broken down by each topic within each chapter, browse through the glossary, or even search the RIM. There is also a Hot Topics section that highlights the most used articles, and a Latest Article section that points users to the most recent updates.
The employer website now has a modern, sleek look with a menu that’s easy to navigate and understand. Much of the information was carried over from the old website, but some new tools were added, like the Important Messages and Recent Correspondence sections.

Are You Using the Most Recent Forms?

To ensure you always have the most up-to-date forms, clear your files (digital and paper) and go to the Forms and Publications section of the ORS website (www.michigan.gov/orsschools) when you need a copy of a form. There you can be sure you’ll find the most recent version. Submitting up-to-date forms can help expedite their processing.

Definition of Gross Wages for Pension Plus DC Member Contributions

For the Defined Contribution (DC) portion of the Pension Plus Plan, members are automatically enrolled to contribute two percent of their gross wages. This amount is entered on a DTL4 record for a Pension Plus member and may be different than the amount used as reportable compensation on the DTL2 record for the same employee.
Gross wages include earnings reported on the member’s W-2 or 1099R form as earnings for services performed for the reporting unit, including but not limited to amounts deferred or contributed to an annuity. The definition of earnings (as compared to the definition of compensation is in Chapter 7.21.01 in the RIM. 
The definition of compensation can be found in the Reporting Instruction Manual, Chapter 4.01: Reportable Compensation.

TDP Interest Posting – July 1, 2012

On July 1, 2012, ORS will post 8 percent interest to the unpaid balance of TDP agreements that were initiated July 1, 2004 and later. This happens every year on July 1st. You will be able to see the interest posting using the TDP Download Detail link on the View Employee Info screen on the Employer Reporting website. Members will be able to see the interest posting on the Member Statement link in miAccount.
Impact of interest charges.
Members with a TDP agreement that is subject to interest should review their account and make sure their total payment for the year is greater than the interest charged. If the total payment is less than the amount of interest charged, they are at risk of paying more money in interest than the actual cost of their service credit purchase.
Increasing minimum payments.
Members can increase their minimum payment so that the purchase is paid in full earlier and less interest is accrued with the Supplemental TDP Agreement form.

Update: Online Retirement Application Process a Success

Earlier this year, ORS moved to an online only retirement application process.  The application form is no longer available on the ORS web site and members are directed to go to miAccount to submit their application electronically.  The result has been a resounding success. In the first three months since announcing the switch, the number of public school employees applying online jumped from 69 percent to 99.5 percent.
Applying in miAccount provides members with an efficient, streamlined, and expedited application process and gives them access to all of the retirement management tools that miAccount has to offer.
Please remind your employees that all public school retirement applications with an effective date of July 1, or later must be completed online.  Any paper applications received will be returned with instructions for submitting via miAccount.

2012 Employer Survey Shows Positive Results

ORS made some significant improvements to its annual employer survey this year. By combining the standard employer satisfaction survey with the employer outreach survey, ORS only had to send one survey request to employers. As a result, 776 reporting units responded, compared to 441 in 2010.  Other results worth noting:
  • 92.9 percent of respondents indicated they encourage staff to use miAccount, up from 89.2 percent in 2010.
  • 85.2 percent of respondents indicated ORS provides sufficient resources, tools and information on the retirement reporting process compared to 63.9 percent in 2010.
  • 89.8 percent of respondents indicated they are aware public school employees must now apply to retire using miAccount. (New measure)
  • 92.2 percent of respondents indicated they provide access to computers for staff to use miAccount. (New measure)
Also new this year, ORS used a new email delivery tool called GovDelivery to send the survey link to the schools. GovDelivery gives ORS a report of undeliverable email addresses, which allows us to contact employers and let them know that their contact data needs updating.
ORs is conducting a thorough comparison of this year’s results to previous surveys in order to identify action items for improving customer service and process efficiencies. We would like to thank all who participated in the 2012 Employer Survey.

ORS Attends MSBO Conference

MSBO Conference
Earlier this month ORS delivered three presentations and hosted an exhibit booth at the MSBO Annual Conference & Exhibit Show at Detroit’s Cobo Hall.
The presentations to packed rooms of payroll officials and school administrators covered what’s new and upcoming at ORS and how to prepare for the potential MPSERS legislative reform. Several questions were asked in regards to the effects of the reform for members, payroll systems, reporting, deadlines and instructions. ORS was able to answer questions and provide scenarios based on the drafted potential reform.  
ORS representatives also encouraged schools to get employees signed up on miAccount to ensure employees have access to all their retirement information. 
ORS stressed the importance of having retirement reports posted and having up-to-date demographic information and web reporting contact information so ORS can accurately and quickly communicate information to both members and payroll offices as needed.

MPSERS Working After Retirement Tutorial Now Available

There's a new tutorial available on the MPSERS website that explains the rules for working after retirement. The tutorial includes links to core services, social security income limits, and more. View the tutorial from our tutorial page here.

How to Get Additional Pension Plus Welcome Guides

The Pension Plus New Employee Welcome Guide will be delivered to new public school employees in the Pension Plus retirement plan as they are reported to ORS. The guide can also be found on the Pension Plus website at www.mipensionplus.org. Employees who began public school employment on or after July 1, 2010, are members of the Pension Plus retirement plan. The plan offers a Pension Component, which guarantees a lifetime pension once the employee meets age and service requirements, and a Savings Component which enrolls them in a tax-deferred investment account that can help enhance savings for retirement.

3% HCC Update

The lawsuit concerning the member health care contribution remains under review in the Court of Appeals. Reporting units must continue to withhold this from employee pay during this appeal process. ORS will advise the reporting units as soon as the lawsuit is resolved.

Contribution Rates for FY 2014

The contribution rates due on members' wages paid between October 1, 2013, and September 30, 2014, are available on the school employer website at www.michigan.gov/psru on the Employer Contribution Rate page. The rates apply to K-12 school districts, intermediate school districts, community colleges, district libraries, public school academies and charter schools, and federal programs.
If you have any questions, please contact Financial Services, Retirement Accounting, at (517) 241-5042.

New MiDEAL office supply contract available for use by school districts

Michigan school districts and public academies are able to take advantage of the new State of Michigan MiDEAL office supply contract with Office Max to order products for the upcoming school year. Over 650 items are available AND you may add up to 50 additional market basket items of your choice. In addition, receive a 3% rebate on your purchases quarterly from Office Max.
If you are not already a member of the MiDEAL program, please visit our website for information about joining: www.michigan.gov/mideal. The complete MiDEAL Office Max office supply contract may be viewed in its entirety at http://www.michigan.gov/localgov/0,4602,7-194-32658_28849-123071--,00.html. Further details are shown in the flyer below. Questions? Please call Mary Hanses at 517-335-4364.