Reform Alert # 3 - New Hire Overview

Michigan Office of Retirement Services sent this bulletin at 08/29/2012 02:59 PM EDT

MPSERS reform

 

August 29, 2012

 

Reform Alert # 3 - New Hire Overview

As you know, SB 1040, as passed by the legislature, would provide new members of the Michigan Public School Employees Retirement System (MPSERS) who first work on or after September 4, 2012, , the option to choose between two retirement plans: the Pension Plus plan or a Defined Contribution plan. We have created a series of communications that will provide you with the information to help with the transition to new and changed reporting requirements.

In this message we will cover the following:

 

  • Member Benefit Verification. Employers will verify if a newly hired employee is a new MPSERS member using the Member Benefit Plan link on the Retirement Reporting website. The Member Benefit Verification form will be submitted to ORS for all NEW members.
  • New Hire Retirement Plan Election. Employees hired on or after September 4, 2012, will be able to choose between two retirement plans: a Pension Plus plan and a Defined Contribution (DC) plan.
  • Retirement Reporting Changes for New Members. Wage and contribution records for new members first worked on or after September 4, 2012.

Member Verification

The retirement reporting system does not have a field to report when an employee first worked. Therefore, to ensure that members are placed in the correct benefit structure and given the correct election, it is necessary to complete and submit the Member Benefit Plan Verification form (R0856C) for anyone who first works between August 1, 2012, and September 30, 2012. The form is available for you to download and print at www.michigan.gov/psru, under Reporting Forms - Other.

 

New Hire Retirement Plan Election

New public school employees who first work on or after September 4, 2012, are provided the choice to either remain a member of the Pension Plus plan, or opt-out of the Pension Plus plan and become a participant in the Defined Contribution (DC) plan.

 

To make their election, new hires will use the MPSERS New Hire Election form (R1011), which includes information to help them make their decision. The New Hire Retirement Plan Election form and information will be available on the employer information website after SB1040 is signed into law by Governor Snyder; a signing ceremony is scheduled for Tuesday afternoon, September 4, 2012. . Employers will be responsible for providing the form and information to new hires.

 

Retirement Reporting Changes for New Members First Worked On or After September 4, 2012

  • Do NOT withhold the 3% Healthcare Contribution for NEW MPSERS Members who first work on or after September 4, 2012. Withhold Pension Plus MIP contribution rates as published in the Reporting Instruction Manual 6.03 Pension Plus Plan. NOTE: You will continue to deduct 3% healthcare contribution for existing members.
  • Defined Contribution (DC) rates will increase from the current Pension Plus mandatory auto-enrollment 2% employee contribution and 1% employer contribution to include an additional mandatory auto-enrollment 2% employee contribution with a mandatory auto-enrollment 2% employer match for the Personal Healthcare Fund (PHF). The DC contributions should total 4% employee contribution and 3% employer contribution. These contribution amounts will change if the employee opts out of Pension Plus and elects DC. The employee may also change their deduction amount at ING once their account has been created. 
  • FOR NEW MEMBERS REPORTED TO MPSERS ONLY – All DTL1, DTL2, and DTL4 records will show as “suspended” until the member has been verified as first worked prior to September 4, 2012, or until the end of October, when ORS implements system enhancements to accept the new benefit plan contribution rates for new members hired on or after September 4, 2012. Contributions on all unposted records should be paid as you normally would pay retirement contributions on any unposted records. 

Upcoming Communications

Webinars regarding new hires and additional MPSERS reform updates will be available on the Employer Information website. Subjects will include:

  • Reporting Changes including DTL4 reporting changes and how to report new members who elect DC.
  •  Employer contribution rates for FY2012-13 and FY2013-14.
  •  System changes as a result of the pension and health election for existing employees (election window 9/4/12 and 10/26/12)

 ORS will notify you of webinar topics, dates, and times. Stay tuned for further communications.