Reform Alert # 9 - New Hire Process – Retirement Plan Election Form

September 14, 2012

Reform Alert # 9 - New Hire Process – Retirement Plan Election Form

New public school employees who first work on or after September 4, 2012, are provided the option 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.
The Pension Plus plan contains a pension component and a tax-deferred investment account that earns a 50 percent employer match on employee contributions of up to 1 percent of salary.

The Defined Contribution plan provides a 50 percent employer match on employee contributions of up to 6 percent of salary. The employee would be automatically enrolled in a 6 percent employee contribution retroactive to the date of employment, earning a 3 percent employer match.
New hires have 75 calendar days from their first payroll date, (last day of their first pay period as reported to ORS), to make their election. If no election is made they remain a member of the Pension Plus plan.

PA 300 of 2012 makes employers responsible to administer the election process. To make their election, new hires will use the MPSERS New Hire Retirement Plan Election form R0940C, which includes information to help them make a decision. This form, including a decision guide and Frequently Asked Questions (FAQs), will be available on the employer information website at www.michigan.gov/psru under 2012 Retirement Reform > New Hires.

Determining who makes an election.

For now, ORS Employer Reporting will review the Member Benefit Plan Verification forms that you submit and determine if the new hire first worked September 4, 2012, or later. If so, then the following steps are to be taken:

1. ORS will provide your reporting unit with a list of those who have a retirement plan election.
2. You will provide the paper election form to the new employees. The employee then has 75 calendar days from their first payroll date to make their election. Determine the deadline and advise the employee of the date.
3. The employee is to return the completed and signed election form to the employer.
4. The employer faxes a copy of the form to ORS, Employer Reporting, (517) 322-5190 within five business days of the form being signed.
5. ORS will change the benefit status for that employee, and then advise the reporting unit what negative and/or positive adjustments should be made to the retirement report.

If you have any questions please submit them to the ORS_Web_Reporting@michigan.gov email box. Please put 'NEW HIRE' in the subject line.