Reform Alert # 42 – Open Service Credit Billings May Expire Early Based on Member Election

MPSERS reform

 

January 9, 2013

 

Reform Alert # 42 – Open Service Credit Billings May Expire Early Based on Member Election

 

Depending on the retirement plan your employees elect during the MPSERS 2012 Reform, an open actuarial billing statement may expire earlier than the June 30, 2013, expiration date printed on the statement.  If your employees’ election choice reduces their pension factor to 1.25% (Option 3 or Option 2, once they reach attainment), or if your employees select the Defined Contribution Plan, their billing statements will expire on their transition date. (See the table below to determine which election choices do not allow an employee to purchase service credit.)

 

The following actuarial service credit billings are affected:

  • Universal Buy-In

  • Parental Leave

  • State of Michigan Civil Service - Defined Contribution Service

  • Nonpublic Educational Service

If a member is requesting a Tax Deferred Payment Agreement for the following bills the expiration date will not change:

  • Out-of-System Public Educational Service Pre-1974

  • Out-of-System Public Educational Service Post-1974

  • Active Duty Military Service

  • Sabbatical Leave Pre-1981

  • Sabbatical Leave Post-1981

  • State of Michigan Civil Service - Defined Benefit Plan

  • Weekly Workers' Compensation

The Election Choice File will be located on the Employer Reporting Website and available on Friday, January 11, 2013. Log in and then from the Employer Home Page, click on MPSERS Status Details Page, then on MPSERS Status Details Page link again, and on Download Member Election Choice File. After you have reviewed the file, you will complete the TDP Agreement based on the information provided in the chart below. If the employee has an actuarial billing statement that has expired, he/she must request a new billing statement from ORS.

 

Option

Actuarial Billing

Universal Buy-In

Parental Leave

SOM Civil Service – DC Service

Nonpublic Education Service

Initiating a TDP Agreement

Pension Factor Changes

1

MIP 7%

Basic 4%

No change. Current open billings are good until expiration date of June 30, 2013.

The member can initiate a TDP agreement if the agreement is signed by the member and the reporting unit on or before June 30, 2013.

Service credit purchases use a 1.5% pension factor.

2

(Before Attainment)

MIP 7%

Basic 4%

Current open billings are good until the expiration date of June 30, 2013, or the member reaches 30 years attainment, whichever comes first.

The member can initiate a TDP agreement if the agreement is signed by the member and reporting unit on or before June 30, 2013, or the member reaches 30 years attainment, whichever comes first.

Service credit purchased or entered into a TDP agreement before attainment uses a 1.5% pension factor.

 

2

(After Attainment)

MIP Fixed

MIP Graded

MIP Plus

Basic

Member must request a new billing statement. Beginning February 1, 2013, bills will be calculated using the new actuarial rates.

The member must request a new billing statement prior to initiating a TDP Agreement.

Service credit purchased or entered into a TDP agreement after the transition date uses a 1.25% pension factor.

3

MIP Fixed

MIP Graded

MIP Plus

Basic

Current open billings are good until January 31, 2013. Beginning February 1, 2013, the member must request a new billing statement that will be calculated using the new actuarial rates.

The member can initiate a TDP agreement is signed by the member and the reporting unit on or before January 31, 2013.

Service credit purchased or entered into a TDP agreement before February 1, 2013, uses a 1.5% pension factor. Service credit purchased or entered into a TDP agreement on or after February 1, 2013, uses a 1.25% pension factor.

4

MIP DC Converted

Basic DC Converted

Not eligible to make a service credit purchase after January 31, 2013.

The member is not eligible to initiate a TDP agreement.

Service credit purchased or entered into a TDP agreement before February 1, 2013 uses a 1.5% pension factor.

 

As soon as they are available, the new actuarial rates will be posted to the member website at www.michigan.gov/orsschools under Service Credit – Earning and Purchasing - Calculating Actuarial Cost.

 

Employees with current open Member Billing Statements were sent a letter informing them of these changes.

 

If you have any questions, please contact ORS_Web_Reporting@michigan.gov.