MPSERS RETIREMENT REFORM – NEW DEFINED CONTRIBUTION PLANS
During the recent Retirement Reform Election, eligible employees were given the opportunity to change from their current MPSERS pension plan to a Defined Contribution (DC) plan, and also from the subsidized Retiree Healthcare Fund to the Personal Healthcare Fund. These changes became effective on your 2/22/13 paycheck.
If you elected either or both of these new plans, this information will be communicated to ING, the company administering the plans. ING will contact you directly through mail with a personal PIN. This PIN will give you access to your ING account online, where you will be able to choose your investment plan as well as change your contributions to either of these plans. Contact ING at (800) 748-6128 or visit https://stateofmi.ingplans.com to learn about investment options.
Defined Contribution Plan contributions.
As a Defined Contribution (DC) plan participant, you receive a 4% employer contribution to your 401(k) account. In addition, you are able to make contributions to a 457 account.
If you choose to make contributions under the DC plan, you are immediately vested in your contributions and related earnings to your savings in your 457 account. You are 50% in your employer’s matching contributions after the equivalent of 2 years of full time service, 75% percent after 3 years of service, and 100 percent after 4 years of service. Your vesting for your employer’s contributions begins with your first day of work, so all of your Michigan Public School Employees Retirement System service counts towards your vesting in the Defined Contribution plan.
If you switched to the DC plan, your retirement benefits will be made up of two things:
- Your pension (based on years of service, final average compensation (FAC) and 1.5 percent pension factor as of the day before your transition date); and
- Your state-sponsored 401(k) and 457 accounts, which would include your 4 percent employer contributions (made to your 401(k) account), any personal contributions you made to your 457 account, and any accumulated investment earnings. Vesting rules apply.
Personal Healthcare Fund contributions.
The Personal Healthcare Fund is a portable, tax-deferred fund that you can use for paying healthcare and other expenses in retirement. As a member of the Personal Healthcare Fund, you voluntarily opted out of the premium healthcare subsidy. You no longer contribute 3% of compensation to the Retiree Healthcare Fund and any contributions you have made to that fund will be deposited into a tax-deferred, 401(k) account. In addition, you are automatically enrolled in a 2% employee contribution into a 457 account, earning you a 2 percent employer match into a 401(k) account.
You are immediately vested in your contributions and related earnings to your healthcare savings in your 457 account. You are 50% in your employer’s matching contributions after the equivalent of 2 years of full time service, 75% percent after 3 years of service, and 100 percent after 4 years of service. Your vesting for your employer’s contributions begins with your first day of work, so all of your Michigan Public School Employees Retirement System service counts towards your vesting in the Personal Healthcare Fund.
MPSERS encourages employees to continue to refer to the Reform Tools Overview website for questions on the recent reform: http://www.michigan.gov/orsschools/0,4653,7-206-61921—,00.html. If you have questions about your retirement, feel free to contact Human Resources at 231-995-1362.