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These definitions are provided in plain English to help you understand your retirement plan. For official definitions, please see the Retirement Act.
Select the first letter of the term you wish to see.
#| A-D| E-G| H-K| L-O| P-S| T-X| Y-Z
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1099
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A statement issued each year in January that tells you the amount of pension payments or retirement distributions paid in the previous year. You need these statements for income tax purposes. |
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401(a)
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A qualified pension plan established under Section 401(a) of the Internal Revenue Code. |
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401(k)
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An employer-sponsored retirement savings plan, authorized by Congress, where contributions are put in an investment account managed by the employee. Generally, contributions to the account as well as investment earnings aren't taxed until distributions are made. |
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403(b)
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A retirement plan available to employees of public schools, non-profit organizations, and educational institutions. Employees are allowed to contribute pre-tax dollars to a company pool that is invested in stocks, bonds, or money markets. |
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457
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An employer-sponsored retirement savings plan for employees of state and local governments, authorized by Congress, where contributions are put in an investment account managed by the employee. Generally, contributions to the account as well as investment earnings aren't taxed until distributions are made. |
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A
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Acknowledgement Letter
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A notice sent to you soon after you apply for your retirement pension. It summarizes your selections and includes a preliminary pension estimate. It may also list any missing information or documents needed to complete the processing of your application. |
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Act 88 - Reciprocal Retirement Act
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Act 88 helps public servants who have worked for more than one Michigan government employer, but fall short of being vested with any or all of them, to combine years of service qualify for a pension. |
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Active Member
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An individual who is on the payroll of a Michigan K-12 public school, intermediate school district, district library, some public school academies, a tax-supported community college, or certain employees who started working before January 1, 1996, for one of seven universities: Central, Eastern, Northern, and Western Michigan Universities, Ferris State and Lake Superior State Universities, and Michigan Technological University. |
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Actuarial Cost
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Actuarial formulas help keep the retirement fund healthy. By projecting expected lifetime payments, they determine costs for such things as service credit, insurances, and survivor and equated plan pension amounts. |
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Alternate Payee
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If you divorce while you are an active or deferred member, the court may order that a portion of your pension be paid to an alternate payee such as a former spouse or dependent child. |
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Annual Certification
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As a disability retiree, every year until age 59 you will receive an Annual Disability Certification form to verify that you are still unable to work because of a disabling condition. |
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Award Letter
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A letter issued when we complete processing your retirement application. It tells you how much your pension will be, how it was calculated, and lists any tax and insurance deductions. |
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B
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C
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Certified Copy
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A document such as a birth or death certificate that is printed on special safety paper and contains the raised, embossed seal of the court issuing the document. |
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COBRA
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The federal Consolidated Omnibus Budget Reconciliation Act is more commonly known as COBRA. It provides for continued insurance coverage for certain individuals who lose eligibility for group insurance benefits. |
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Contributory Plan
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A type of retirement plan where employees make personal contributions from salary. Until 1974 both employees and employers contributed to the pension fund. By 1977 the system was funded entirely through employer contributions -- a Noncontributory Plan. In late 1986, a new contributory plan was introduced, the Member Investment Plan (MIP). |
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Coordination of Benefits
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A provision in the health, dental, and vision plans that limits benefits for enrollees with multiple group insurance to 100% of the covered expenses and designates the order in which the multiple plans will pay benefits. |
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D
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Default Provision
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While you are actively employed, if a survivor pension is payable upon your death, the retirement act automatically provides a lifetime monthly survivor benefit to your spouse, or if not married, in equal payments to your unmarried children until they reach age 18. |
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Deferred Member
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A person who stopped working after becoming vested but before reaching the age requirement to draw a pension. |
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Defined Benefit Plan
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A retirement plan that provides retirement benefits based on a set formula. To qualify for a pension at retirement, members must meet certain age and service requirements. |
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Delayed Subsidy
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The health insurance premium subsidy paid by the retirement system begins later than the retirement effective date. |
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Direct Deposit
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You can have your pension payment deposited directly into your bank account using EFT (electronic funds transfer). Direct deposit or EFT is more convenient and safer. |
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Disability Determination Service (DDS)
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An agency that helps ORS determine whether an applicant for a disability retirement meets the medical criteria defined in statute. |
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Disability Retirement
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If, while an active public school employee, you become totally and permanently disabled, you may qualify for a disability retirement benefit. Your eligibility and pension amount depend on whether it's a duty disability or nonduty disability. |
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Domestic Relations Order (DRO)
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A court order filed with the retirement system that typically provides for a division of a pension as a marital asset. A DRO is necessary to divide a pension after retirement, or to remove the survivor option if one was elected at the time of retirement. For orders filed before your retirement effective date, see Eligible Domestic Relations Order. |
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Duty Death
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If you die from a injury or illness incurred at work while an active public school employee, your eligible beneficiaries may be entitled to a survivor pension regardless of your age and years of public school service. |
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Duty Disability
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You may qualify for a duty disability benefit if, due to an injury or illness incurred at work while an active public school employee, you become totally and permanently disabled. |
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E
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Early Reduced Retirement
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You can elect to take an early reduced retirement as early as age 55 if you have at least 15 but less than 30 years of service and are still actively employed. Your pension is permanently reduced by one half of one percent for each month you take your pension before age 60. |
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Earnings Limitation
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If you are receiving a disability retirement, special limitations apply if you go to work, whether for a Michigan public school or another employer. Contact ORS in advance if you are a disability retiree under age 60 considering a return to work. As a regular retiree, if you return to work for a participating public school, you may be subject to employment restrictions or limits on how much you can earn annually. |
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Electronic Funds Transfer (EFT)
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The safe and convenient method of payment where your pension funds are electronically transferred into your bank account on the scheduled due date. Also referred to as Direct Deposit.
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Eligible Domestic Relations Order
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A court order that directs that part of your pension be paid to an alternate payee, such as a former spouse or dependent child. To be an eligible order for retirement system purposes, the order must meet certain requirements and be on file with ORS before your retirement effective date. |
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Employment Restrictions
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After you retire, you may not work (even as a volunteer) for a participating public school or for the state of Michigan within the first month of your retirement effective date. If you are receiving a disability pension, you should contact ORS before you accept employment because you may be subject to special restrictions. |
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Equated Plan
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This plan pays you a higher pension amount early in retirement, and then, at age 62, your pension payment is permanently reduced. You might choose this option if you want your overall income to remain fairly even both before and after social security begins. |
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F
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Final Average Compensation (FAC)
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If you are a member of the Member Investment Plan (MIP), your highest three consecutive years of compensation are averaged to determine your final average compensation, or FAC. If you are a member of the Basic Plan, your highest five consecutive years are used. We use your FAC to calculate your pension. Even though the highest years used to calculate your benefit may have occurred earlier in your career, we still refer to it as your final average compensation. See also Pension Formula. |
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Final Payroll Details |
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After you submit all of your required paperwork for your
retirement application, your employer(s) submit your final wage and service
information. We ask your payroll officer to report and verify your wages and any
additional payments you may have received so we can determine your final
eligibility and the wages to be used to calculate your pension. |
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Fiscal Year (FY)
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The school fiscal year begins July 1 and ends June 30. Your account balances as of the close of each fiscal year are reported to you, and are used to determine service credit costs, and interest assessments and credits. |
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Full Retirement
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You retire meeting the age and service requirements for a full retirement pension. |
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G
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Graded Premium
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The amount the retirement system pays toward a retiree's health insurance premium may be based on the number of years of earned and purchased service credit. |
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H
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Health Maintenance Organization (HMO)
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A type of health care plan that provides a full range of health care services to its members. Members of an HMO typically receive all of their medical care from health care providers in the HMO network, coordinated by a primary care physician. |
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HIPAA
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The federal Health Insurance Portability and Accountability Act of 1996 is more commonly known as HIPAA. It helps people buy and keep health insurance, even when they have serious health conditions, and protects the privacy of your health information. |
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I
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Independent Medical Advisor (IMA)
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If you file an application for a disability retirement, an independent medical advisor will review your medical records to assist ORS in the medical determination. |
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Intervening Military Service Credit
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Your active duty military service is considered intervening if you leave school employment, directly enter active duty in the U.S. armed forces, including reserve components, and return to employment in a participating school within 24 months of discharge. |
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M
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Match Provision
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Certain types of service credit purchases require that you earn at least as much service credit as you are purchasing. In other words, you can't buy credit that will exceed the amount of credit earned as a working member of the retirement system. |
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Medical Reexamination
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If you are receiving a disability retirement, you may be asked to have a medical reexamination to determine if you are capable of resuming employment. |
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Medicare
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Health insurance provided under the federal Social Security Act. As soon as you're eligible, enroll in both Part A-Hospital and Part B-Medical because your plan health insurance stops paying any expenses normally paid by Medicare. |
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Member Billing Statement
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A statement that details the type of service credit you can purchase, how much you can buy, the cost, and the due date. Although it's called a billing statement, you are under no obligation to buy any of the credit. The due date is when the terms of the statement expire. |
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Member ID
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A unique number identifying your member account with the retirement system. It is found on any personal communications received from the retirement system or can be requested through miAccount. |
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Member Investment Plan (MIP)
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This Contributory Plan was introduced in late 1986 to replace the Basic Plan. Members at that time could choose between the two plans. It provides more generous pension benefit options. If you first
worked in 1990, but before July 1, 2010, you are a MIP member. |
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Member Statement
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Your personalized statement in miAccount that displays your
wages, service credit, service credit purchases, and contributions as reported
to us from your employer. |
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MPSERS
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Michigan Public School Employees Retirement System, provided under Public Act 300 of 1980, as amended. |
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N
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Noncontributory Plan
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A type of retirement plan where the retirement system is funded entirely through employer contributions. Since 1977, the Basic Plan has been a noncontributory plan. |
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Nonduty Death
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If your death is not a result of an injury or illness incurred at work, it is called a nonduty death. A monthly benefit to your survivor(s) may be payable if you were vested. |
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Nonduty Disability
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If, while an active public school employee, you become totally and permanently disabled from an illness or injury incurred outside of work, you may qualify for a disability retirement benefit. Your nonduty disability protection begins when you are vested with the equivalent of ten full-time years of Michigan public school employment. |
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Nonintervening Military Service Credit
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Active duty military service that does not interrupt your Michigan public school service. |
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O
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Optional Retirement Plan
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A retirement plan that some personnel at some universities and community colleges can choose as an alternative to the Public School Employees Retirement System. These plans are commonly administered by TIAA/CREF, not ORS. |
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P
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PA 300
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Public Act 300 of 1980, as amended, is the law that provides the retirement plan for Michigan public school employees. |
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Personal Contributions
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If you are part of the Member Investment Plan (MIP), you have personal contributions on account. If you're a Basic Plan member, you may have contributions on account if you were a member when the retirement plan was contributory (before 1974). Service credit you may have purchased is also considered personal contributions. Every year we report your personal contribution account activity and interest. |
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Postretirement Increase
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Member Investment Plan (MIP) retirees receive a 3 percent increase each October, beginning with the first October after you have been retired a full year. Basic Plan retirees may receive a supplemental payment in a year when the plan's investments exceed predictions; however this payment may not occur every year. |
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Preferred Provider Organization (PPO)
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A contracted network of health care providers in which the providers generally agree to a discount for their services. Patients typically have lower out-of-pocket costs when they use the PPO providers and higher costs when they receive care outside the PPO. |
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Premium
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The amount a subscriber pays for insurance coverage. See also Premium Subsidy. |
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Premium Subsidy
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The portion of your health insurance premiums paid for by the retirement system. When Medicare begins, the premium subsidy usually increases and your cost is significantly less. |
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Preretirement Information Meeting (PRIM)
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Informational retirement meetings held across the state to explain your plan and the retirement application process. |
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Provider
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A physician, hospital, nursing home, pharmacy, lab or any individual or group that provides a health care service. |
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Q
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Qualified Domestic Relations Order (QDRO)
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A court order that typically provides for a division of a retirement account (such as a 401(k) or 457 plan) as a marital asset. |
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Qualified Plan Rollover (Plan-to-Plan Transfer)
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The process of transferring money from a qualified (as defined by the Internal Revenue Service) pretax investment account or retirement plan to another without being required to pay taxes or penalties on the transferred money. Qualified plans are generally a 401(a), 401(k), 403(b), 457, along with conduit IRAs (Individual Retirement Accounts) that resulted from any of these sources. |
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R
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Refund Beneficiary
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If no ongoing monthly pension benefits are payable after a member or retiree dies, any personal contributions on account will be paid in a lump sum to the person named on the Beneficiary Nomination form for public school employees. Be sure to keep your beneficiary designation up to date. |
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Refunded Contributions
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If you had a previous period of public school employment and withdrew your contributions when you left, you took a refund of contributions. You would have lost all service credit earned prior to the refund, though it is possible to reinstate the credit by repaying the refund. See also Repayment of Refunded Contributions. |
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Repayment of Refunded Contributions
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Service credit you earned during a previous period of public school employment, but then canceled because you withdrew your contributions when you left, may be paid back, with interest, to the retirement system to reinstate your service credit. |
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Reporting Unit
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A Michigan public school that participates in the Public School Employees Retirement System. Participating schools are known as reporting units because they report your hours, compensation, and contributions to the Office of Retirement Services (ORS). |
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Retirant
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Anyone receiving a disability or retirement pension from the retirement system. |
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Retiree
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Anyone receiving a disability or retirement pension from the retirement system. |
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Retiree Health Care Fund |
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All active members of the Michigan Public School Employees
Retirement System make contributions to the Retiree Health Care Fund, which
assists with funding retiree health care. The IRS does not allow refunds from
this type of fund. |
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Retirement Effective Date
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Your retirement effective date is the first day of the month following the month in which you have satisfied all eligibility requirements and terminated employment in Michigan public schools. |
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Routing Number
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The nine-digit number associated with your financial institution. The number is usually located in the bottom left corner of a check. |
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S
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Service Credit
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You earn service credit while you work for a participating public school. Generally you earn one year of service when you work 1,020 hours within the July 1 through June 30 school fiscal year. You can earn no more than one year of service credit in any given school fiscal year, and you can receive no more than 30 hours of credit if you're on a weekly payroll and no more than 60 hours if you're paid biweekly. Your service credit balance can also reflect granted, transferred, reinstated, and purchased service credit. |
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Straight Life Option
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A pension payment option where you receive the maximum monthly benefit throughout your lifetime, and no benefits (pension or insurance) are paid to your survivors after your death. |
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Supplemental Payment
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A distribution of excess earnings that is made to Basic Plan retirees. This payment, sometimes called a 13th check, is distributed only in years when the plan's investments exceed predictions. |
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Survivor Option
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A pension payment option where you receive a reduced benefit, but your pension continues to your designated beneficiary (spouse, sibling, parent, or child) after you die. You can choose the 100, 75, or 50 percent survivor option. In most cases the insurance benefits will continue as well, but in some cases a premium applies. |
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Survivor Pension Beneficiary
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A person eligible to receive a monthly pension upon the death of a member or retiree. Active members must name a beneficiary before leaving public school employment in order for an eligible beneficiary to receive a monthly pension benefit. Retirees must have elected a survivor option. |
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T
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Tax-Deferred
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Tax-deferred refers to delaying, or deferring, the payment of taxes on wages put in a qualified retirement plan or used to purchase service credit. |
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Tax-Deferred Investment
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An investment whose accumulated earnings are free from taxation until the investor takes possession of them. |
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Tax-Deferred Payment (TDP)
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A program where you can purchase service credit with tax-deferred payments deducted from your wages. The amount you authorize for deduction from your paycheck is not subject to income tax until you begin taking distributions, usually at retirement. |
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U
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Universal Buy-In
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A type of service credit that any active member may purchase. |
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V
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Vesting
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The guaranteed right to receive a benefit at some point in the future. You vest when you have sufficient years of service to qualify for a future benefit (such as pensions, retirement account balances, insurance offerings that are based on employer contributions) even if you terminate employment. |
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W
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Workers' Compensation
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A benefit administered by the state's Department of Labor and Economic Growth. Employers, either directly or through their insurance companies, provide compensation for a disability or death that is the result of a work-related illness or injury. |
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Y
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Years of Service (YOS)
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The years or fractions of years you have worked for a Michigan public school. YOS may also reflect granted, transferred, reinstated, and purchased service credit. We use your total YOS to calculate your pension. See also Pension Formula. |
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