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Frequently Asked Questions

Below are the most frequently asked questions (FAQs) about the Defined Benefit plan reform. FAQs may be added or revised. Please check back regularly.

  1. Changes to the Pension Plan   - Updated 1/6/2012
  2. Making Your Election   - Updated 2/14/2012
  3. Impact on Retiree Health Insurance  - Updated 1/19/2012
  4. Impact on Overtime and Your FAC - Updated 1/24/2012
  5. Stay in the DB Plan   - Updated 3/1/2012
  6. Switch to DC Plan   - Updated 3/2/2012
  7. Understanding Your Estimates  - Added 1/6/2012
  8. Understanding "Attainment"   - Updated 12/16/2011
  9. Vesting Status   - Updated 12/21/2011
  10. Deferred, Former Nonvested Members, Employees on Leave of Absence/Layoff, those Returning to State Employment, and DB-DC Transfers from 1997   - Updated 1/19/2012
  11. Impact on Service Credit and EDRO   - Updated 12/21/2011

 

1 - Changes to the Pension Plan

  1. What's happening?

2 - Making Your Election

  1. What are my choices?
  2. How long do I have before I must decide?
  3. Can I change my mind?
  4. What if I miss the deadline?
  5. What if I don't make a choice?
  6. I work for a noncentral agency. Do I need to make an election?
  7. I'm a conservation officer. Do these changes affect me?
  8. I'm a covered employee responsible for the care and supervision of prisoners. Do these changes affect me?
  9. I'm in a covered position. Is my supplemental pay affected by the reform?
  10. I've already attained 30 years of service. What should I do?
  11. I'm retiring before April 1, 2012. What do I do?
  12. How can I get help making this decision?
  13. I don't have internet access. Can I make the election through the mail?
  14. I want the default option (Option 3: DB/DC Blend). Why should I bother going online to make an election?
  15. I plan to make my election by the March 2 deadline. Why do I keep getting reminders from ORS?
  16. If there's a lawsuit pending against the reform changes, do I still need to make an election?

3 - Impact on Retiree Health Insurance

  1. If I choose to freeze my Defined Benefit pension and participate in the DC Plan, is my insurance plan in retirement affected?
  2. If I leave state service and then am reemployed by the state on or after January 1, 2012, what happens to my retiree health insurance?
  3. I am in the DB plan and my spouse is in the DC plan. If my spouse elects the Personal Healthcare Fund, can I cover him/her under my DB health insurance when I retire?
  4. I am in the DB plan and my spouse is in the DC plan. My spouse is considering selecting the Personal Healthcare Fund. If I name my spouse as 50% survivor to my pension, will she be eligible for my insurance subsidy when I die, or will she only get a 50% subsidy?

4 - Impact on Overtime and Your FAC

  1. Will my overtime pay still be included in my final average compensation (FAC) calculation?
  2. How is overtime calculated in the FAC period?
  3. I do not have any overtime earnings at any point in my career. Will the new rules affect my final average compensation (FAC)?
  4. My highest three years of earnings all occurred before 1/1/2012. Will the actual amount of overtime I earned be calculated as a part of my FAC?
  5. What if my highest three years of earnings all occurred after 1/1/2012? How will the overtime I earn after 2012 be calculated as a part of my FAC?
  6. Does the pension estimator in miAccount take the new overtime rules into account?
  7. If my FAC period does not include my last three years of earnings, will the annual leave payout be used in the calculation of my FAC?
  8. What earnings are considered to be overtime for retirement purposes?
  9. I'm receiving a payment just for being "on call." This pay is paid to me at my normal "straight time" rate. Is this considered overtime?
  10. I am working in a job sharing position and paid less than 80 hours. I am paid time and a half for any hours above my normal work schedule. Is this considered to be overtime?

5 - Stay in the DB Plan

  1. What happens if I decide to stay in the Defined Benefit Plan?
  2. If I decide to stay DB and pay the 4 percent, is the 4 percent counted in my 401(k) or 457 account?
  3. If I stay in the DB plan, what happens to my retiree health insurance?
  4. If I elect to stay in the DB plan and contribute 4 percent, will these contributions be "credited" to my account and refunded to my beneficiary in the event of my death either pre-retirement or post-retirement?
  5. If I elect to stay in the DB plan and contribute the 4 percent, but then leave state employment before I'm vested, can I get a refund on the 4 percent that I contributed?
  6. I'm vested and elect to stay in the DB plan and make the 4 percent contributions. What happens if I terminate employment and then later return to work for the state?
  7. I'm a current DB member but not vested. I elect to stay in the DB plan and make the 4 percent contributions. What happens if I terminate employment before I'm vested and then later return to work for the state?
  8. Can I still qualify for early reduced retirement?
  9. Are years of service capped at 30?
  10. If I stay in the DB plan, will my accrued annual leave still be included in my final average compensation (FAC) calculation?
  11. If I stay in the DB plan and contribute the 4 percent, does it impact the cost of living increase (COLA)?
  12. Is my 4 percent contribution as a result of my election to stay in the DB plan a pre-tax contribution?

6 - Switch to DC Plan

  1. What would I get as a DC member?
  2. If I switch to the DC plan for future service, what would my retirement benefit be?
  3. What does it mean when you say my pension calculation would be "determined"?
  4. If I switched to the DC plan for future service on April 1, 2012, how would my future DB pension be calculated?
  5. If I switch to the DC plan, will my accrued annual leave be included in my final average calculation (FAC)?
  6. If I switch to the DC plan, would I still have the same retirement payment options of Straight Life, Survivor or Equated plan?
  7. If I elect to remain in the DB plan until my attainment date and then switch to the DC plan for future service, how would my future DB pension be calculated?
  8. If I switch to the DC plan for future service, what happens to my retiree health insurance?
  9. If I switch to the DC plan and then become disabled, do I still get a disability pension?
  10. If I switch to the DC plan and then die, do my survivors get anything?
  11. Let's say I switch to the DC plan and then leave state employment. What would happen if I were to later return to work for the state?
  12. How does the 3 percent matching contribution work?
  13. If I elect to remain in the DB plan until my attainment date and then switch to the DC plan for future service, do I have to take any actions with ING now, or at my attainment date?
  14. I already have a 401(k) and/or a 457 account. If I switch to the DC plan, will I then have additional accounts?
  15. How do I decide between a 401(k) and 457 account for my contributions?
  16. If I elect to stay in the DB Plan until my attainment date and then switch over to the DC Plan, what ages on the actuarial chart will be used to calculate my survivor pension?
  17. I'm a conservation officer. If I switch to the DC plan, will my attainment be at 25 years or 30 years of service?
  18. I'm a covered employee, responsible for the care and supervision of prisoners. If I switch to the DC plan, will my attainment be at 25 years or 30 years of service?
  19. I'm in a covered position. If I elect DB/DC Blend and switch to DC, will I still get my supplemental pay?
  20. I am a covered employee, if I elect option 2 or 3 can I still retire under the covered eligibility?
  21. I am a covered employee, if I elect option 3 and retire under the covered eligibility will the changes regarding overtime still apply to my retirement calculation?
  22. I'm a conservation officer. If I have 18 years of service as a conservation officer, and take Option 3 switching to the DC plan effective April 1, 2012, will I still be eligible for the conservation officer pension when I reach the eligibility requirements?

7 - Understanding Your Estimates

  1. What is included in the estimates on the election information page in miAccount?
  2. Why are the estimates for the reform different from the estimate I do in miAccount?

8 - Understanding "Attainment"

  1. What does "attainment date" mean?
  2. Does "attainment" mean 30 years of service in all cases, or does it refer to the earliest possible retirement eligibility date?
  3. If I choose to remain in DB until I reach my attainment date, what happens if I leave before I reach 30 years?
  4. Is "retirement date" same as "attainment date"?
  5. When will I reach my attainment date?

9 - Vesting Status

  1. I'm in the Defined Benefit plan but I'm not vested. If I stay in DB, am I still eligible for a pension and health care?
  2. I'm in the Defined Benefit plan but I'm not vested. If I move to the Defined Contribution plan, what happens to my vesting status?
  3. What are the vesting requirements for the Defined Contribution plan?
  4. If I switch to the Defined Contribution plan, do I need to have 4 years before I'm fully vested in employer contributions?
  5. Does my military time count toward vesting as a member of the DC plan?
  6. I have military service. Do I need to apply for it before I switch to the DC plan to make it count?

10 - Deferred, Former Nonvested Members, Employees on Leave of Absence/Layoff, those Returning to State Employment, and DB-DC Transfers from 1997

  1. What's a deferred member?
  2. I'm a deferred DB member. Do I need to make a choice?
  3. I'm a deferred DB member. Does this affect my pension calculation and, if so, how?
  4. I'm a deferred DB member. What happens to my pension if I return to work for the state?
  5. I'm a former DB member but not vested. What happens if I return to work for the state?
  6. I'm in DB and I'm laid off. How does this affect me? Will I be put into DC if/when I return to work?
  7. I'm in DB and I'm on a leave of absence. How does this affect me?
  8. I'm a retired DB member who was rehired by the state and am currently in the DC plan. How does this affect me?
  9. I transferred from DB to DC back in 1997. Does this affect me?

11 - Impact on Service Credit and EDRO

  1. How does my current service credit purchase affect my attainment date? (For example, I've got 28 years of service and I'm purchasing 4 additional years of service.)
  2. I have a service credit purchase agreement in place. How is that affected if I chose Option 3, to switch to the DC plan on April 1, 2012?
  3. Can I still purchase service credit after I elect to switch to DC but before I reach my attainment date?
  4. I have a Tax Deferred Payment (TDP) for purchasing service credit. If I go to DC, what happens?
  5. I have an Eligible Domestic Relations Order (EDRO) on my Defined Benefits plan. If I switch to the DC, will this cut my ex-spouse out of my pension?

1 - Changes to the Pension Plan

1. What's happening?
 

On April 1, 2012, the state's Defined Benefit (DB) pension plan will become a contributory plan, meaning that both employers and employees contribute to the pension fund. As a member of the DB plan you will be switched to the state's Defined Contribution (DC) plan for future service unless you voluntarily elect to remain in the DB plan and contribute 4 percent of your annual compensation to the state's pension fund. Members who switch to the DC plan will have both a pension (with calculation determined as of the date of the switch) and a 401(k) account when they retire.

If you want to remain in the DB plan, you must elect to do so. Go to miAccount by 5:00 p.m. EST, March 2, 2012, to make your election.

If you do not elect to remain in the DB plan, your pension calculation (years of service and compensation) will be determined on March 31, 2012, and you will be switched to the state's Defined Contribution (DC) for your future service. If you are not vested, you will continue to earn service credit towards your insurance and pension eligibility.

Whether you switch to the DC plan for future service or remain in the DB plan, your retiree health insurance remains unchanged.

Published on 12/16/2011
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2 - Making Your Election

1. What are my choices?
 

Under the new law, as a member of the Defined Benefits Plan you have 3 choices:

Option 1: DB Classified. You can stay in the DB plan until you retire or leave state employment. To do this, you must select Option 1 in miAccount by 5:00 p.m. EST, March 2, 2012. By doing so you will voluntarily elect to contribute 4 percent (pre-tax) of your annual compensation to the state's pension fund beginning April 1, 2012, and continuing until you terminate employment with the state.

Option 2: DB 30. You can stay in the DB plan until your attainment date, which is when you reach 30 years of service (or until you terminate state service, if that happens first). Upon attainment, you would switch to the DC plan for future service. To do this you must elect Option 2 in miAccount by 5:00 p.m. EST, March 2, 2012. By doing so you will voluntarily elect to contribute 4 percent (pre-tax) of your annual compensation to the state's pension fund beginning April 1, 2012, and continuing until you reach your attainment date or terminate employment. If you elect Option 2, your retirement benefits would be comprised of your pension (based on your Final Average Compensation and years of service at your attainment date and your 401(k) and 457 accounts, which would include state and personal contributions and any accumulated investment earnings.

Option 3: DB/DC Blend. You can switch to the DC plan on April 1, 2012. To do this you can select Option 3 in miAccount by 5:00 p.m. EST, March 2, 2012. If you elect Option 3, your retirement benefits would be comprised of your pension (based on years of service and Final Average Compensation as of March 31, 2012,) and your 401(k) and 457 accounts, which would include state and personal contributions and any investment earnings.

If you do not make any election in miAccount by 5:00 p.m. EST, Friday, March 2, 2012, you will automatically be switched to the state's DC plan for the duration of your future service on April 1, 2012.

Published on 12/16/2011
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2. How long do I have before I must decide?
 

You must make your election in miAccount before 5:00 p.m. EST, March 2, 2012.

Published on 12/16/2011
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3. Can I change my mind?
 

Yes, as long as you do it before March 2, 2012. Requests to change an election must be submitted before the 5:00 p.m. EST, Friday, March 2, 2012, deadline. After that, your election is irrevocable.

Published on 12/16/2011
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4. What if I miss the deadline?
 

If you do not make any election in miAccount by 5:00 p.m. EST, March 2, 2012, you will automatically be switched to the state's DC plan on April 1, 2012.

Published on 12/16/2011
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5. What if I don't make a choice?
 

If you do not make any election in miAccount by 5:00 p.m. EST, March 2, 2012, you will automatically be switched to the state's DC plan on April 1, 2012.

Published on 12/16/2011
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6. I work for a noncentral agency. Do I need to make an election?
 

Yes. The Business Enterprise System and the Mackinac Island State Park participate in the state's DB and DC plans. If you work for either of these agencies and are a member of the DB plan, you'll need to make your election in miAccount by 5:00 p.m., Friday, March 2, 2012.

However, the American Legion, State Bar of Michigan, Third Circuit Court, Recorders Court, and the 36th District Court participate in the state's DB plan but not the state's DC plan. If you are an employee of one of these agencies and a member of the DB plan, you still need to make an election. But because your employer does not participate in the state's DC plan, that option is not available to you. Information regarding your options and directions for making your election will be mailed to you in early January. You will need to submit your choice by mail, postmarked no later than, Friday, March 2, 2012.

Updated on 1/3/2012
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7. I'm a conservation officer. Do these changes affect me?
 

Yes, you will need to make an election in miAccount by 5:00 p.m. EST, March 2, 2012. If you do not make any election you will automatically be switched to the state's DC plan on April 1, 2012.

Published on 12/16/2011
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8. I'm a covered employee responsible for the care and supervision of prisoners. Do these changes affect me?
 

Yes, you will need to make an election in miAccount by 5:00 p.m. EST, March 2, 2012. If you do not make any election you will automatically be switched to the state's DC plan on April 1, 2012.

Published on 12/16/2011
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9. I'm in a covered position. Is my supplemental pay affected by the reform?
 

No. The rules regarding eligibility and calculation for supplemental pension for covered employees have not changed. If your employer has determined that you are responsible for the custody and supervision of prisoners (called covered employment), you may be eligible for a supplemental pension when you are age 51 with 25 years in a covered position, or at age 56 with 10 years in a covered position. In both situations, your last 3 years must be in a covered position.

Published on 1/4/2012
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10. I've already attained 30 years of service. What should I do?
 

You have the same options. You can voluntarily elect to contribute 4 percent of pay and stay in the DB plan and continue to accrue service credit to be used in your pension calculation, or you can switch and continue your service as a participant in the DC plan. Contact your financial advisor to determine which option is best for you.

Published on 12/16/2011
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11. I'm retiring before April 1, 2012. What do I do?
 

You still need to make an election. The changes in the legislation take effect on April 1, 2012, so if you are retiring before then, it doesn't change anything for you. But, on the chance that you might change your retirement plans, we'd want to make sure that you are placed in the plan you prefer.

Published on 12/16/2011
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12. How can I get help making this decision?
 

Neither ORS nor ING can advise you on this decision because everyone's financial circumstances and career plans differ. However, ORS does provide several online tools to help you figure out which option is best for you:

In addition, ING is offering a free consultation with one of their Investment Advisors who can explain the choice you are making in the context of your overall retirement planning. Just contact ING at (800) 748-6128 and ask to speak with an ING Investment Advisor.

Updated on 1/18/2012
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13. I don't have internet access. Can I make my election through the mail?
 

No, your election must be made online in miAccount. Your human resources office can help you make your election online during work hours, or you can log into miAccount using computers and internet access provided by your local library.

Published on 12/21/2011
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14. I want the default option (Option 3: DB/DC Blend). Why should I bother going online to make an election?
 

This is an important decision that will affect your retirement future. By going online to make your election, you'll be able to print out a confirmation of your choice that you can keep for your records. Plus, ORS will be sending a series of reminder communications to DB plan members who have not made their election. If you make your election, you won't receive these reminders.

Published on 1/24/2012
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15. I plan to make my election by the March 2 deadline. Why do I keep getting reminders from ORS?
 

You can't predict what might happen on the last day that might affect your ability to make your election. Do so now, and you won't receive any further reminders from us!

Published on 1/24/2012
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16. If there's a lawsuit pending against the reform changes, do I still need to make an election?
 

Yes. A coalition of state employee unions filed suit on February 13th in Ingham Circuit Court questioning the constitutionality of the changes to employee benefits created by PA 264 of 2011. The lawsuit will not be resolved before the statutory deadline for choosing your future retirement plan (March 2, 2012). ORS must implement Public Act 264 of 2011 as written. State employees in the Defined Benefit plan who do not make an election by 5:00 p.m., Friday, March 2nd will become members of the Defined Contribution plan on April 1; their pension calculation (FAC x years of service x 1.5 percent) will be frozen as of March 31, 2012.

Published on 2/14/2012
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3 - Impact on Retiree Health Insurance

1. If I choose to freeze my Defined Benefit pension and participate in the DC Plan, is my insurance plan in retirement affected?
 

No. As a person who will receive a Defined Benefit pension, you will continue to be eligible for the maximum insurance premium subsidy in retirement (once you are vested). Insurance choices available to DC Plan members do not apply to you.

Published on 12/27/2011
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2. If I leave state service and then am reemployed by the state on or after January 1, 2012, what happens to my retiree health insurance?
 

If you are vested in the DB plan and you are reemployed after January 1, 2012, you would become a participant in the DC plan, for future service, but you would retain your health insurance premium subsidy.

If you are not vested in the DB plan and you return to work after January 1, 2012, then you become a participant in the DC plan. Because you were not vested when you returned, you would not be eligible for any retiree health insurance coverage premium but you would receive the following:

  • Up to 2% percent matching employer contribution into a 401(k) account if you contribute 2 percent of pay.
  • A credit into a health reimbursement account (HRA) at termination if you have at least 10 years of service at termination.
    • The credit will be $2,000 if you are at least 60 years of age.
    • The credit will be $1,000 if you are less than 60 years of age.
Published on 12/16/2011
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3. I am in the DB plan and my spouse is in the DC plan. If my spouse elects the Personal Healthcare Fund, can I cover him/her under my DB health insurance when I retire?
 

The law currently allows spouses to be covered under a retiree's insurance. If this is true when you retire, you could cover your spouse.

Published on 1/19/2012
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4. I am in the DB plan and my spouse is in the DC plan. My spouse is considering selecting the Personal Healthcare Fund. If I name my spouse as 50% survivor to my pension, will she be eligible for my insurance subsidy when I die, or will she only get a 50% subsidy?
 

According to current law, if you select the 50%, 75% or 100% Survivor Pension when you retire, your beneficiaries would retain the full insurance coverage offered by the state if they meet eligibility requirements; learn more at http://www.michigan.gov/orsstatedb/0,4654,7-208-30607_48436_48440---,00.html. If this is true when you retire, your beneficiaries could qualify for insurance coverage. If you select the Straight Life option, your survivors would not be eligible for any insurance subsidy.

Published on 1/19/2012
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4 - Impact on Overtime and Your FAC

1. Will my overtime pay still be included in my final average compensation (FAC) calculation?
 

Yes. If the FAC period includes any years before 2012, the calculation will include your actual overtime earned in those years. For each year in your FAC period that occurs after 2012, the calculation will use a 6 year average of your overtime earnings.

Published on 1/18/2012
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2. How is overtime calculated in the FAC period?
 

How overtime is calculated in the FAC will depend on what years fall within your FAC period. Here's how it works:

Step 1: ORS will look at your total compensation—base salary, overtime, and annual leave payout. ORS will use these numbers to identify the 3-year period of your highest earnings. This is your Final Average Compensation (FAC) period (shown in gray below). Note that annual leave payout is only included in your FAC if your final year of employment is part of your FAC period.

Step 2: ORS will look to see if that 3 year FAC period includes any overtime.

  • If the end date for your FAC occurs before 12/31/2011, then the actual overtime amounts earned during those 3 years will be used in your final FAC calculation. This rule remains unchanged.
  • If your FAC period ends after 1/1/2012, then ORS will look back 6 years to determine your average overtime for that period. According to statute, ORS can only look back to 2009.
  • If your FAC period ends in 2012, 2013 or 2014, ORS will prorate your overtime over that period to find the average.
  • If your FAC period ends 2015 or later, ORS will take the average of the 6 year period.

Step 3: ORS will recalculate your FAC for the same 3 year period using the actual overtime (if earned before 12/31/2011) and/or the averaged overtime (earned after 1/1/2012). This will determine your FAC to be used in calculating your pension under the new rules.

Note that your FAC will never be less than what it would have been as of 12/31/2011. To make sure, ORS will also calculate your FAC using the rules in place before PA 264 was enacted (prior to 12/31/2011). If that FAC calculation is higher, and if the FAC period does not extend beyond 12/31/2011, than that FAC calculation will be used in determining your pension.

To learn more and see examples of how overtime will be calculated in the FAC, watch ORS's recorded online tutorial (available 24/7) and read the informational handout.

Published on 1/18/2012
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3. I do not have any overtime earnings at any point in my career. Will the new rules affect my final average compensation (FAC)?
 

No. If you do not have earned overtime, the calculation of the FAC is based upon an average of your highest three years of earnings, as usual. The changes to the calculation of the FAC only affect those people who have earned overtime after 1/1/2012 and have overtime earnings during their FAC period.

Published on 1/18/2012
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4. My highest three years of earnings all occurred before 1/1/2012. Will the actual amount of overtime I earned be calculated as a part of my FAC?
 

Yes. If your highest three years of earnings occur before 1/1/2012, then the actual overtime amounts will be used in the calculation of your FAC.

Published on 1/18/2012
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5. What if my highest three years of earnings all occurred after 1/1/2012? How will the overtime I earn after 2012 be calculated as a part of my FAC?
 

If the end date for your FAC calculation is 1/1/2015 or later, then ORS will look back 6 years from that end date and average your overtime for that 6 year period; that averaged amount will be added to your FAC calculation.

If the end date for your FAC calculation is between 1/1/12 and 1/1/15, then ORS will look back to January 1, 2009 and average your overtime for the period, prorate it (based on the number of years averaged), and add it to your FAC calculation.

To learn more and see examples of how overtime will be calculated in the FAC, watch ORS's recorded online tutorial (available 24/7) and read the informational handout.

Published on 1/18/2012
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6. Does the pension estimator in miAccount take the new overtime rules into account?
 

No. Unfortunately, the new overtime rules could not be added to the pension estimator in miAccount in time for the reform election window. Pension estimates containing an FAC period after 1/1/2012 will be slightly inaccurate. However, pension estimates with an FAC period ending before 1/1/2012 generated in miAccount can be used.

Published on 1/18/2012
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7. If my FAC period does not include my last three years of earnings, will the annual leave payout be used in the calculation of my FAC?
 

This rule remains unchanged. The annual leave payout will not be used in the FAC calculation if the last three years are not the FAC period. Think of the annual leave payout as part of your last year of earnings. If another three year period yields a higher FAC, then you'd want that as your FAC period even if it doesn't include the annual leave payout.

Published on 1/18/2012
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8. What earnings are considered to be overtime for retirement purposes?
 

PA 264 of 2011 defines overtime for retirement purposes as:

  • Any payment for services rendered in excess of 80 hours in any pay period, and/or
  • The value of any overtime premium payment. An overtime premium payment is the additional amount of pay over and above the straight-time rate of pay, if paid for less than 80 hours in any pay period.
Published on 1/24/2012
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9. I'm receiving a payment just for being "on call." This pay is paid to me at my normal "straight time" rate. Is this considered overtime?
 

If you are working and getting paid for a full 80 hours during any given pay period and the on-call pay means the total number of hours paid is in excess of 80 hours, then the on-call payment will be considered to be overtime. If this pay is earned after 1/1/2012, we will apply the rules for averaging the overtime as explained below.

Published on 1/24/2012
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10. I am working in a job sharing position and paid less than 80 hours. I am paid time and a half for any hours above my normal work schedule. Is this considered to be overtime?
 

If you are still working less than 80 hours, we'll count only the overtime premium earnings as overtime. For example, If you normally work 75 hours per pay period, and work an extra two hours at time-and-a-half, we'll count 77 hours at straight-time. The two hours of "half time" are the overtime premium and are, therefore, considered to be overtime earnings.

Published on 1/24/2012
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5 - Stay in the DB Plan

1. What happens if I decide to stay in the Defined Benefit Plan?
 

Your pension calculation remains unchanged, but beginning April 1, 2012, you will, in accordance with your election, contribute 4 percent of your compensation to the pension fund. This will be a pre-tax contribution.

Published on 12/16/2011
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2. If I decide to stay DB and pay the 4 percent, is the 4 percent counted in my 401(k) or 457 account?
 

No. The 4 percent contribution to the pension fund is separate from and does not impact your 401(k) or 457 account.

Published on 12/16/2011
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3. If I stay in the DB plan, what happens to my retiree health insurance?
 

Nothing. Whether you switch to the DC plan for future service or remain in the DB plan, your retiree health insurance remains unchanged.

Published on 12/16/2011
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4. If I elect to stay in the DB plan and contribute the 4 percent, but then leave state employment before I'm vested, can I get a refund on the 4 percent that I contributed?
 

Yes. If you terminate state employment before you are vested, you can request a refund of your 4 percent contributions, but it would cancel your service credit.

Published on 12/16/2011
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5. If I elect to stay in the DB plan and contribute 4 percent, will these contributions be "credited" to my account and refunded to my beneficiary in the event of my death either pre-retirement or post-retirement?"
 

If you elect Option 1: DB Classified and die before retirement, your beneficiary (typically your spouse) would be eligible for a survivor pension. If you retire with a survivor option and then die, the named beneficiary would be eligible for a survivor pension. In both cases, the pension payments are partially funded by your 4% employee contribution, so there'd be no refund of those contributions since, in essence, your beneficiaries would be already receiving them. If you choose the straight life option and then die soon after retirement, there may be residual contributions on deposit. If so, these contributions would be refunded to either the named beneficiary or your estate.

Employee contributions are always paid out first. Each month's pension payment would reduce the employee contribution total by the amount of the pension payment. Once that employee contribution total has been depleted (usually in less than two years from retirement) there'd be no money left to refund.

Published on 1/3/2012
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6. I'm vested and elect to stay in the DB plan and make the 4 percent contributions. What happens if I terminate employment and then later return to work for the state?
 

When you return to work for the state, you would become a participant in the DC plan for future service. Your retirement benefits would be comprised of your pension (compensation and years of service determined as of the date you left state employment) and your 401(k) account, which would include employer and employee contributions plus any accumulated investment earnings. You would retain your retiree health insurance premium subsidy from the state.

Published on 12/16/2011
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7. I'm a current DB member but not vested. I elect to stay in the DB plan and make the 4 percent contributions. What happens if I terminate employment before I'm vested and then later return to work for the state?
 

If you were to return as a former, nonvested member of the DB plan, you would become a participant in the DC plan. As a DC plan participant you would receive a 4 percent employer contribution to your 401(k) account and be eligible for a dollar-for-dollar employer match of up to 3 percent of pay to the plan. Any service credit previously earned would count towards vesting in employer contributions. You would not be eligible for any retiree health insurance premium subsidy but would receive the following:

  • Up to 2 percent matching employer contribution into a 401(k) account if you contribute two percent of pay.
  • A credit into a health reimbursement account (HRA) at termination if you have at least 10 years of service at termination. The credit will be $2,000 if you are at least 60 years old or $1,000 if you are less than 60.
Published on 12/16/2011
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8. Can I still qualify for early reduced retirement?
 

Yes. Whether you stay in the DB plan or switch to the DC plan, your years of service as a DB member and DC participant can be used toward vesting for an early reduced benefit of your DB pension. Learn more about the early reduced benefit at http://www.michigan.gov/orsstatedb/0,4654,7-208-30580_31510---,00.html.

Updated on 3/1/2012
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9. Are years of service capped at 30?
 

There is no cap on years of service if you elect Option 1: DB Classified to remain in the DB plan until you terminate employment. But, if you elect Option 2: DB 30 to remain in the DB plan until your attainment date (30 years of service, or when you terminate employment) and then switch to the DC plan for future service, your pension will only be calculated based on your 30 years of service (or your years of service as of the date you left state employment). If you elect Option 3: DB/DC Blend to switch to the DC plan on April 1, 2012, whatever years of service you already have as of April 1, 2012 - even if it exceeds 30 years of service - will be used in your pension calculation. Any service credit earned after you switch to the DC plan does not count towards your pension calculation.

Updated on 12/29/2011
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10. If I stay in the DB plan, will my accrued annual leave still be included in my final average compensation (FAC) calculation?
 

Possibly. If you elect to stay in the DB plan and your highest three consecutive years of compensation includes your termination date, then your Final Average Compensation (FAC) formula will include up to 240 hours of accrued annual leave multiplied by the rate of pay as of your termination date. The hours will be paid at separation. If your highest three consecutive years occur earlier in your career and do not include your termination date, then the accrued annual leave will not be included in your FAC calculation, but the hours will still be paid at separation, at your final rate of pay.

Published on 12/16/2011
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11. If I stay in the DB plan and contribute the 4 percent, does it impact the cost of living increase (COLA)?
 

No, the two are separate. Each year retired DB plan members receive a cost of living increase fixed at 3 percent (not exceed $25 per month or $300 per year).

Published on 12/16/2011
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12. Is my 4 percent contribution as a result of my election to stay in the DB plan a pre-tax contribution?
 

Your 4 percent employee contribution is subject to FICA, but is not currently subject to federal, state, or local income tax.

Published on 1/10/2012
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6 - Switch to DC Plan

1. What would I get as a DC member?
 

As a DC plan participant you would receive a 4 percent employer contribution to your 401(k) account and be eligible for a dollar-for-dollar employer match of up to 3 percent of pay to the plan. You would retain your eligibility for the retiree health insurance premium subsidy offered by the state.

Published on 12/16/2011
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2. If I switch to the DC plan for future service, what would my retirement benefit be?
 

If you switch to the DC plan, your retirement benefits will be made up of two things: (1) your pension (based on years of service and compensation at the point that you switched to the DC plan); and (2) your 401(k) and 457 accounts, which would include state and personal contributions, and any accumulated investment earnings.

Published on 12/16/2011
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3. What does it mean when you say my pension calculation would be "determined"?
 

It means that when you retire, your pension payment will be calculated based on your years of service x your Final Average Compensation (FAC) x 1.5 percent as of the day before you became a participant in the DC plan.

Published on 12/16/2011
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4. If I switched to the DC plan for future service on April 1, 2012, how would my future DB pension be calculated?
 

If you switch to the DC plan for future service as of April 1, 2012, your pension calculation will be determined based on your years of service x your Final Average Compensation (FAC) (both frozen as of April 1, 2012) x 1.5 percent. If your highest three consecutive years of compensation includes the date you switched to the DC plan (at attainment or on April 1, 2012), then your FAC formula will include up to 240 hours of accrued annual leave multiplied by the rate of pay as of the date you switched to the DC plan. The hours will be paid at separation. If your highest three consecutive years occur earlier in your career and do not include your date of switch, then the accrued annual leave will not be included in your FAC calculation. The hours will still be paid at separation at the rate of pay at your date of switch to the DC plan.

Published on 12/20/2011
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5. If I switch to the DC plan, will my accrued annual leave be included in my final average calculation (FAC)?
 

Possibly. If your highest three consecutive years of compensation includes the date you switch to the DC plan (at attainment or on March 31, 2012), then your FAC formula will include whatever annual leave time you have at separation, up to the 240 hour limit. For the purpose of your pension calculation, those hours will be multiplied by your rate of pay as of the date of your switch to the DC plan (at attainment or on March 31, 2012). If your highest three consecutive years occur earlier in your career and do not include your date of switch, then the accrued annual leave will not be included in your FAC calculation.

Unused annual leave hours will be paid at separation at your rate of pay as of the separation date. The maximum annual leave hours paid is determined by your employer, so check with your HR office to learn more.

Updated on 1/27/2012
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6. If I switch to the DC plan, would I still have the same retirement payment options of Straight Life, Survivor or Equated plan?
 

Yes, if you are eligible for a pension you would still have all of the pension payment options available to you: Straight Life, Survivor, and Equated Plan.

Published on 12/16/2011
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7. If I elect to remain in the DB plan until my attainment date and then switch to the DC plan for future service, how would my future DB pension be calculated?
 

If you switch to the DC plan at your attainment date (when you have 30 years of service, or when you terminate employment), your future pension payment would be calculated based on your 30 years of service x your Final Average Compensation as of your date of attainment x 1.5 percent.

Published on 12/16/2011
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8. If I switch to the DC plan for future service, what happens to my retiree health insurance?
 

Nothing. Whether you switch to the DC plan for future service or remain in the DB plan, your retiree health insurance remains unchanged.

Published on 12/16/2011
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9. If I switch to the DC plan and then become disabled, do I still get a disability pension?
 

If you become ill or injured while you are an active state of Michigan employee, and you can no longer work, you may qualify for a duty or nonduty disability pension based on your service up to the date of the switch to the DC plan. To learn more, read If You Become Disabled.

Updated on 12/19/2011
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10. If I switch to the DC plan and then die, do my survivors get anything?
 

If you are retired at the time of your death, your pension beneficiary would receive whatever survivor pension benefit (if any) you chose at retirement (100 percent survivor pension, 75 percent, or 50 percent); your named beneficiaries would receive the payout from your account balance for your 401(k) that you earned as a member of the DC plan, and the payout from any life insurance policy you may have.

If you are a state employee at the time of your death, your survivors would receive the benefits noted above. If you were vested your pension beneficiary may also be eligible for a monthly survivor benefit based on your years of service as of the date you switched to the DC plan.

Published on 12/16/2011
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11. Let's say I switch to the DC plan and then leave state employment. What would happen if I were to later return to work for the state?
 

You would come back in the DC plan and any new service credit earned would be added to the service credit you had already earned for the purposes of achieving DB pension eligibility. If you have 10 or more years of service when you leave state employment, then, when you are 60 years of age, you would be eligible for your pension (calculation determined at the time you switched to the DC plan) and the retiree insurance premium.

Published on 12/16/2011
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12. How does the 3 percent matching contribution work?
 

By electing Option 2: DB 30 or Option 3: DB Blend, you will be eligible for an employer match of up to 3 percent of pay to your 401(k) account when you contribute up to 3 percent of compensation. You will be automatically enrolled in the 3 percent matching program as of the date you switch to the DC plan—either when you reach 30 years of service (Option 2: DB30) or on April 1, 2012 (Option 3: DB Blend).

If you are already contributing to a 401(k) or 457 as part of your deferred compensation, the first 3 percent of those contributions will be used to meet the requirement for the 3 percent state match. The state match will go into your 401(k) account. You won't need to contribute any more to get the full match and you won't see any new deduction from your pay.

Any contributions you make on top of the 3 percent will go into your deferred compensation account.
If you are contributing less than 3 percent into your 401(k) or 457 account, the contribution required to qualify for the full state match (up to 3 percent) will be will be automatically deducted from your pay shortly after you switch to the DC plan.

If you do not have a 401(k) account, one will be set up for you when you switch to the DC plan. You'll want to contact ING at 1-800-748-6128 or visit https://stateofmi.ingplans.com/eportal/welcome.do to select your investment option(s). If you do not select an investment option, you will be placed in the Target Date Fund based on the assumption you'll retire when you reach age 65.

You can also contact ING if you want to adjust your contribution amount. The state will match up to a 3 percent contribution, so consider contributing as much as you can to get the maximum state match.

Published on 1/4/2012
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13. If I elect to remain in the DB plan until my attainment date and then switch to the DC plan for future service, do I have to take any actions with ING now, or at my attainment date?
 

When you reach your attainment date you will be automatically enrolled in the 3 percent matching contribution. You will need to make decisions regarding how your contributions will be invested in your 401(k) or 457 account and whether or not you might want to contribute more than the 3 percent. Contact ING at (800) 748-6128 for assistance.

Published on 12/16/2011
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14. I already have a 401(k) and/or a 457 account. If I switch to the DC plan, will I then have additional accounts?
 

No. The DC plan is a type of retirement. This plan functions within the 401(k) and 457 accounts that you already have with the State of Michigan.

Published on 12/16/2011
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15. How do I decide between a 401(k) and 457 account for my contributions?
 

You'll have to determine which is better for you. Check out ING's Key Features document to compare the benefits of each type of account.

Published on 12/16/2011
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16. If I elect to stay in the DB Plan until my attainment date and then switch over to the DC Plan, what ages on the actuarial chart will be used to calculate my survivor pension?
 

This remains unchanged; your survivor pension will be calculated as of your age at termination. Go to miAccount to estimate the survivor pension or for further information.

Published on 12/16/2011
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17. I'm a conservation officer. If I switch to the DC plan, will my attainment be at 25 years or 30 years of service?
 

If you are a conservation officer, your point of attainment will be at 30 years of service. At that point, you would switch to the DC plan if you continued to work. However, you only need 25 years of service, the required number of years as a conservation officer, to be eligible for your pension.

Published on 12/16/2011
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18. I'm a covered employee, responsible for the care and supervision of prisoners. If I switch to the DC plan, will my attainment be at 25 years or 30 years of service?
 

If you are a covered employee, your point of attainment will be at 30 years of service. At that point, you would switch to the DC plan if you continued to work. However, you only need 25 years of service, with the required number of years as a covered employee, in order to be eligible for your pension.

Published on 12/16/2011
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19. I'm in a covered position. If I elect DB/DC Blend and switch to DC, will I still get my supplemental pay?
 

If you meet eligibility requirements for supplemental pay when you terminate employment (see question 2.9 above), you will receive a supplemental pension calculated as of the date you switched to the DC plan: final average compensation (FAC) x years of service (YOS) (both determined as of the date of the switch) x .005. Any service you provided in a covered position while a participant in the DC plan will not be included in your supplemental pension calculation. Remember that the calculation for your regular pension will also be determined as of the date you switched to the DC plan: FAC x YOS (both frozen as of the date you switch to the DC plan) x .015.

Published on 1/4/2012
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20. I am a covered employee, if I elect option 2 or 3 can I still retire under the covered eligibility?
 

Yes. The rules regarding eligibility for covered employees have not changed. If your employer has determined that you are responsible for the custody and supervision of prisoners (called covered employment), you may be eligible to retire when you are age 51 with 25 years in a covered position, or at age 56 with 10 years in a covered position. In both situations, your last 3 years must be in a covered position.

Published on 1/10/2012
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21. I am a covered employee, if I elect option 3 and retire under the covered eligibility will the changes regarding overtime still apply to my retirement calculation?
 

Yes. See question 4.1 above for an explanation of how overtime is calculated in the FAC.

Published on 1/4/2012
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22. I'm a conservation officer. If I have 18 years of service as a conservation officer, and take Option 3 switching to the DC plan effective April 1, 2012, will I still be eligible for the conservation officer pension when I reach the eligibility requirements?
 

Eligibility for a conservation officer pension is based on years of service, and those years of service can extend into the DC plan. The service requirements for conservation officers are: For those hired before April 1, 1991: 25 years of service with 20 years as a conservation officer. For those hired after April 1, 1991, 25 years of service with 23 years as a conservation officer. In either case, you must be employed as a conservation officer during the two years prior to retirement. The pension formula is based only on wages in the DB plan.

So, if you are a Conservation Officer and you elect Option 3: DB/DC Blend, you would switch to the DC plan for future service as of April 1, 2012. If you continue to work as a conservation officer, you will continue to accrue service credit toward your retirement requirement. When you have reached the service requirement and you terminate employment, your pension calculation would be determined based on a two-year Final Average Compensation (FAC) (frozen as of April 1, 2012) x 60 percent.

Example: You have 1 year of regular state service and 18 years as a conservation officer. You switch to the DC plan on April 1, 2012. Your two-year FAC period is frozen as of that date. You work 6 more years as a conservation officer until you have a total of 25 years of service, with 24 years as a conservation officer. When you terminate employment you would be eligible for the conservation officer DB pension calculated as a two-year FAC X 60 percent. The two-year FAC is taken from the years you worked under the DB plan, in most cases, the last two years before you switched to the DC plan.

Updated on 3/02/2012
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7 - Understanding Your Estimates

1. What is included in the estimates on the election information page in miAccount?
 

All of the estimates are calculated based on your Final Average Compensation (FAC) as of March 31, 2012. Any overtime that was earned during the FAC period is included in the estimates as part of your FAC. Annual leave payouts are not included, nor are supplemental calculations for covered employees or conservation officers.

The amount of service credit used in the estimates is different for each option: DB Classified is your service credit at your earliest retirement eligibility date, DB 30 is your service credit when you reach attainment, and DB/DC blend is your service credit as of March 31, 2012. Service credit includes any earned, pending, and purchased service. If you have a TDP agreement in progress, the estimates include the total amount of service you are purchasing, whether or not it has already been paid for.

Published on 1/6/2012
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2. Why are the estimates for the reform different from the estimate I do in miAccount?
 

The estimates you complete with the Estimate Pension tool in miAccount project your FAC out to the termination date you enter. The estimates on the election information screen use your FAC as of March 31, 2012.

If you are a covered employee or conservation officer, the Estimate Pension tool also allows you to choose a termination date according to your specific eligibility rules.

Published on 1/16/2012
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8 - Understanding "Attainment"

1. What does "attainment date" mean?
 

Attainment date is defined as the final day of the pay period in which the member of the DB plan reaches 30 years of credited full time service or the date the member terminates employment, whichever comes first.

Published on 12/16/2011
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2. Does "attainment" mean 30 years of service in all cases, or does it refer to the earliest possible retirement eligibility date?
 

The attainment date only applies to DB members who elect to switch to the DC plan at 30 years of service. It is used to identify the point at which their 4 percent contributions to the Defined Benefits plan cease and their pension calculation is determined. After they have reached their attainment date, they become participants in the Defined Contribution plan. The eligibility rules for their pension do not change, just the pension calculation.

Published on 12/16/2011
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3. If I choose to remain in DB until I reach my attainment date, what happens if I leave before I reach 30 years?
 

The date you terminated employment would then be considered your attainment date. You will receive whatever pension and benefits you qualify for as of the date you terminate employment. The switch to the Defined Contribution plan would only happen when you reach 30 years of service, and if you leave before then, it won't happen.

Published on 12/16/2011
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4. Is "retirement date" same as "attainment date"?
 

No. "Attainment date" is defined as 30 years of credited service or the date the member terminates employment, whichever comes first. You don't have to retire when you reach your attainment date; it just marks the point in time when you switch to the DC plan, if you choose that option.

Published on 12/16/2011
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5. When will I reach my attainment date?
 

Go to miAccount to see your years of service to date and from there you can estimate when you will reach 30 years of service, your attainment date.

Keep in mind that we are projecting your attainment date based on current information. Leaves of absence, breaks in service, and part time employment could extend your attainment date.

Published on 12/16/2011
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9 - Vesting Status

1. I'm in the Defined Benefit plan but I'm not vested. If I stay in DB, am I still eligible for a pension and health care?
 

Yes. If you stay in the DB plan, you continue to earn service credit towards vesting. Once you meet the required 10 years of service, you will be vested and will qualify for pension and retiree healthcare benefits if you retire at age 60 or later with at least 10 years of service or age 55 or later with at least 30 years of service.

Published on 12/16/2011
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2. I'm in the Defined Benefit plan but I'm not vested. If I move to the Defined Contribution plan, what happens to my vesting status?
 

If you are not vested, you will continue to earn service credit towards your pension eligibility as long as you remain employed by the state. Once you have the 10 years of service required for vesting, you would qualify for a pension benefit when you become age-eligible. Your pension amount would be based on the years of service and Final Average Compensation you had as of the date you switched to the DC plan. You would also be eligible for retiree healthcare benefits.

Published on 12/16/2011
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3. What are the vesting requirements for the Defined Contribution plan?
 

The vesting requirements for the state's contributions to the DC plan (the 4 percent contribution and up to the 3 percent match) are as follows: 2 years of service - 50 percent vested; 3 years of service - 75 percent vested, and 4 years of service -100 percent vested. Your own contributions are fully owned by you at all times. Your vesting for the state's contributions to your Defined Contribution retirement account begins with your date of hire, so all of your state service counts towards the DC 4 year vesting schedule.

Updated on 12/21/2011
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4. If I switch to the Defined Contribution plan, do I need to have 4 years before I'm fully vested in employer contributions?
 

Yes. But all of your service credit, whether earned in the DB plan or the DC plan, will count toward the 4 year vesting for employer contributions.

Published on 12/16/2011
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5. Does my military time count toward vesting as a member of the DC plan?
 

Up to five years of intervening military leave (which interrupts your state of Michigan employment) can be used to meet the vesting requirements for both employer contributions (a four- year vesting requirement) and health insurance (a ten- year vesting requirement. Non-intervening military service may not be used to meet vesting requirements. To learn more see the Application for Military Leave of Absence Credit.

Published on 12/16/2011
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6. I have military service. Do I need to apply for it before I switch to the DC plan to make it count?
 

No. You can apply for the military service credit after you switch to the DC plan. To learn more see the Application for Military Leave of Absence Credit.

Published on 12/16/2011
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10 - Deferred, Former Nonvested Members, Employees on Leave of Absence/Layoff, and those Returning to State Employment

1. What's a deferred member?
 

A deferred member is someone who left state service after becoming vested, but is not yet old enough to draw a pension.

Published on 12/16/2011
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2. I'm a deferred DB member. Do I need to make a choice?
 

No, you don't need to do anything. These changes have no impact on your future pension or insurance benefits. But if you return to work for the state, you would become a member of the DC plan for any future service.

Published on 12/16/2011
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3. I'm a deferred DB member. Does this affect my pension calculation and, if so, how?
 

No. Your pension payment (based on your compensation and years of service) was determined on your date of separation. Your retiree health insurance remains unchanged.

Published on 12/16/2011
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4. I'm a deferred DB member. What happens to my pension if I return to work for the state?
 

As a deferred (vested) member of the DB plan, if you return to work for the state on or after January 1, 2012, you would become a participant in the DC plan for your future service. Your retirement benefits would be comprised of your pension (compensation and years of service determined as of the date you terminated employment) and your 401(k) and 457 accounts, which would include employer and employee contributions and any accumulated investment earnings. You would retain your retiree health insurance premium subsidy from the state.

Published on 12/16/2011
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5. I'm a former DB member but not vested. What happens if I return to work for the state?
 

It depends on when you were reemployed by the state. As a former, nonvested member of the DB plan, if you are reemployed by the state on or after January 1, 2012, and before January 1, 2014, you would become a participant in the DC plan. When you have earned sufficient service credit for vesting (10 years) you would be eligible for a pension based on your Final Average Compensation and years of service in the DB plan and you would retain your eligibility for the retiree health insurance premium subsidy offered by the state.

As a former, nonvested member of the DB plan, if you were to return to work for the state on or after January 1, 2014, you would become a participant in the DC plan. Any service credit previously earned would count towards vesting in the DC plan. As a DC plan participant you would receive a 4 percent employer contribution to your 401(k) account and be eligible for a dollar-for-dollar employer match of up to 3 percent of pay to the plan. You would not be eligible for any health insurance premium subsidy offered by the state. Instead, you would be placed into the Personal Healthcare Fund where you would receive a dollar-for-dollar employer match of up to 2 percent into a 401(k) or 457 account. In addition, you would receive a credit into a health reimbursement account (HRA) at termination if you have at least 10 years of service. The credit will be $2,000 if you are at least 60 years old or $1,000 if you are less than 60.

Updated on 1/19/2012
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6. I'm in DB and I'm laid off. How does this affect me? Will I be put into DC if/when I return to work?
 

If you are on layoff status for less than one year as of December 31, 2011, you are still considered an active employee and must make an election by March 2, 2012. After one year of layoff status, your employee/employer relationship with the state is terminated (unless ORS receives verification from your employer that you still have an employee/employer relationship). If, after that, you return to work for the state, then you would come in under the DC plan.

Published on 12/19/2011
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7. I'm in DB and I'm on a leave of absence. How does this affect me?
 

Employees on an approved leave of absence (medical, waived rights, with or without pay, FMLA, or service member family leave) are considered active employees and must make an election by 5:00 pm EST, March 2, 2012. If you return to work before your leave expires, then on April 1, 2012, you would be placed in whichever plan you chose. If you do not return to work before your leave expires, then your employer-employee relationship with the state is terminated. If you return to work for the state later, you would come in under the DC plan.

Updated on 12/21/2011
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8. I'm a retired DB member who was rehired by the state and am currently in the DC plan. How does this affect me?
 

If you are a retired DB member who was rehired by the state, your retirement benefits and retiree health insurance are locked in. This legislation does not affect you and you do not need to take any action.

Published on 12/21/2011
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9. I transferred from DB to DC back in 1997. Does this affect me?
 

No. You are not affected by these changes. You remain eligible for the full healthcare premium subsidy as if you had not switched to the DC plan. This legislation does not affect you and you will not be able to make an election.

Published on 12/22/2011
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11 - Impact on Service Credit and EDRO

1. How does my current service credit purchase affect my attainment date? (For example, I've got 28 years of service and I'm purchasing 4 additional years of service.)
 

Your attainment date is based on total service credit (earned service plus purchased service). So, if you chose to switch to the DC plan at attainment-Option 2: DB 30-then when your earned service and purchased service equal 30 years, you will have reached attainment and your will be switched to the DC plan. You continue to purchase any years remaining on your TDP agreement and, once paid, those years will be added to your FAC. Use miAccount to track your current service credit totals.

Updated on 12/21/2011
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2. I have a service credit purchase agreement in place. How is that affected if I chose Option 3, to switch to the DC plan on April 1, 2012?
 

Service purchase agreements remain in place and are irrevocable, regardless if you stay in the DB plan or switch over to the DC plan. So, if you chose Option 3: DB/DC Blend and elect to switch to the DC plan as of April 1, 2012, you will still be required to complete the terms of your service credit purchase agreement and, once paid, those years will be added to your FAC. Use miAccount to track your current service credit totals.

Published on 12/21/2011
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3. Can I still purchase service credit after I elect to switch to DC but before I reach my attainment date?
 

As long as you are a DB member you may purchase service credit. Any service credit you are purchasing through a Tax Deferred Payment agreement that is in place prior to your attainment date will continue past your attainment date.

Published on 12/16/2011
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4. I have a Tax Deferred Payment (TDP) for purchasing service credit. If I go to DC, what happens?
 

Service credit purchases (TDPs) remain in effect and are irrevocable, even if you switch to the DC plan.

Published on 12/16/2011
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5. I have an Eligible Domestic Relations Order (EDRO) on my Defined Benefits plan. If I switch to the DC, will this cut my ex-spouse out of my pension?
 

Standing EDROs remain unchanged and in effect. However, you will need to talk with your attorney to work out any division of ownership between you and your ex-spouse for your Defined Contribution account.

Published on 12/16/2011
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The retirement plan information that appears on this website is intended to summarize basic provisions of Public Act 240 of 1943, as amended.
Current laws, rates, and factors are subject to change. Should there be discrepancies between the information reflected here and the actual law,
the provisions of the law govern.



Copyright © 2014 State of Michigan