4.04.06: Merit Pay

Merit pay as established by a reporting unit for the purpose of rewarding achievement of specific performance objectives is retirement reportable compensation if all of the following criteria are met:

  • A specific performance objective is established prior to the fiscal year, or onset of pay period, during which the employee takes action toward achievement of the performance objective.
  • The performance objectives associated with the merit pay are measurable and time bound.
  • The participation in merit pay is available to other employees in the reporting unit.

Merit pay cannot be paid for the specific purpose of increasing the employee’s final average compensation.

Upon request, reporting units must provide supporting documentation to ORS for review, such as the employee’s contract or board memo containing the eligible amount and performance objectives. Please contact ORS if you have any questions about the reportability of a payment.

The increase in compensation that results from payment cannot exceed the 4.03.00: Normal Salary Increase (NSI).

Please note: reportable and nonreportable “compensation” is defined in MCL 38.1303a and only applies to active MPSERS members. For information on reporting earnings for retirees please see section 9.01: Earnings of Retirees Who Return to Work.

Last updated: 11/1/2018