Application for Waiver of Underfunded Status Process

My local government received an e-mail from Treasury with a notification that one of our retirement systems triggered a preliminary review of underfunded status. The e-mail included an Application for Waiver. Is my local government required to fill out this waiver application? 

No. Submitting a waiver application is optional and meant to be used if your local government meets general waiver criteria. Waiver applications and criteria can be found by clicking the “Forms and Instructions” button on our website, Michigan.gov/LocalRetirementReporting.

My local government has more than one retirement system, but not all of them triggered underfunded status. Do we need to apply for a waiver for each system, even the systems that did not trigger as preliminarily underfunded?

No. If you chose to apply for a waiver, you only need to complete a waiver application for the retirement systems that have triggered a preliminary review of underfunded status.

How do I know which of our retirement systems are underfunded? 

Local governments that trigger as preliminarily underfunded on the Retirement System Annual Report (Form 5572) will receive an email notification from Treasury indicating which systems have been identified as preliminarily underfunded.

To verify your local government’s status, please go to Michigan.gov/LocalRetirementReporting. Reporting information can be found in the “Reports and Documents” section by fiscal year.

Finally, you can view all correspondence related to the Act on the document search site by visiting www.michigan.gov/localfinancialreporting.

Are there two different waiver application forms?

Yes. Form 5583 is for Defined Benefit Pension Retirement Systems and Form 5584 is for Retirement Health Benefit Systems.

What information should be provided in the waiver application?

The local government must complete Form 5583 for Defined Benefit Pension Retirement or Form 5584 for Retirement Health Benefit Systems. Within the forms are detailed instructions including what information is required to be included in your waiver application. Waiver applications and criteria can be found by clicking the “Forms and Instructions” button on our website, Michigan.gov/LocalRetirementReporting.

Is there any information that should NOT be included with our waiver application?

Yes. Personal and confidential information that identifies specific individuals associated with the retirement systems should be redacted. This includes, but is not limited to, any two identifying factors such as plan participant names, dates of birth, social security numbers, etc.

My local government received notification of a preliminary review of underfunded status. Because we do not meet general waiver criteria, we are not submitting a waiver application. What happens next?

Following the 45-day period allowed for waiver applications, Treasury will provide notification to your local government detailing the determination of underfunded status. Within this notification, Treasury will also request a corrective action plan (CAP). Per section 10 of the Act, CAPs are due within 180 days of the determination letter.

The instructions for the waiver application state that the waiver must be approved by the local government’s governing body before it is submitted to Treasury for review. Our governing body is not scheduled to meet before the due date of the waiver. Can I submit the waiver application without the approval of our governing body?

No. The Act requires governing body approval of the waiver application. Proof of approval by the governing body must be included in your waiver application.

What happens after my local government submits our waiver application to Treasury?

After receiving your waiver application, Treasury will send a letter informing your local government if the waiver application is approved or disapproved. If the waiver application is disapproved, Treasury will provide a notification detailing the reasons for disapproval. 

What happens if our application for waiver is disapproved?

If a waiver is disapproved, Treasury will provide a notification to the local government detailing the determination of underfunded status. Within this notification, Treasury will also request a corrective action plan (CAP). Per section 10 of the Act, CAPs are due within 180 days of the determination letter.