March 8, 2013

Office of Retirement ServicesServing more than 530,000 customers

Michigan Public School Employees Retirement System

Agenda

MPSERS Reform – Implementation Update Contribution Rates Retirees Returning to Work – PA 464 of

2012 GASB 68

Thank you!

Employer Outreach to the Members: 100% validation of members to be given an election Provided contact information and assistance reaching

members Made personal contacts, hosted seminars and

computer labs 86.7% of members logged in to miAccount 82% of members made their elections

Implementation Update

We have now implemented PA 300 of 2012! Over 215,000 members given an election – all

had a Healthcare Election; 193,500 had Pension Election.

Implementation UpdateElection Results Pension Election:

Option 1/Maintain 1.5%: 28% Option 2/Maintain 1.5 until 30 YOS: 3% Option 3/Switch to 1.25%: 65% (elected or defaulted)

Option 4/Switch to DC: 4%

Healthcare Election Premium Subsidy: 89% (elected or defaulted)

Personal Healthcare Fund: 11%

ImplementationHealth Care Contributions 3% Retiree Healthcare Contribution falls into two

categories 3% contributions continue for those who elected

Graded Premium Subsidy 3% contributions stop as of transition date for those

who elected Personal Healthcare Fund PHF participants received a contribution to their

401(k) equal in value to the amount of their 3% HCC contributions on March 1, 2013.

PHF are fully vested in this 401(k) contribution. Account will be set up for them at ING.

Contribution Rates

Employer Contribution RatesFebruary 1, 2013 – September 30, 2013

Basic/MIP With

Premium Subsidy

Pension Plus With Premium Subsidy

Pension Plus PHF

Pension Plus to DC with PHF

Basic/MIP to DC With Premium Subsidy

Basic/MIP to DC With

PHF

Basic/MIP With PHF

*DB Retirees

Returned to Work

*DC Retirees

Returned to Work

DB CONTRIBUTIONS

PENSION CONTRIBUTIONS

Pension Normal Cost 2.43% 2.24% 2.24% 0.00% 0.00% 0.00% 2.43% 0.00% 0.00%

Pension UAAL* 11.42% 11.42% 11.42% 11.42% 11.42% 11.42% 11.42% 11.42% 11.42%

Pension Early Retirement Incentive

1.36% 1.36% 1.36% 1.36% 1.36% 1.36% 1.36% 1.36% 1.36%

Pension Total Rate 15.21% 15.02% 15.02% 12.78% 12.78% 12.78% 15.21% 12.78% 12.78%

HEALTH CONTRIBUTIONS

Health Normal Cost 0.93% 0.93% 0.00% 0.00% 0.93% 0.00% 0.00% 0.00% 0.00%

Health UAAL* 8.18% 8.18% 8.18% 8.18% 8.18% 8.18% 8.18% 8.18% 8.18%

Health Total Rate 9.11% 9.11% 8.18% 8.18% 9.11% 8.18% 8.18% 8.18% 8.18%

DTL2 Records

DB Contribution Total

24.32% 24.13% 23.20% 20.96% 21.89% 20.96% 23.39% 20.96% 20.96%

DC CONTRIBUTIONS

DC Employer Contributions 0.00% 1.00% 1.00% 3.00% 4.00% 4.00% 0.00% 0.00% 4.00%

Personal Healthcare Fund 0.00% 0.00% 2.00% 2.00% 0.00% 2.00% 2.00% 0.00% 0.00%

DTL4 Records

DC Contribution Total

0.00% 1.00% 3.00% 5.00% 4.00% 6.00% 2.00% 0.00% 4.00%

Employer Contribution RatesFY 2013-2014 - Effective October 1, 2013

Basic/MIP With Premium

Subsidy

Pension Plus With Premium

Subsidy

Pension Plus PHF

Pension Plus to DC with

PHF

Basic/MIP to DC With Premium Subsidy

Basic/MIP to DC With PHF

Basic/MIP With PHF

*DB Retirees Returned to

Work*

*DC Retirees Returned to

Work*

DB CONTRIBUTIONS      

PENSION CONTRIBUTIONS                  

Pension Normal Cost 2.90% 2.67% 2.67% 0.00% 0.00% 0.00% 2.90% 0.00% 0.00%

Pension UAAL*   14.08% 14.08% 14.08% 14.08% 14.08% 14.08% 14.08% 14.08% 14.08%

Pension Early Retirement Incentive 1.36% 1.36% 1.36% 1.36% 1.36% 1.36% 1.36% 1.36% 1.36%

Pension Total Rate 18.34% 18.11% 18.11% 15.44% 15.44% 15.44% 18.34% 15.44% 15.44%

HEALTH CONTRIBUTIONS              

Health Normal Cost 0.93% 0.93% 0.00% 0.00% 0.93% 0.00% 0.00% 0.00% 0.00%

Health UAAL* 5.52% 5.52% 5.52% 5.52% 5.52% 5.52% 5.52% 5.52% 5.52%

Health Total Rate 6.45% 6.45% 5.52% 5.52% 6.45% 5.52% 5.52% 5.52% 5.52%

DTL2 RecordsDB Contribution Total

24.79% 24.56% 23.63% 20.96% 21.89% 20.96% 23.86% 20.96% 20.96%

DC CONTRIBUTIONS                  

DC Employer Contributions 0.00% 1.00% 1.00% 3.00% 4.00% 4.00% 0.00% 0.00% 4.00%

Personal Healthcare Fund 0.00% 0.00% 2.00% 2.00% 0.00% 2.00% 2.00% 0.00% 0.00%

DTL4 RecordsDC Contribution Total

0.00% 1.00% 3.00% 5.00% 4.00% 6.00% 2.00% 0.00% 4.00%

Employer Contribution RatesFY 2014-2015 - Effective October 1, 2014

Basic/MIP With Premium

Subsidy

Pension Plus With Premium

Subsidy

Pension Plus PHF

Pension Plus to DC with

PHF

Basic/MIP to DC With Premium Subsidy

Basic/MIP to DC With PHF

Basic/MIP With PHF

*DB Retirees Returned to

Work

*DC Retirees Returned to

Work

DB CONTRIBUTIONS      

PENSION CONTRIBUTIONS                  

Pension Normal Cost 4.31% 3.23% 3.23% 0.00% 0.00% 0.00% 4.31% 0.00% 0.00%

Pension UAAL*   17.40% 17.40% 17.40% 17.40% 17.40% 17.40% 17.40% 17.40% 17.40%

Pension Early Retirement Incentive 1.36% 1.36% 1.36% 1.36% 1.36% 1.36% 1.36% 1.36% 1.36%

Pension Total Rate 23.07% 21.99% 21.99% 18.76% 18.76% 18.76% 23.07% 18.76% 18.76%

HEALTH CONTRIBUTIONS              

Health Normal Cost 0.51% 0.51% 0.00% 0.00% 0.51% 0.00% 0.00% 0.00% 0.00%

Health UAAL* 2.20% 2.20% 2.20% 2.20% 2.20% 2.20% 2.20% 2.20% 2.20%

Health Total Rate 2.71% 2.71% 2.20% 2.20% 2.71% 2.20% 2.20% 2.20% 2.20%

DTL2 RecordsDB Contribution Total

25.78% 24.70% 24.19% 20.96% 21.47% 20.96% 25.27% 20.96% 20.96%

DC CONTRIBUTIONS                  

DC Employer Contributions 0.00% 1.00% 1.00% 3.00% 4.00% 4.00% 0.00% 0.00% 4.00%

Personal Healthcare Fund 0.00% 0.00% 2.00% 2.00% 0.00% 2.00% 2.00% 0.00% 0.00%

DTL4 RecordsDC Contribution Total

0.00% 1.00% 3.00% 5.00% 4.00% 6.00% 2.00% 0.00% 4.00%

Retirees Returning to Work - P.A. 464

Retirees Returning to WorkWhy PA464? Prevents offloading costs onto other reporting

units Ensures retirement system funding stability

Retirees Returning to Work Critical Shortage State Superintendent has defined the list Any retiree must have been retired for 12

months prior to reemployment Retirees must be directly hired by the school School will need to pay UAAL* for pension and

health (20.96%) School must report retiree based on their payroll

frequency

Retirees Returning to Work

Critical Shortage List Positions Applies to K-12 school districts, intermediate school districts, public school

academies, and charter schools, but not community colleges or district libraries.

Who Hired Retiree?

Retirement Effective

Date

Length of Retirement

Reporting Unit Action

DB Retiree

Reporting Unit Action

MIP/Basic Conversion to DC

Retiree

DB Retiree Restrictions

MIP/Basic Converted to DC Retiree Restrictions

Reporting Unit ONLY

Any retirement effective date

12 months or more

Reporting unit must report to ORS. Reporting unit must pay 100% of 20.96% UAAL* on earnings.

Reporting unit must report to ORS. Reporting unit must pay 100% of 20.96% UAAL* on earnings. Reporting unit must pay 4% employer contribution to 401(k). 

May work for 3 year period or until July 1, 2014, whichever comes first without an earnings limit.

May work for 3 year period or until July 1, 2014, whichever comes first without an earnings limit.

Retirees Returning to Work

Substitute Teachers Hired directly by Reporting Unit, Third Party

Administrator, or Independent Contractor Must pay the Pension and Healthcare UAAL*

(20.96%) Report earnings to ORS by payroll frequency

Retirees Returning to Work

Substitute Teachers Applies to K-12 school districts, intermediate school districts, public school

academies, charter schools, community colleges, and district libraries.

Who Hired Retiree?

Retirement Effective Date

Length of Retirement

Reporting Unit Action

DB Retiree

Reporting Unit Action

MIP/Basic Conversion to DC

Retiree

DB Retiree Restrictions

MIP/Basic Converted to DC Retiree Restrictions

Reporting Unit or 3rd Party Vendor or Independent Contractor

After July 1, 2010

1 month or more

Reporting unit must report to ORS. Reporting unit must obtain earnings from 3rd party vendor or independent contractor and report it to ORS. Reporting unit must pay 100% of 20.96% UAAL* retiree earnings.

Reporting unit must report all retirees. Reporting unit must obtain earnings from 3rd party vendor or independent contractor and report it to ORS. Reporting unit must pay 100% of 20.96% UAAL* earnings. Reporting unit must pay 4% employer contribution to 401(k).

Subject to 1/3 of FAC earnings limit.

Subject to 1/3 of FAC earnings limit.

Retirees Returning to Work

School Improvement Facilitator or Instructional Coach Hired by Third Party Administrator, or Independent

ContractorMust pay the Pension and Healthcare UAAL* (20.96%)Report earnings to ORS by payroll frequency

Hired directly by Reporting UnitCritical Shortage provisions apply

Retirees Returning to Work

School Improvement Facilitator or Instructional Coach

Who Hired Retiree?Retirement

Effective DateLength of

RetirementReporting Unit Action

DB Retiree

Reporting Unit ActionMIP/Basic Conversion to DC

Retiree

DB Retiree Restrictions

MIP/Basic Converted to DC Retiree Restrictions

1. Reporting Unit(Including community colleges and district libraries.)

After July 1, 2010

1 month, but less than 12 months

Reporting unit must report all retirees. Reporting unit does not pay UAL.

Reporting unit must report all retirees. Reporting unit does not pay UAL. Reporting unit must pay 4% employer contribution to 401(k).

Subject to 1/3 of FAC earnings limit.

Subject to 1/3 of FAC earnings limit. 

1. Reporting Unit After July 1, 2010

12 months or more

Covered under the Critical Shortage Provision (K-12 school districts, intermediate school districts, district libraries, public school academies, and charter schools, but not a community college or a district library.). See A. Critical Shortage chart and notes. Once the Critical Shortage provision no longer applies, the rules revert to see above line item.

1. 3rd Party Vendor or Independent Contractor

After July 1, 2010

Reporting unit (including community colleges and district libraries) must report all retirees. Reporting unit (including community colleges and district libraries) must obtain earnings from 3rd party vendor or independent contractor and report them to ORS> Reporting unit (including community colleges and district libraries) must pay 100% of 20.96% UAAL* on retiree earnings.

Reporting unit (including community colleges and district libraries) must report all retirees. Reporting unit (including community colleges and district libraries) must obtain earnings from 3rd party vendor or independent contractor and report it to ORS. Reporting unit (including community colleges and district libraries) must pay 100% of 20.96% UAAL* on earnings. Reporting unit (including community colleges and district libraries) must pay 4%

Subject to 1/3 of FAC earnings limit.

Subject to 1/3 of FAC earnings limit. 

Retirees Returning to Work

Core Service applies to those who retired on or after July 1, 2010 If returning to work in a core service position – no

changeRetiree employed directly by Reporting Unit – subject to 1/3

earnings limitRetiree employed directly by entity other than Reporting Unit

– forfeit pension and healthcare subsidy until termination

GASB 68

GASB 68

Effective for fiscal year 2015. Liabilities. Expenses. Measured as of the plan’s fiscal year end.

GASB 68

Accounting (reporting) changes, not required funding changes.

The reporting units will be provided the liability and expense amounts.

What are the most likely allocation methods? GASB has not yet released the GASB 68

implementation guide. This guide will presumably provide more guidance on acceptable allocation methods.

Questions???

ORS Contact Information

Employer Reporting Website: www.michigan.gov/psru Call Center: 517-636-0166

Andy Kolp 517-636-0143 or kolpa@michigan.gov

Angie Schrauben 517-322-6547 or schraubena@michigan.gov

ORS Contact Information

Member Website www.michigan.gov/orsschools

Member Customer Service 800-381-5111

Member Self Service www.michigan.gov/orsmiaccount