Court Orders May Impact MPSERS Reform

Despite temporary restraining orders that may impact recent reform legislation, NMU staff and faculty members who participate in the Michigan Public School Employees Retirement System (MPSERS) are being advised to proceed online to miAccount, as originally scheduled, and select pension and healthcare contribution options.


The Michigan Court of Appeals has issued two restraining orders regarding the length of time of the election period—a Sept. 4-Oct. 26 window—and the constitutionality of the law’s changes to pension and retiree health benefits. The practical effect is that the window for making elections remains open until the courts take action. A hearing is tentatively scheduled for Nov. 1. If the order is lifted, the deadline could fall soon after. If the new provisions are found to be unconstitutional, employees will be allowed to rescind or change their elections.


As adopted, Senate Bill 1040 requires employees to choose one of four options related to the pension fund. They can increase their contribution rate to retain the current multiplier of 1.5 percent for future years of service or increase their contribution and retain the 1.5 percent multiplier until they reach 30 years of service, after which the contribution would return to the previous level with a 1.25 percent multiplier. Remaining options would be to maintain their current contribution level with a 1.25 percent pension factor or no longer contribute to the pension fund and be switched to a defined contribution plan with a 4 percent employer contribution to a tax-deferred 401(K).


SB 1040 also offers two healthcare options. Employees can either continue contributing 3 percent of their compensation to the Retiree Healthcare Fund and keep the premium subsidy benefit or stop paying the 3 percent and instead establish the Personal Healthcare Fund, a portable, tax-deferred fund that can be used to pay related expenses in retirement.


“We’ve had some people ask questions for clarification,” said Kristen Bjorne (Human Resources). “But if MPSERS members go out to the miAccount website, there are tools and calculators available to assist members in making decisions on which options may be best for them and their particular situations. What’s good for one person may not be in the best interest of someone else.”


For more information, read the Legislative Summary.



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Updated: October 23, 2012

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