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Make the rest of your life the best of your life

Make the Rest of Your Life the Best of Your Life

Understanding your MPSERS Benefits and Retirement Planning

No part of this presentation may be copied or reproduced

in any form or by any means, without the expressed written permission of

MARSP Retirement Planning Services, LLC


Make the rest of your life the best of your life

  • MPSERS

  • (Michigan Public School Employees Retirement System)

  • MPSERS Provides Two Benefits to the Retiree

    • Pension Benefits (Income)

    • Health Insurance (Master Medical, Prescription, Dental, Vision, Hearing)


Make the rest of your life the best of your life

Retirement Income Goals:

From Where Could I Receive Income?

Income

Previous to

Retirement

100%

Retirement

Income

Goal

70% - 90%

MPSERS

35 - 45%


Make the rest of your life the best of your life

How MPSERS

Calculates your Benefits

Total Number Years of Service

X

Average Salary

X

Multiplier

Annual Income from Option 1

(No Survivorship Benefit)


Pension qualifiers for employees hired pre 7 1 2010

Pension Qualifiers(for employees hired pre 7/1/2010)

Full Retirement

Early Reduced

Deferred

Age 60 and up


Mpsers option 1 defined benefit calculation

MPSERS(Option 1 Defined Benefit Calculation)

Multiplier

Multiplier

Multiplier


Post 2008 2011 changes

Post 2008-2011 Changes

  • Impact of buying years of service on insurance subsidy

  • Increase in MIP Contributions

  • Working after Retirement

  • Creation of Pension Plus

  • 3% Contribution to Health Care Trust


2012 changes new michigan tax laws

2012 ChangesNew Michigan Tax Laws

The effects are different depending on age

  • Born before 1946

    • No pension tax impact

  • Born 1946 – 1952

    • Until age 67, will have a pension exemption of

      $20,000 for single, $40,000 for married

    • After age 67, will have an income exemption of

      $20,000 for single, $40,000 for married

  • Born after 1952

    • Until age 67, will have no exemptions

    • After age 67, will have an income exemption of

      $20,000 for single, $40,000 for married


Make the rest of your life the best of your life

2012 Changes Pension Reform

Different Multipliers:

Choice of one of four options

  • Maintain 1.5% multiplier with added cost

  • Maintain 1.5% multiplier until you reach 30 years then switch to 1.25%

  • Reduce your multiplier to 1.25% for the balance of your career with no added increase

  • Freeze Pension - 4% deposited in a retirement account


Make the rest of your life the best of your life

2012 Changes New Cost

To Keep The 1.5% Multiplier:

  • MIP Members will pay 7%

  • Basic Members will pay 4%

  • Pension Plus employees have no changes


Make the rest of your life the best of your life

How MPSERS

Calculates your Benefits

If you elected 1.5%

Total Number Years of Service

X

Average Salary

X

1.5%

Annual Income from Option 1

(No Survivorship Benefit)


Make the rest of your life the best of your life

How MPSERS

Calculates your Benefits

If you elected 1.25%


Make the rest of your life the best of your life

How MPSERS

Calculates your Benefits

If you elected 4% DC Plan

  • Benefits under the defined benefit system are frozen and starting in 2012 you will be in a defined contribution plan. You have a 4 percent employer contribution going to a 401k. Employees would qualify for a 1.5 percent multiplier on all existing accrued benefits.


Make the rest of your life the best of your life

2012 Changes Pension Reform

This is the default if you didn’t elect a choice on Miaccount

Different Multipliers: You picked one of four options

  • Maintain 1.5% multiplier with added cost

  • Maintain 1.5% multiplier until you reach 30 years then switch to 1.25%

  • Reduce your multiplier to 1.25% for the balance of your career with no added increase

  • 4% deposited in a retirement account


Make the rest of your life the best of your life

2012 Changes Healthcare

  • If hired before 2008, you will have a maximum of 80% Healthcare subsidy and pay 3% into the Retiree Healthcare Fund

  • If you chose to opt out of the retirement healthcare you do not pay 3% in Retiree Healthcare Fund and receive a matching contribution (2% employee / 2% employer) into a personal healthcare fund


Make the rest of your life the best of your life

2012 Changes Healthcare

  • Hired since July 2008, you will have a graded subsidy, 10 years 30% with an additional 4% each year worked, maximum of 80%

  • If you are retired and age 65 or older on January 1, 2013 no change in subsidy

    • maximum 90%


Make the rest of your life the best of your life

Member ID: ____________________

R0009C (Rev. 7/2008) - 2 -

ORS Public School Employees

Retirement Application (continued)

Section IV: Election of Pension Option and Beneficiary

Pension Option: Read about each option in the instructions and the Retirement Readiness. Be sure you understand how

this choice will affect your pension amount and any potential survivor benefits. Select your desired option. No

corrections or visible erasures are permitted on this page. If you make a mistake, you can print a new page at

www.michigan.gov/ORSschools.

I elect the following pension option (select one):

Straight Life 100% Survivor 75% Survivor 50% Survivor

Equated Option: I wish to combine the above pension option with the Equated Plan. I understand I will receive a larger

pension until age 62 when it will be permanently reduced. I have enclosed a Social Security estimate with this application.

Beneficiary Designation: If you selected a survivor pension option above, you MUST name a beneficiary. You can only

name one person as beneficiary. See instructions for eligible beneficiaries. If you selected a straight life option above,

your beneficiary named below will receive a one-time refund of contributions, if any.

Beneficiary Name: _______________________________________ Relationship: ____________________________________

Beneficiary’s SSN: _______________________________________ Birth Date: ___________ Male Female

STOP Do not sign until you are in front of a Notary Public. All signatures must be notarized AT THE SAME TIME.

Pension Options

R0009C (Rev. 7/2008) - 2 -

ORS Public School Employees

Retirement Application (continued)

Section IV: Election of Pension Option and Beneficiary

4 OPTIONS


Who can be my pension beneficiary

Who can be my Pension Beneficiary?

Spouse(If someone else is elected,

spouse must sign off)

Child

Parent

Brother

Sister

(Dependency is not required)


Make the rest of your life the best of your life

MPSERS Retirement Options

Which is Best for You???

BENEFICIARY PERCENTAGE

0%

100%

75%

50%

BENEFICIARY

HEALTH

No

Yes

Yes

Yes

YOU

$1,500

$1,100

$1,200

$1,300

BENEFICIARY

$0.00

$1,100

$900

$650

Pop Up

No

Yes

Yes

Yes

Straight Life

Option 1

100% Survivorship

Option 2

75% Survivorship

Option 3

50% Survivorship

Option4

Monthly benefits are based on a retiree who has 30 years of service and an FAC of $40,000, Benefits will vary depending on each individuals circumstance.


Make the rest of your life the best of your life

The pension option selected for your spouse at retirement is permanent.

What option would you choose?


100 survivorship option the honey i love you option

Compared To Straight Life, You Are Reducing Your Pension Benefit By:

$400.00 Per Month

$4,800. Per Year

$144,000 In the First 30 Years of Retirement!

100% Survivorship Option the “Honey I Love You Option”


New spouse benefit jan 01 2009

Allows you to add a new spousal beneficiary if your spouse at retirement dies before you or you are single at retirement and marry later.

179 days-1 year to enroll new spouse after marriage

Not available for non-spouse beneficiary

“New Spouse” Benefit(Jan 01, 2009)


Make the rest of your life the best of your life

Retirement Income Goals:

From where could I receive income?

Income

Previous to

Retirement

100%

Retirement

Income

Goal

70% - 90%

SS/E-Opt

10% - 15%

MPSERS

35 - 45%


Make the rest of your life the best of your life

The Equated Difference

Should I Take

Equated or

Not?


Ors public school employees retirement application continued

ORS Public School EmployeesRetirement Application (continued)

The Equated Option

Section IV: Election of Pension Option and Beneficiary

Pension Option: Read about each option in the instructions and the Retirement Readiness. Be sure you understand how

this choice will affect your pension amount and any potential survivor benefits. Select your desired option. No

corrections or visible erasures are permitted on this page. If you make a mistake, you can print a new page at

www.michigan.gov/ORSschools.

I elect the following pension option (select one):

Straight Life 100% Survivor 75% Survivor 50% Survivor

Equated Option: I wish to combine the above pension option with the Equated Plan. I understand I will receive a larger pension until age 62 when it will be permanently reduced. I have enclosed a Social Security estimate with this application.

Beneficiary Designation: If you selected a survivor pension option above, you MUST name a beneficiary. You can only

name one person as beneficiary. See instructions for eligible beneficiaries. If you selected a straight life option above,

your beneficiary named below will receive a one-time refund of contributions, if any.

Beneficiary Name: _______________________________________ Relationship: ____________________________________

Beneficiary’s SSN: _______________________________________ Birth Date: ___________ Male Female


Make the rest of your life the best of your life

MPSERS Straight Life

(Example)

Retirement Income Without Equated Plan:

AGE 62

Social Security

$1,100

Age 55

Initial Pension $1,500 Pension Amount

Unchanged at 62

Retirement Income With Equated Plan:

Age 55

AGE 62

Initial Pension + Equated

$2,000

Social Security

$1,100

Pension Reduced to $900


Social security

Social Security

Three significant ages for collecting Social Security

Reduced Benefits

Full Retirement Age


Significant ages regarding social security

Significant Ages Regarding Social Security

  • Reduced benefits as early as age 62

  • Full benefits at full retirement (ages 65 to 67)

  • Increased benefits, if benefits are delayed beyond full retirement age to as late as age 70


Make the rest of your life the best of your life

Retirement Income Goals:

From where could I receive income?

Personal

Savings

25 - 30%

Income

Previous to

Retirement

100%

Retirement

Income

Goal

70% - 90%

SS/E-Opt

10% - 15%

MPSERS

35 - 45%


Make the rest of your life the best of your life

Retirement Income Goals:

Where Will My Income Come From?

Personal

Savings

$10,000 - $12,000

Income

Previous to

Retirement

Retirement

Income

Goal

SS/E-Opt

$4,000 - $6,000

MPSERS

$14,000 - $18,000

$40,000

$28,000 - $36,000


Personal retirement savings

What is a403(b)?

How much can I contribute?

Personal Retirement Savings


403 b deferral limits for 2012

403(b) Deferral Limits for 2012

100% of Compensation

Up To $17,000.00

403(b) Catch-up Provisions

Over Age 50 Catch-up $5500 per yr

*15 Yrs of Service - $3,000 for 5 Yrs

Amounts withdrawn from a 403(b) account are included in taxable ordinary income in the year distributed. Distributions prior to age 59 1/2 may be subject to a 10% IRS penalty.

*Assumes participant is eligible for catch-up


Purchasing years of service why would you want to purchase years of service

To increase your pension

To retire early

Purchasing Years of ServiceWhy would you want to purchase years of service?


Methods of purchasing years of service

Methods of purchasing years of service

Pay by check (after tax)

Tax Deferred Purchase (TDP)

Transfers from Qualified Accounts

(8% simple interest of the unpaid balance

as of July 1st of each year)


Purchasing time

Purchasing Time

Must have two years of service completed before you can purchase.

Employees hired after September 4, 2012 can no longer purchase years


Purchasing time1

Purchasing Time

CAUTION: If a member retires early as a result of purchasing time, the member pays 100% of the health insurance premium from the time of retirement until the member would have been normally eligible to retire.


Make the rest of your life the best of your life

Example of Health Insurance cost for a retiree & spouse who purchase one year of service credit after 7/1/08 and retires one year early

Monthly cost of MPSERS Master Medical Plan

MPSERS Dental & Vision

Total monthly Premium

Annual Premium

2012 Premiums

$ 1,198.69

$ 72.64

$ 1,271.33

$15,255.96


Make the rest of your life the best of your life

Retirement Income Goals:

From where could I receive income?

Income of 1/3 FAC

Working for a Public School

Income

Previous to

Retirement

100%

Retirement

Income

Goal

70% - 90%

MPSERS

35 - 45%


Make the rest of your life the best of your life

Retirement Income Goals:

From where could I receive income?

Other

Income

Income

Previous to

Retirement

100%

Retirement

Income

Goal

70% - 90%

MPSERS

35 - 45%


Working after retirement retirement date on or after 7 1 2010

Working After Retirement(retirement date on or after 7/1/2010)

  • Retirees employed by a reporting unit earning over 1/3 of their final average compensation will forfeit their pension and retiree healthcare benefit.

  • Retirees employed via a third party or independent contractor will have pension and retiree health care benefits suspended.


Mpsers information

www.michigan.gov/ors

Or call 800-381-5111

MPSERS Information


Mpsers master health care plan

MPSERSMaster Health Care Plan

Your retirement

health care benefit

is very different

from what you have today


Health care benefit

Health Care Benefit

If you will receive a pension check from MPSERS, you will qualifyfor aHealth Care Plan, which includes:

  • Major Medical}Sign up in two parts:

  • Prescriptions}Part 1 is MM/P, and

  • Hearing }Hearing

  • Dental]

  • Vision]Part 2 is D,V


Major medical and prescription mm p or hmo

Major Medical and Prescription (MM/P), or HMO

  • MPSERS retirees have choices

    • MM/P is BCBSM: Traditional PPO for under age 65; or Medicare PLUS Blue Group PPO after age 65; includes Catamaran (formerly Catalyst Rx) for prescriptions

    • HMOs: Blue Care Network; HAP; Priority Health

      • HMOs each have own prescription plan

    • Insurance Options Summary Comparison sheets are on the www.michigan.gov/orsschools website


Master health care program blue cross blue shield catamaran formerly catalyst rx

Master Health Care ProgramBlue Cross/Blue Shield & Catamaran (formerly Catalyst Rx)

PPO Plan – See any provider, but if out of network, you pay a higher percentage.

Annual deductible must be paid before benefits are paid (2012 deductible is $500/Individual).

No coverage for routine/preventive care.


Master health care program blue cross blue shield catamaran formerly catalyst rx cont

Master Health Care Program Blue Cross/Blue Shield & Catamaran (formerly Catalyst Rx) cont.

  • The only option if you permanently move out of Michigan.

  • Deductible and out-of-pocket maximums may be reduced by $100 by participating in Living Well program.

  • Prescription program provided by separate company –Catamaran (formerly Catalyst Rx.)


Key differences between traditional and hmo plans

Key differencesbetween traditionaland HMO plans

Preventative services

Deductible

Office/medical copay

Prescription copay

Network availability

Other


Same monthly premiums

Same Monthly Premiums

  • MM/P and HMO premium(Medicare Part B)

    • 2012 pre-Medicare = $99.90 deducted from MPSERS check

    • Add spouse for $55.35 ($24.87/Medicare)

  • Prescription premium

    • $12.00 per contract for Catamaran (formerly Catalyst Rx) prescription plan with BCBSM (pre- and post-Medicare), otherwise $0.00

    • $0.00 for HMO prescription plan

  • Dental/Vision = $3.63 per person


  • Prescription co pay 2012

    Prescription co-pay (2012)


    In summary

    In Summary

    • Pension Benefits (Income)

    • Comprehensive Health Insurance (Master Medical, Prescription, Dental, Vision)

    Michigan Public School Retirees have one of the best programs in the country!


    Make the rest of your life the best of your life

    Contact MARSP at:

    www.marsp.org

    [email protected]

    517-337-1757 – phone

    888-960-4022 – toll free

    517-337-8560 – fax

    PO Box 23214

    Lansing MI 48909


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