LEGISLATIVE REPORT
Senate Bill 1040 – Public School Employees Retirement Act Reform
Senate Bill 1040 amends the Michigan Public School Employees Retirement System (MPSERS) to restructure the public school employee retirement system and retirement health care system. This bill was introduced by Republican State Senator Roger Khan. Senate Bill 1040 passed the Michigan Senate on May 17, 2012 and has been sent to the State House of Representatives.
Retirement
Current employees would have to choose whether to:
- increase contributions to the retirement system,
- maintain current contributions to the retirement system, or
- stop contributing to the retirement system, and move to a 401k.
All new employees will be placed in a 401k retirement plan.
Heath Care
This bill also makes changes to the health care coverage for current and former employees. These employees will see their health care premium rise from the current 10 percent to 20 percent for health, dental, vision and hearing benefits.
The charts below further outline these changes.
Retirement
|
Increase Contribution Basic: to 5% MIP: to 8% |
Maintain 1.5% Retirement Multiplier |
|
|
Basic and Member Investment Plan Employees |
Maintain Contripbution Basic: 0% MIP: 3 - 6.4% |
Receive Reduced 1.25% Retirement Multiplier |
|
Make No Contribution |
Freeze Pension and Switch to 401(k) Plan |
Retiree Health Care
|
|
Current |
SB 1040 |
|
Current Retirees |
-Receive 90% premium coverage |
-Receive 80% premium coverage |
|
Current Employees Hired Before July 1, 2008 |
-Pay 3% toward retiree health care
-Receive 90% premium coverage after 10 years |
-No change
-Health care premium with maximum of 80% |
|
Current Employees Hired After July 1, 2008 |
-Pay 3% toward retiree health care
- Graded health care premium coverage of 30 percent after 10 years of service, with additional 3 percent coverage per year up to a maximum of 90% |
-No change
-Graded health care premium with maximum of 80%
|
|
New Hires After July 1, 2012 |
|
-Do not pay 3% toward retiree health care
-Enroll in 401(k) for health care in which state will provide up to 2% match
-Receive $2,000 lump sum from the state in health retirement account for those at least 60 years old and with at least 10 years of service at termination; or $1,000 if under 60 years with 10 years of service |
