Make the Rest of Make the Rest of Your Life the Best Your Life the Best

of Your of Your LifeLife

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

MPSERS(Michigan Public School Employees Retirement

System)

MPSERS Provides Two Benefits to the Retiree

1. Pension Benefits (Income)

2. Health Insurance (Master Medical, Prescription, Dental, Vision, Hearing)

Retirement Income Goals:

From Where Could I Receive Income?

Income Previous to Retirement

100%

Retirement Income

Goal70% - 90%

MPSERS 35 - 45%

How MPSERS

Calculates your Benefits

Total Number Years of ServiceX

Average SalaryX

Multiplier

Annual Income from Option 1(No Survivorship Benefit)

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

• Full Retirement

• Early Reduced

• Deferred

• Age 60 and up

MPSERS(Option 1 Defined Benefit Calculation)

Years of Service

X X X1.5% 1.5% 1.5%

Average Salary

X1.5%

Annual IncreasePotential 13th

Check

3% Non-compounding

Increase

Formula Basic

60 Highest Consecutive

Months

Age 55 w/30 Years of Service

X X

30 Years of Service

Pension Plus

MIP

Age 60 w/25 Years of Service

No Increase

X X

60 Highest Consecutive

Months

36 Highest Consecutive

Months

Multiplier Multiplier Multiplier

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 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

Different Multipliers: Choice of one of four options1.Maintain 1.5% multiplier with added cost2.Maintain 1.5% multiplier until you reach 30 years then switch to 1.25%3.Reduce your multiplier to 1.25% for the balance of your career with no added increase4.Freeze Pension - 4% deposited in a retirement account

9

2012 Changes Pension Reform

10

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

Total Number Years of ServiceX

Average SalaryX

1.5%

Annual Income from Option 1(No Survivorship Benefit)

How MPSERSCalculates your

BenefitsIf you elected 1.5%

12

Your Projected Annual Straight Life MPSERS Benefit

Pre 2012Years of Service

Post 2012Years of Service

X

Average Salary=

X1.5%

X

1.25%

How MPSERSCalculates your

BenefitsIf you elected 1.25%

13

How MPSERSCalculates 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.

Different Multipliers: You picked one of four options1.Maintain 1.5% multiplier with added cost2.Maintain 1.5% multiplier until you reach 30 years then switch to 1.25%

3.Reduce your multiplier to 1.25% for the balance of your career with no added increase4.4% deposited in a retirement account

14

2012 Changes Pension Reform

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

• 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

15

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%

16

2012 Changes Healthcare

Member ID: ____________________R0009C (Rev. 7/2008) - 2 -ORS Public School EmployeesRetirement Application (continued)Section IV: Election of Pension Option and BeneficiaryPension Option: Read about each option in the instructions and the Retirement Readiness. Be sure you understand howthis choice will affect your pension amount and any potential survivor benefits. Select your desired option. Nocorrections or visible erasures are permitted on this page. If you make a mistake, you can print a new page atwww.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 largerpension 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 onlyname 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 FemaleSTOP Do not sign until you are in front of a Notary Public. All signatures must be notarized AT THE SAME TIME.

R0009C (Rev. 7/2008) - 2 -

ORS Public School EmployeesRetirement Application (continued)

Section IV: Election of Pension Option and Beneficiary

4 OPTIONS

Pension Options

Who can be my Pension

Beneficiary?

Spouse (If someone else is elected,

spouse must sign off)

ChildParentBrotherSister

(Dependency is not required)

MPSERS Retirement OptionsWhich is Best for You???

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.

Straight LifeOption 1

100% SurvivorshipOption 2

75% SurvivorshipOption 3

50% SurvivorshipOption4

YOU

$1,500

$1,100

$1,200

$1,300

BENEFICIARY

$0.00

$1,100

$900

$650

BENEFICIARY PERCENTAGE

0%

100%

75%

50%

BENEFICIARY HEALTH

No

Yes

Yes

Yes

Pop Up

No

Yes

Yes

Yes

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

What option would you choose?

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

Retirement Income Goals:From where could I receive income?

MPSERS 35 - 45%

SS/E-Opt 10% - 15%

Income Previous to Retirement

100%

Retirement Income

Goal70% - 90%

The Equated The Equated DifferenceDifference

Should I Take

Equated or Not?

ORS Public School EmployeesRetirement Application (continued)

Section IV: Election of Pension Option and BeneficiaryPension Option: Read about each option in the instructions and the Retirement Readiness. Be sure you understand howthis choice will affect your pension amount and any potential survivor benefits. Select your desired option. Nocorrections or visible erasures are permitted on this page. If you make a mistake, you can print a new page atwww.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 onlyname 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

The Equated Option

MPSERS Straight LifeMPSERS Straight Life(Example)

Retirement Income Without Equated Plan:

Social Security $1,100Age 55

Retirement Income With Equated Plan:

Initial Pension + Equated $2,000

AGE 62

AGE 62

Social Security $1,100

Initial Pension $1,500 Pension Amount Unchanged at 62

Pension Reduced to $900

Age 55

Social Security

1. Three significant ages for collecting Social Security

2. Reduced Benefits

3. Full Retirement Age

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

Retirement Income Goals:From where could I receive income?

MPSERS 35 - 45%

SS/E-Opt 10% - 15%

Personal Savings25 - 30%

Income Previous to Retirement

100%

Retirement Income

Goal70% - 90%

MPSERS $14,000 - $18,000

SS/E-Opt$4,000 - $6,000

Personal Savings

$10,000 - $12,000

Retirement Income Goals:Where Will My Income Come From?

Income Previous to Retirement

Retirement Income

Goal

$40,000 $28,000 - $36,000

Personal Retirement Savings

What is a403(b)?

How much can I

contribute?

403(b) Deferral Limits for 2012

100% of CompensationUp 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 YrsAmounts 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?

1. To increase your pension

2. To retire early

Methods of purchasing years of service

1. Pay by check (after tax)

2. Tax Deferred Purchase (TDP)

3. Transfers from Qualified Accounts

(8% simple interest of the unpaid balance

as of July 1st of each year)

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 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.

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

Retirement Income Goals:From where could I receive income?

MPSERS 35 - 45%

Income Previous to Retirement

100%

Retirement Income

Goal70% - 90%

Income of 1/3 FAC

Working for a Public School

Retirement Income Goals:From where could I receive income?

MPSERS 35 - 45%

Income Previous to Retirement

100%

Retirement Income

Goal70% - 90%

OtherIncome

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 Master Health Care Plan

Your retirementhealth care benefit

is very differentfrom what you have today

Health Care Benefit

If you will receive a pension check from MPSERS, you will qualify for a Health Care Plan, which includes:

1. Major Medical } Sign up in two parts:

2. Prescriptions } Part 1 is MM/P, and

3. Hearing } Hearing

4. Dental ]

5. Vision ] Part 2 is D,V

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)

•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.

46

•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 differencesbetween traditional

and HMO plans

Preventative services

Deductible

Office/medical copay

Prescription copay

Network availability

Other

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)Health Care

BenefitBCBSM & Catamaran (formerly

Catalyst Rx)

Blue Care Network

Health Alliance Plan

Priority Health

Prescription copay

20% copay - $7 min/$36max retail (1 mo.); $17.50

min/$90 max mail in (3 mo); add’l

charge on maint. drug on/after 4th fill, if don’t use

most cost-effective venue. $1,000 indiv drug

copay max - formulary drugs;

40% out-of-pocket non-formulary

drugs

$10 generic copay; $40 brand

copay; inc. contraceptives;

sexual dysfunction drugs 50% co-ins. Mail order copay: 2x normal copay

(up to 90 day supply)

Copay $15 generic;

$45preferred brand; $70 non-preferred brand and speciality

drug-ded N/A. Up to a 3 mo supply

for 2 copays through mail order and select retail

pharmacies

Copay Generic $10;pref brand

$40 at retail pharmacy (1 mo); Non-pref brand: $70; Specialty

20% co-ins max $100 per Rx

Mail order copay: 2x normal copay

(up to 90 day supply).

In Summary

1. Pension Benefits (Income)

2. Comprehensive Health Insurance (Master Medical, Prescription, Dental, Vision)

Michigan Public School Retirees have one of the best

programs in the country!

www.marsp.orgstaff@marsp.org

517-337-1757 – phone888-960-4022 – toll free517-337-8560 – fax

PO Box 23214Lansing MI 48909

Contact MARSP at: