What Types of Michigan State Pensions are offered?
While there are many private pension programs available in Michigan, two main state-funded programs exist for public state employees. The state-funded programs currently available are:
The ORS pension program is available for all public state employees. Within this pension program, state employees in the military, police and judge fields will find separate benefits programs designed specifically for such areas of employment.
The ORSschools program is specifically designed for Public School employees
Description of the ORS State Employee Pension Plan
There are two plan types for the ORS state employee program that members can chose from. Each program will depend on election by employee and years of service. Plans include:
The Defined Contribution Plan (DC) – Hired by the State after March 31, 1997 or began employment under the Defined Benefit plan and elected to change. The DC plan has two options available for the health care plan:
- The Personal Healthcare fund- employer will match up to 3% of the amount contributed by the employee into a 401K fund. The state may match up a 2% contribution in addition to employer percentages. Employees are immediately vested in personal payroll contributions. Employer contributions are vested 50% after two years of employment, 75% after 3 years and 100% from 4 years and on. Most employers require a 3% payroll contribution from the employee in order to qualify for the match.
- The Graded Premium Subsidy allows employees to keep current health insurance premiums which include 30% after the ten year vesting period and an additional 3% yearly for every year past vesting date.
The Defined Benefit Plan (DB) – Election is by the individual for this plan or elected this DB 30 plan and has not yet reached the 30 years of credited service. Under the DB plan, the state contributes a specific amount to the retirement fund that is determined by an actuary yearly. The employee contributes 4% of each payroll and gains interest on contributions.
To be eligible for full retirement, the employee must be at least age 55 with at least 30 years of credited service or age 60 with 10 years. Early reduced retirement can be obtained at age 55 with between 15 and 30 years of credited service. Benefits are reduced by .50% for every month that the employee retires under age 60. The following exceptions apply for specific state fields:
- Those responsible for the custody and supervision of prisoners may receive supplemental benefits at age 51 with 25 years in an eligible position or at age 56 with 10 years in a covered field.
- Conservation Officers can draw their pension once 25 years of service has been reached at any age as long as at least 20 of the years are employed as a conservation officer.
- Michigan Health Facility employees whose facilities closes may take retirement if the last 5 years have been employed in the facility and they have reached age 51 with 25 years of service. This may also be taken if the employee is age 56 with 10 years of service.
The cost of living adjustment for the DB plan is a fixed 3% yearly increase that cannot exceed 25$ per month or $300 a year. Each employee monthly benefits are different, based on a state calculation using factors such as final annual pay, years of service and qualifying deductions. A reward letter mailed to employee after retirement qualifications have been confirmed will state the benefit amount.
The combined DB and DC plan- this is reserved for employees that have either elected the DB 30 plan and have reached 30 years of service, elected the DB/DC blend plan or began employment under the DB plan and left service to return after January 1, 2012.
State police members ORS benefits are calculated based on the highest five years of consecutive earnings, number of service years and a pension factor. Employee contributions are 4% of payroll. Police are eligible for benefits at age 55 with 25 years of service or age 60 with 10 years vesting years.
Judges qualify for either the DB or DC plans listed above and includes the Governor, and other active state government members as well as both judges and Probate judges.
Benefits for those who have previously acted in the military are available for those separated from service that are at least age 55 and have served a minimum of 19 years, 6 months and 1 day in active National Guard service, State Defense Forces or Michigan National Guard. Benefits are a set amount at 600$ per year or $50 per month and can be combined with the ORS DC or DB benefits.
Description of the ORSchools State Pension Program
Public school pensions benefit amounts are calculated using a state formula which includes the final average wages yearly multiplied by a 1.5% pension factor times years of credited service. Employee contributions are 3.9% for qualifying basic retirement pensions and 3% for retirement plus members. Pension contributions may change based on the date in which the employee was enrolled in the pension. The employer matches a particular percentage based on specific employment. Employees may also elect to contribute to a pretax health care program with varying contributions.
Public school employees may take retirement benefits after reaching specific ages and years of service include:
- Full retirement may be taken when employee reaches age 46 with 30 years vested service, 60 years with 10 years of service or age 60 still working with 5 years of service. Basic full retirement may be taken at either age 60 with 10 years vested service or age 55 with 30 years.
- Reduce benefit retirement can be taken at age 55 still working with between 15 and 30 years of service.
- Death benefits for survivors while still on duty do not have a vesting period.
- Disability is available after 10 years of service and at any age