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MCCBOA Spring Workshop March 2, 2012

Office of Retirement Services. MCCBOA Spring Workshop March 2, 2012. Steve Crippen and John Donovan. Agenda. Introductions FY2013 & FY2014 Contribution rates Investment returns History of membership, especially regarding Community Colleges Healthcare Cost Containment Reform Q&A.

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MCCBOA Spring Workshop March 2, 2012

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  1. Office of Retirement Services MCCBOA Spring WorkshopMarch 2, 2012 Steve Crippen and John Donovan

  2. Agenda • Introductions • FY2013 & FY2014 Contribution rates • Investment returns • History of membership, especially regarding Community Colleges • Healthcare Cost Containment • Reform • Q&A

  3. Contribution Rates

  4. What Is Driving The Rates? • Recognition of investment losses over 5 years: • FY2014 still has FY2008 and FY2009 losses. • FY2015 will have FY2008 and FY2009 losses • FY2016 will have just FY2009 losses • Retirement Incentive of 2.66%: affects years FY2013 through FY2017

  5. What Is Driving The Rates? • Loss of membership: MPSERS • 2003 peak of 327,000 members • 2011 membership is 236,000 • Community Colleges membership • 2005: 21,599 • 2010: 22,556 • Healthcare has been managed very well

  6. Membership • Declined from 327,000 in 2003 to 236,600 in 2010 (27.6% decline in 8 years). • As membership declines, the contribution rate automatically increases. • If the 2011 population had remained at 2003 levels, the larger membership pool would have resulted in an FY 2011/2012 employer pension contribution rate at least 5 percent lower than it otherwise will be. • Health Care would be at least 2% lower

  7. Cost Containment

  8. Cost Containment

  9. Reform • No Legislation Introduced Yet • SERS reform • Refund 3% HCC • Member contributions for future service • Option to elect to Defined Contribution • Option to continue graded health premium or convert to “personal healthcare fund” • SERS new hires are in the personal healthcare fund

  10. Working After Retirement • Core Services • 1/3 Earnings Limit • Bona-fide Termination • Compensation/Earnings

  11. Core Services • Employee Class Codes and Definitions • Impact To Pension and Health Subsidy • Third Party Retiree Rehire Certification • http://www.state.mi.us/dmb/ors/emp/psru/docs/R0851C-Retiree-Rehire-Certification.pdf • Reporting Instruction Manual Appendix B

  12. Retiree Earnings Limit • Pre 7/1/2010 Earnings Limit • Post 6/30/2010 Earnings Limit • Earnings Versus Compensation • Annual Limit – No Proration

  13. Bona-fide Termination • 401a IRS - Tax Qualified Status • Pre-promise Of Re-employment • 30 Day Separation

  14. Member Resources • For General Retirement Questions • Information and Overview http://www.michigan.gov/orsschools • Member Account www.michigan.gov/orsmiaccount • Or Call: (800) 381-5111 • Pension Plus • Go To: http://www.mipensionplus.org

  15. Employer Resources • For General Reporting Questions • Go To: http://www.michigan.gov/psru • Call: (517) 636-0166 • Email: ORS_Web_Reporting@michigan.gov • Pension Plus • Go To: http://www.mipensionplus.org

  16. Questions?

  17. Thanks For Inviting Us

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