Michigan Public Schools Retirement System

Transcription

1 Michigan Public Schools Retirement System How to Report Retirees Who Return to Work

2 Community Colleges and Universities

3 Retirees Returning to Work Why the need for changes? Prevent offloading costs onto other reporting units. Ensures retirement system funding stability. What are the changes? PA 300 of 2012 introduced Qualified Participants.

4 Retirees Returning to Work Qualified Participants A Qualified Participant is: An individual who has a Defined Contribution (DC) component to their retirement plan. DC and/or the Personal Healthcare Fund (PHF). If a Qualified Participant returns to work, the employee and employer contributions to their DC plan resume. Once a Qualified Participant, always a Qualified Participant. Must pay the Pension and Healthcare UAAL* and DC contributions on all former Qualified Participant who return to work. Reference the communication that provided the contribution rates, this will be your guide when reporting qualified participants. The University rates were sent June 7, 2013 and the Community College rates were sent May 22, 2013.

5 Before You Hire a Retiree Bona Fide Termination Bona fide termination: the employee/employer relationship has been completely severed. Before a member terminates employment and begins collecting their pension, no promise of re-employment or a contract for future employment can be in place within a reporting unit. A retiree cannot work for or in a Michigan public school reporting unit during the month of their retirement effective date, even as a volunteer.

6 Retirees Returning to Work Core Services: Universities/Community Colleges Applies to those who retired on or after July 1, If returning to work in a core service position, only applies to retirees hired by a 3 rd party administrator or independent contractor. Retirees employed directly by entity other than Reporting Unit forfeit their pension and healthcare subsidy until bona fide termination. Retirees employed directly by Reporting Unit are subject to 1/3 earnings limit. Direct versus Indirect Employment Direct Employment- the employee is paid directly by the university or community college and subject to earn earnings limitations of 1/3 of the employees FAC. Indirect Employment- the employee is working for the university or community college but are paid by a 3 rd party administrator or independent contractor.

7 Core Services: Examples Core Services are those services that are important to the central purpose of a reporting unit. Simply put, core services include most teaching and administrative roles. Retirees must have a Bona Fide termination. Bob is a basic member (DB) who retired in He was hired as a independent contractor to work as a teacher. Because Bob retired before 2010, Core service rules do not apply and Bob would not be subject to earnings limitation guidelines. George is a basic member who retired September 1, 2010 (after July 1, 2010). He is hired by a community college to work as a independent contractor teaching Aircraft Mechanics. Teaching is a core service, therefore George will forfeit his pension and retiree insurance premium subsidy until his employment ceases. He may continue to receive the insurance but will be required to pay full insurance premiums. Once employment ends, ORS will request that the reporting unit put in writing this information so that the retiree can have his pension reinstated the first of the month following the termination 9/21/12

8 Core Services: Examples Rita is a Basic Member who elected Defined Contribution (DC) during the retirement reform. She is retiring June, When the school year starts in the fall, she is going to be hired by a third party to work as a Maintenance Supervisor for the University. Maintenance Supervisor is considered a core service. Rita would forfeit any DB pension until her employment with the third party ends. Because she is a qualified participant (converted to DC), the reporting unit must report her on their payroll frequency and pay UAAL. Once her employment ends, ORS will request that the reporting unit put in writing this information so that the retiree can have her pension reinstated the first of the month following the termination. Rita must ensure she has a bona fide termination and that she does not have a promise of reemployment in place before terminating her employment. If Rita has a promise of employment in place prior to termination, she would not be eligible to retire and would forfeit her pension. 9/21/12

9 Retirees Returning to Work Reporting Process: New Class Codes Class Code 9033 Non CS/ Direct Hire Retiree Teacher 9034 Non CS/ Direct Hire Retiree Admin 9035 Non CS/ Direct Hire Retiree Other Class Code Status New DTL1 DTL2 DTL4 Required with 1 st pay or demo changes Required Required for qualified participants

10 Retirees Returning to Work Next Steps Use Member Benefit Plan Link to identify retirees

11 Retirees Returning to Work 9/21/

12 Retirees Returning to Work Next Steps Adjustments should be completed by September 1, 2013 to avoid any late fees and interest charges. Identify if retirees who meet the new rules have been reported under 9003, 9004 or On most current, open report: Make negative adjustments for all applicable pay periods Make positive adjustments under the new class codes See section of the Reporting Instruction Manual for further instruction The contribution rates were sent to the universities on June 7, 2013 and community colleges on May 22, Please reference those communications as needed.

13 Retirees Returning to Work Employment Class Code Selection- Work with your technical team to implement the new class codes by the end of June. 9/21/12

14 Questions?

15 ORS Contact Information Employer Resources For General Reporting Questions Call: (517) Member Resources For General Retirement Questions Information and Overview: Member Account: or Call: (800)

16 ORS Contact Information Shared Resources Pension Plus Michigan Legislative Website

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