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Granholm to Propose Retirement Incentives for State Employees

New State Employees to Contribute 20 Percent of Health Care Premium Costs

February 2, 2010       Leave a Comment
By: Dave Rogers

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Governor Jennifer Granholm
 

Gov. Jennifer Granholm is proposing to further address Michigan's structural deficit by providing retirement incentives for state employees.

"With state revenue at historic lows, Michigan must continue to reduce the size of our public workforce through retirement incentives for approximately 7,000 eligible state employees and 39,000 eligible public school employees," Mrs. Granholm said.

In some instances, state employees who elect to retire would be allowed to continue to work up to 20 hours a week for up to three years.

Beginning as early as April 2010, new state employees will receive benefits under a new state health plan that is commensurate with health plans in the private sector pursuant to new agreements with state employee unions or state civil service rules.

Employees under this plan will contribute 20 percent of premium costs. The new health-care plan would allow state government to reduce its cost by more than 21 percent per person but still provide important health-care coverage for employees and their families.

The administration has unveiled a retirement incentive plan to reduce the size of the public workforce by offering both positive and negative incentives to approximately 7,000 state employees and 39,000 public school employees eligible for retirement.

The retirement incentive plan will require legislative approval in time for state employees to submit their retirement application between April 15 and May 15, 2010.


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State employees who are members of the defined benefit (DB) plan will experience the following changes effective October 1, 2010:
  • To ensure that the State Employees Retirement System (SERS) is financially sound, a 3 percent employee contribution will be reinstated.

  • Earned service credit capped at 30 years. Employees continuing in state service beyond 30 years will be moved to a defined contribution (DC) plan for any additional years of service accrued after September 30, 2010, excluding what is purchased by the employee.

  • Elimination of state-subsidized retiree vision and dental coverage as part of the state employee health plan for state employees retiring with an effective date after September 30, 2010. Retirees will be able to purchase this coverage for a monthly fee through the plan.

  • Increased retirement multiplier of 1.6 percent for eligible employees who retire with an effective date between July 1 and October 1, 2010. Details on eligibility will be included in the fiscal year 2011 executive budget recommendation.

  • Phased retirement option for retiring employees age 60 or older. Phased-in retirement will be allowed for up to three years, enabling them to collect their DB plan retirement with a workload of no more than 20 hours per week for a previously full-time employee. This option is available to the employee at management discretion.

    Public school employees who are members of the Michigan Public School Employees Retirement System (MPSERS) will be subject to the following changes effective October 1, 2010.

  • To ensure MPSERS is financially sound, employee contributions to the plan will increase by 3 percent for all employees except those in the MIP Plus program, whose contribution was increased in 2008. MIP Plus members contribution will increase by 0.9 percent.

  • Elimination of subsidized retiree vision and dental coverage for school employees retiring with an effective date after October 1, 2010. Retirees will be able to purchase this coverage for a monthly fee through the plan.

  • The retirement multiplier will be increased from 1.5 percent to 1.6 percent for employees who retire with an effective date between July 1 and September 1, 2010, which will be paid by the applicable school districts.

  • A new, more cost-effective retirement plan for new employees hired on or after October 1, 2010 will be created. New employees will participate in both a base defined benefit plan and a defined contribution plan.

  • Phased-in retirement will be allowed for up to three years for retiring employees, age 60 or older. They will be able to collect their DB plan retirement with a workload of no more than 20 hours per week for a previously full-time employee. This option is available to the employee at the discretion of the school districts.

    A limited number of state employees will be hired to replace those who choose to retire under this plan. The replacement of public school employees will be at the discretion of the local district.

    The retirement incentive plan will be outlined in greater detail when the executive budget recommendation for fiscal year 2011 is presented to the House and Senate Appropriations Committees on February 11, 2010. At that time, the Office of Retirement Services will post additional information about the retirement incentive plan on its web site at www.michigan.gov/ors. ###

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    Dave Rogers

    Dave Rogers is a former editorial writer for the Bay City Times and a widely read,
    respected journalist/writer in and around Bay City.
    (Contact Dave Via Email at carraroe@aol.com)

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