Contributions

The retirement system is funded by public school employer and employee contributions and by the investment earnings on those contributions. All contributions are a funding source for pensions and healthcare. They do not result in additional individual benefits. Learn more information about how your Defined Benefit (DB) pension contributions are applied to your account. 

When your pension payments begin, payments are first made from the DB pension contributions you paid into the system during your career. After these funds are exhausted, payments are made from the retirement system throughout the rest of your life. 

Who Contributes What

Employer DB pension contributions.

Each year an actuary determines how much the public schools need to contribute to fund its portion of member benefits. These contributions are not refundable to you or your employer.

Your DB pension contributions.

As a Basic 4%, MIP Fixed, MIP Graded, MIP Plus, or MIP 7% member, you also contribute a percentage of your salary to the pension fund. Basic, Basic DC Converted, and MIP DC Converted members do not contribute to the pension fund.

Basic 4%.

As a Basic 4% member you contribute 4% of your pretax salary to the pension fund starting Feb. 1, 2013.* You will continue to contribute 4% until you terminate your public school employment unless you chose to stop your contributions at 30 years of service (YOS). 

If you chose to stop your contributions at 30 YOS: 

  • You'll contribute 4% until you reach 30 YOS. 

  • You'll switch back to the Basic plan upon attaining 30 YOS and your contribution level will return to zero until you terminate your public school employment. 

Note: You might have other pension contributions - from earnings before July 1, 1977, or from purchased service credit - on account. 

MIP Fixed, MIP Graded, and MIP Plus.

As a MIP Fixed, MIP Graded, or MIP Plus member, your contribution rate depends on when you first begin working for a Michigan public school reporting unit.

  • MIP Fixed. If you elected the MIP before Jan. 1, 1990, or were a Basic plan member who enrolled in the MIP by Jan. 1, 1993, you contribute 3.9% of your pretax salary. 

  • MIP Graded. If you first worked between Jan. 1, 1990, and June 30, 2008, or are a returning member who did not work between Jan. 1, 1987, and Dec. 31, 1989, you contribute pretax contributions based on the following chart:
     
    COMPENSATION
    (school fiscal year earnings)
    MIP GRADED CONTRIBUTIONS
    $0 to $5,000 3% of compensation (up to $150 total)
    $5,000.01 to $15,000 $150, plus 3.6% of compensation from $5,000.01 up to and including $15,000 (up to $510 total)
    $15,000.01 and over $510, plus 4.3% of compensation over $15,000

 

  • MIP Plus. If you first worked between July 1, 2008, and June 30, 2010, you contribute pretax contributions based on the following chart:
     
    COMPENSATION
    (school fiscal year earnings)
    MIP PLUS CONTRIBUTIONS
    $0 to $5,000 3% of compensation (up to $150 total)
    $5,000.01 to $15,000 $150, plus 3.6% of compensation from $5,000.01 up to and including $15,000 (up to $510 total)
    $15,000.01 and over $510, plus 6.4% of compensation over $15,000

 

MIP 7%.

As a MIP 7% member you contribute 7% of your pretax salary to the pension fund starting Feb. 1, 2013.* You will continue to contribute 7% until you terminate your public school employment unless you chose to reduce your contributions at 30 YOS. 

If you chose to reduce your contributions at 30 YOS: 

  • You'll contribute 7% until you reach 30 YOS. 

  • You'll switch back to the MIP benefit structure (MIP Fixed, Graded, or Plus) upon attaining 30 YOS and your contribution level will return to the previous level until you terminate your public school employment (see the respective MIP contribution charts above for effective rates, depending on when you first began working for a Michigan public school reporting unit). 

Retiree Healthcare Contributions.

If you are a member with the premium subsidy benefit, you contribute 3% of your compensation to the Retiree Healthcare Fund to retain eligibility for the retiree health insurance premium subsidy offered by the state upon your retirement. 

These contributions are refundable in certain cases: 

  • If you leave public school employment and do not qualify for any premium subsidy and are at least age 60. 

  • If you die before becoming eligible for the subsidy benefit and your beneficiary is not eligible for a premium subsidy. 

  • If you die with retiree healthcare fund contributions still on account, and no survivor benefits are payable, we will refund any remaining contributions to your refund beneficiary or your estate. 

If you or your beneficiary are eligible for a refund of Retiree Healthcare Fund contributions, the refund will be issued upon request. You must be terminated for at least six months before you can apply for a refund on miAccount. If you have been terminated for less than six months, you must complete a paper application. A paper application is required because your school district must certify you have ceased all employment with the reporting unit prior to issuing a refund. Distributions of $3,000 or less, including interest, will be paid as a lump sum. Distributions of more than $3,000 will be paid as a separate retirement allowance in equal monthly installments over a 60-month (five-year) period. Contact ORS to request a Retiree Healthcare Fund Refund application.

*The date your plan changes took effect was based on your transition date. The exact date depends on your school district's payroll cycle.