Bill Text: MI HB6475 | 2017-2018 | 99th Legislature | Engrossed
Bill Title: Retirement; state police; general amendments to the state police retirement act; provide for. Amends title & secs. 3, 4, 13, 14, 14a, 15, 23, 24, 25, 26, 27, 28, 32, 40b & 42 of 1986 PA 182 (MCL 38.1603 et seq.) & adds secs. 15a, 24b, 42a, 42b, 42c, 60, 61, 62, 63, 64, 65, 66, 67, 68, 69, 70, 72, 73, 74 & 75.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Passed) 2018-12-31 - Assigned Pa 674'18 With Immediate Effect [HB6475 Detail]
Download: Michigan-2017-HB6475-Engrossed.html
HB-6475, As Passed House, December 6, 2018
SUBSTITUTE FOR
HOUSE BILL NO. 6475
A bill to amend 1986 PA 182, entitled
"State police retirement act of 1986,"
by amending sections 3, 4, 11, 12, 14, 14a, 15, 23, 24, 25, 26, 27,
28, 32, 33, 34, and 42 (MCL 38.1603, 38.1604, 38.1611, 38.1612,
38.1614, 38.1614a, 38.1615, 38.1623, 38.1624, 38.1625, 38.1626,
38.1627, 38.1628, 38.1632, 38.1633, 38.1634, and 38.1642), section
3 as amended by 2010 PA 220, section 4 as amended by 2004 PA 83,
sections 14 and 42 as amended by 2004 PA 50, section 14a as amended
by 2008 PA 366, and sections 25 and 26 as amended by 2000 PA 374,
and by adding sections 15a, 24b, 42a, 42b, 60, 61, 62, 63, 64, 65,
66, 67, 68, 69, 70, 72, 73, and 74.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 3. (1) "Banked leave time program" means the part B
annual leave hours within the state's annual and sick leave program
approved
by a ruling of the internal revenue service Internal
Revenue Service on September 5, 2003, in which a pay reduction or
other concessions are applied to a member in exchange for
additional part B annual leave hours.
(2) "Credited service" means the sum of the prior service and
membership service credited to a member's account.
(3) "Deferred member" means a member who separates from
service with entitlement to a deferred retirement allowance as
provided in section 30, but who is not a retirant.
(4) "Department" means the department of technology,
management, and budget.
(5) "Direct rollover" means a payment by the retirement system
to the eligible retirement plan specified by the distributee.
(6) "Distributee" includes a member or deferred member.
Distributee also includes the member's or deferred member's
surviving spouse or the member's or deferred member's spouse or
former spouse under an eligible domestic relations order, with
regard to the interest of the spouse or former spouse.
(7) "DROP participant" means an officer who participates in
the deferred retirement option plan established in section 24a.
(8) Beginning January 1, 2002, except as otherwise provided in
this subsection, "eligible retirement plan" means 1 or more of the
following:
(a) An individual retirement account described in section
408(a) of the internal revenue code, 26 USC 408.
(b) An individual retirement annuity described in section
408(b) of the internal revenue code, 26 USC 408.
(c) An annuity plan described in section 403(a) of the
internal revenue code, 26 USC 403.
(d) A qualified trust described in section 401(a) of the
internal revenue code, 26 USC 401.
(e) An annuity contract described in section 403(b) of the
internal revenue code, 26 USC 403.
(f) An eligible plan under section 457(b) of the internal
revenue
code, 26 USC 457, which that
is maintained by a state,
political subdivision of a state, or an agency or instrumentality
of
a state or political subdivision of a state and which that
agrees to separately account for amounts transferred into the
eligible plan under section 457(b) of the internal revenue code, 26
USC 457, from this retirement system, that accepts the
distributee's eligible rollover distribution.
(g) Beginning January 1, 2008, a Roth individual retirement
account as described in section 408A of the internal revenue code,
26 USC 408A, subject to the rules that apply to rollovers from a
traditional individual retirement account to a Roth individual
retirement account.
(9) Beginning January 1, 2007, "eligible rollover
distribution" means a distribution of all or any portion of the
balance to the credit of the distributee. Eligible rollover
distribution does not include any of the following:
(a) A distribution made for the life or life expectancy of the
distributee or the joint lives or joint life expectancies of the
distributee and the distributee's designated beneficiary.
(b) A distribution for a specified period of 10 years or more.
(c) A distribution to the extent that the distribution is
required under section 401(a)(9) of the internal revenue code, 26
USC 401.
(d) The portion of any distribution that is not includable in
federal
gross income, except to the extent such the portion of the
distribution is paid to either of the following:
(i) An individual retirement account or annuity described in
section 408(a) or 408(b) of the internal revenue code, 26 USC 408.
(ii) A qualified plan described in section 401(a) of the
internal revenue code, 26 USC 401, or an annuity contract described
in section 403(b) of the internal revenue code, 26 USC 403, and the
plan providers agree to separately account for the amounts paid,
including any portion of the distribution that is includable in
federal
gross income, and the portion of the distribution which
that is not so includable.
(10) "Final average compensation" means, except as otherwise
provided in this subsection, the average annual salary for the last
2 years of service with the department of state police for which
the
member was compensated as defined in subsection (13). In the
case
of Except as otherwise
provided in this subsection, for a
nonclassified member of the department holding the rank of colonel,
final average compensation means the same average annual salary as
that computed for the highest salaried classified member of the
department, or at the average annual salary for the last 2 years of
service with the department of state police for which the member
was compensated, whichever is greater. Beginning with the effective
date of the amendatory act that added section 42a, for a member who
first became a member on or after June 10, 2012, final average
compensation means the average salary for the last 5 years of
service for which the member was compensated as defined in
subsection (14). Average annual salary includes only the following
compensation items:
(a) Beginning with the effective date of the amendatory act
that added section 42a, for a member who first became a member
before June 10, 2012, only the following compensation items:
(i) (a)
Regular salary paid for the last 2
years of service,
including, but not limited to, that salary that is deferred
pursuant to a state deferred compensation program.
(ii) (b)
Overtime, shift differential, and
shift differential
overtime paid for the last 2 years of service.
(iii) (c)
Gross pay adjustments paid
affecting the last 2
years of service, including compensatory time and emergency
response compensation.
(iv) (d)
Up to a maximum of 240 hours of
accumulated annual
leave, paid at the time of retirement separation excluding part B
annual leave hours paid at the time of retirement separation.
(v) (e)
Deferred hours under Plan B of the
fiscal years ending
September 30, 1981, and September 30, 1982, that are paid at the
time of retirement separation.
(vi) (f)
Longevity pay equal to 2 full
years.
(vii) (g)
Bomb squad pay paid for the last 2
years of service.
(viii) (h)
Post 29 freeway premium paid for
the last 2 years
of service.
(ix) (i)
On-call pay paid for the last 2
years of service.
(x) (j)
Beginning October 1, 2003, the
value of any unpaid
furlough hours or the value of any unpaid hours exchanged for part
B annual leave hours, calculated at the member's then-current
hourly rate or rates of pay, for a period during which a member is
participating in the banked leave time program.
(xi) (k)
Beginning May 1, 2009, the value of
temporary layoff
hours.
As used in this subdivision, subparagraph,
"temporary layoff
hours" means hours attributable to the layoff of a member if the
layoff does not exceed 1 month and has a fixed, predetermined, and
announced recall date.
(b) Beginning with the effective date of the amendatory act
that added section 42a, for a member who first became a member on
or after June 10, 2012, only the following compensation items:
(i) Regular salary paid for the last 5 years of service,
including, but not limited to, that salary that is deferred
pursuant to a state deferred compensation program.
(ii) Shift differential.
(iii) Gross pay adjustments paid affecting the last 5 years of
service, including compensatory time and emergency response
compensation.
(iv) Up to a maximum of 240 hours of accumulated annual leave,
paid at the time of retirement separation excluding part B annual
leave hours paid at the time of retirement separation.
(v) Longevity pay equal to 5 full years.
(vi) Bomb squad pay paid for the last 5 years of service.
(vii) Post 29 freeway premium paid for the last 5 years of
service.
(viii) On-call pay paid for the last 5 years of service.
(ix) The value of any unpaid furlough hours or the value of
any unpaid hours exchanged for part B annual leave hours,
calculated at the member's then-current hourly rate or rates of
pay, for a period during which a member is participating in the
banked leave time program.
(x) The value of temporary layoff hours. As used in this
subparagraph, "temporary layoff hours" means hours attributable to
the layoff of a member if the layoff does not exceed 1 month and
has a fixed, predetermined, and announced recall date.
(11) "Furlough hours" means unworked hours incurred in
conjunction with the banked leave time program.
(12) "Internal revenue code" means the United States internal
revenue code of 1986.
(13) "Last 2 years of service" means the 2-year period
immediately preceding the member's last day of service or that
period of 2 consecutive years of service with the department of
state police immediately preceding the date the duty disability
occurred
according to the medical examinations conducted pursuant
to
under section 29 or, if the officer participated in the
deferred
retirement option plan, the 2-year period immediately preceding
participation in the deferred retirement option plan.
(14) "Last 5 years of service" means the 5-year period
immediately preceding the member's last day of service or that
period of 5 consecutive years of service with the department of
state police immediately preceding the date the duty disability
occurred according to the medical examinations conducted under
section 29.
Sec. 4. (1) "Member", except where the context otherwise
requires,
means an employee of the Michigan department of state
police who has subscribed to the constitutional oath of office.
(2) "Officer" means a nonexclusively represented member of the
retirement system.
(3) "Qualified participant" means an individual who first
becomes a member on or after June 10, 2012 and who is also a
participant of Tier 2.
(4) "Regular interest" means a rate or rates per annum,
compounded annually, as the retirement board determines. For the
purposes of employee refunds, the interest rate payable must not
exceed 4% per annum, compounded annually.
(5) (3)
"Retirant" means a member
who separates from service
and retires with a retirement allowance payable from the
appropriate reserve of the retirement system.
(6) (4)
"Retirement allowance"
means the annual amount,
payable monthly, to which a retirant, retirement allowance
beneficiary,
or refund beneficiary is entitled pursuant to under
this act.
(7) (5)
"Retirement allowance
beneficiary" means a person who
is being paid or has entitlement to the payment of a retirement
allowance in the event of the death of a member, deferred member,
or retirant.
(8) (6)
"Retirement board" means
the retirement board created
in section 6.
(9) (7)
"Retirement system" means
the system of benefits for
members and qualified participants of the department of state
police and their survivors and beneficiaries provided by this act.
(10) (8)
"Surviving spouse" means
the spouse at the time of
death of the member or retirant.
(11) "Tier 1" means the retirement plan available to a member
under this act.
(12) "Tier 2" means the retirement plan established pursuant
to section 401(k) of the internal revenue code, 26 USC 401, that is
available to qualified participants under sections 62 to 74.
Sec. 11. (1) The retirement board, in consultation with the
department, shall engage an actuary, in conformance with section
261
of the management and budget act, Act No. 431 of the Public
Acts
of 1984, being section 18.1261 of the Michigan Compiled
Laws.1984 PA 431, MCL 18.1261.
(2)
The actuary shall prepare a biennial an annual valuation
of the assets, liabilities, financial condition, and contribution
rate of the retirement system, upon information supplied by the
department.
(3) The retirement board and the department shall conduct and
review an experience investigation study and adopt risk assumptions
upon
on which actuarial valuations are to be based, after
consultation
with the actuary, and the state treasurer. These risk
assumptions
shall The experience
investigation study must be
periodically reviewed at least once every 5 years.
(4) Every April 1 following a periodic review of risk
assumptions under subsection (3), the office of retirement services
on behalf of the department and the state treasurer shall
collaborate to submit a report to the senate majority leader, the
speaker of the house of representatives, the senate and house of
representatives appropriations committees, the senate and house
fiscal agencies, and the department of state police. A report
required under this subsection must be published on the office of
retirement services's website and include at least all of the
following:
(a) Forecasted rate of return on investments at all of the
following probability levels:
(i) 5%.
(ii) 25%.
(iii) 50%
(iv) 75%.
(v) 95%.
(b) The actual rate of return on investments for 10-, 15-, and
20-year time intervals.
(c) Mortality assumptions.
(d) Retirement age assumptions.
(e) Payroll growth assumptions.
(f) Any other assumptions that have a material impact on the
financial status of the retirement system.
Sec. 12. The retirement board shall elect from its membership
a
chairperson who shall take office immediately upon on election
and
serve until a successor is elected. The director of the bureau
office
of retirement systems, service, department
of technology,
management, and
budget, shall be is the executive secretary of the
retirement system.
Sec. 14. (1) The funding objective of the retirement system is
to establish and receive contributions during each fiscal year that
are sufficient to fully cover the actuarial cost of benefits likely
to be paid on account of services rendered by members during the
fiscal year, the normal cost requirements of the retirement system,
and finance the unfunded actuarial costs of benefits likely to be
paid
on account of service rendered prior to before the fiscal
year, the unfunded actuarial accrued liability of the retirement
system, and health, dental, and vision insurance.
(2)
The Subject to subsections
(5) to (7), the annual level
percentage
of payroll contribution rate shall must be actuarially
determined using experience assumptions and level percent of
payroll actuarial cost methods adopted by the retirement board and
the department pursuant to an annual actuarial valuation, which
shall
must be sufficient to finance benefits being provided and
to
be provided by the retirement system.
(3)
For Subject to subsections
(5) to (7), for differences
occurring in fiscal years beginning on or after October 1, 2001, a
minimum of 20% of the difference between the estimated and the
actual aggregate compensation and the estimated and the actual
contribution rate described in subsection (2), if any, may be
submitted in the executive budget to the legislature for
appropriation in the next succeeding state fiscal year and a
minimum
of 25% of the remaining difference shall must be submitted
in the executive budget to the legislature for appropriation in
each of the following 4 state fiscal years, or until 100% of the
remaining difference is submitted, whichever first occurs. In
addition,
interest shall must be included for each year that a
portion of the remaining difference is carried forward. The
interest
rate shall must equal the actuarially assumed rate of
investment return for the state fiscal year in which payment is
made.
(4) For each fiscal year that begins on or after October 1,
2003,
if the actuarial valuation prepared pursuant to under this
section for each fiscal year demonstrates that as of the beginning
of a fiscal year, and after all credits and transfers required by
this act for the previous fiscal year have been made, the sum of
the actuarial value of assets and the actuarial present value of
future normal cost contributions exceeds the actuarial present
value of benefits, the amount based on the annual level percent of
payroll
contribution rate pursuant to under
subsections (1) and (2)
may be deposited into the health advance funding subaccount created
by section 42.
(5) Beginning with the state fiscal year ending September 30,
2022 until the pension and retiree health care payroll growth
assumption rate is zero, the payroll growth assumption rate must be
reduced by 50 basis points. Beginning with the state fiscal year
ending September 30, 2022, the office of retirement services within
the department of technology, management, and budget and the
retirement board may agree to reduce the rate described in this
subsection by any number of additional basis points.
(6) Beginning with the state fiscal year ending September 30,
2019 and for each subsequent fiscal year, the normal cost
contribution rate must not be less than the normal cost
contribution rate in the immediately preceding fiscal year.
Additionally, the employer portion of the contribution rate must
not be less than the employer portion of the contribution rate in
the immediately preceding fiscal year.
(7) Subject to this subsection, beginning with the state
fiscal year ending September 30, 2019 and for each subsequent
fiscal year until the unfunded actuarial accrued liability is paid
off, the unfunded actuarial accrued liability contribution sum and
due payable must not be less than the unfunded actuarial accrued
liability contribution sum and due payable in the immediately
preceding fiscal year. The unfunded actuarial accrued liability
must be paid off no later than September 30, 2038. Additionally,
the employer portion of the unfunded actuarial accrued liability
contribution sum and due payable must not be less than the employer
portion of the unfunded actuarial accrued liability contribution
sum and due payable in the immediately preceding fiscal year.
(8) (5)
Notwithstanding any other provision
of this act, if
the retirement board establishes an arrangement and fund as
described in section 6 of the public employee retirement benefit
protection act, 2002 PA 100, MCL 38.1686, the benefits that are
required
to be paid from that fund shall must
be paid from a
portion of the employer contributions described in this section or
other eligible funds. The retirement board shall determine the
amount of the employer contributions or other eligible funds that
must be allocated to that fund and deposit that amount in that fund
before it deposits any remaining employer contributions or other
eligible funds in the pension fund.
Sec.
14a. (1) This section is enacted pursuant to under
section 401(a) of the internal revenue code, 26 USC 401, that
imposes certain administrative requirements and benefit limitations
for qualified governmental plans. This state intends that the
retirement system be a qualified pension plan created in trust
under section 401 of the internal revenue code, 26 USC 401, and
that the trust be an exempt organization under section 501 of the
internal revenue code, 26 USC 501. The department shall administer
the retirement system to fulfill this intent.
(2)
The retirement system shall must
be administered in
compliance with section 415 of the internal revenue code, 26 USC
415, and regulations under that section that are applicable to
governmental plans and, beginning January 1, 2010, applicable
provisions
of the final regulations issued by the internal revenue
service
Internal Revenue Service on April 5, 2007. Employer-
financed benefits provided by the retirement system under this act
shall
must not exceed the applicable limitations set forth in
section 415 of the internal revenue code, 26 USC 415, as adjusted
by the commissioner of internal revenue under section 415(d) of the
internal revenue code, 26 USC 415, to reflect cost of living
increases,
and the retirement system shall must
adjust the
benefits, including benefits payable to retirants and retirement
allowance beneficiaries, subject to the limitation each calendar
year to conform with the adjusted limitation. For purposes of
section 415(b) of the internal revenue code, 26 USC 415, the
applicable
limitation shall apply applies
to aggregated benefits
received from all qualified pension plans for which the office of
retirement services coordinates administration of that limitation.
If there is a conflict between this section and another section of
this act, this section prevails.
(3)
The assets of the retirement system shall must be held in
trust and invested for the sole purpose of meeting the legitimate
obligations
of the retirement system and shall must not be used for
any
other purpose. The assets shall must
not be used for or
diverted to a purpose other than for the exclusive benefit of the
members, deferred members, retirants, and beneficiaries before
satisfaction of all retirement system liabilities.
(4) The retirement system shall return post-tax member
contributions made by a member and received by the retirement
system
to a member upon retirement, pursuant to internal revenue
service
Internal Revenue Service regulations and approved internal
revenue
service Internal Revenue
Service exclusion ratio tables.
(5) The required beginning date for retirement allowances and
other
distributions shall must not be later than April 1 of the
calendar year following the calendar year in which the employee
attains age 70-1/2 or April 1 of the calendar year following the
calendar year in which the employee retires. The required minimum
distribution requirements imposed by section 401(a)(9) of the
internal
revenue code, 26 USC 401, shall apply to this act and must
be administered in accordance with a reasonable and good faith
interpretation of the required minimum distribution requirements
for all years to which the required minimum distribution
requirements apply to this act.
(6) If the retirement system is terminated, the interest of
the members, deferred members, retirants, and beneficiaries in the
retirement system is nonforfeitable to the extent funded as
described in section 411(d)(3) of the internal revenue code, 26 USC
411, and related internal revenue service regulations applicable to
governmental plans.
(7) Notwithstanding any other provision of this act to the
contrary that would limit a distributee's election under this act,
a distributee may elect, at the time and in the manner prescribed
by the retirement board, to have any portion of an eligible
rollover distribution paid directly to an eligible retirement plan
specified by the distributee in a direct rollover. This subsection
applies to distributions made on or after January 1, 1993.
Beginning October 1, 2010, a nonspouse beneficiary may elect to
have any portion of an amount payable under this act that is an
eligible rollover distribution treated as a direct rollover that
will be paid in a direct trustee-to-trustee transfer to an
individual retirement account or individual retirement annuity
described in section 408(a) or (b) of the internal revenue code, 26
USC 408, that is established for the purpose of receiving a
distribution on behalf of the beneficiary and that will be treated
as an inherited individual retirement account or individual
retirement annuity pursuant to section 402(c)(11) of the internal
revenue code, 26 USC 402.
(8) Notwithstanding any other provision of this act, the
compensation
of a member of the retirement system shall must be
taken into account for any year under the retirement system only to
the extent that it does not exceed the compensation limit
established in section 401(a)(17) of the internal revenue code, 26
USC 401, as adjusted by the commissioner of internal revenue. This
subsection applies to any person who first becomes a member of the
retirement system on or after October 1, 1996.
(9) Notwithstanding any other provision of this act,
contributions, benefits, and service credit with respect to
qualified military service will be provided under the retirement
system in accordance with section 414(u) of the internal revenue
code, 26 USC 414. This subsection applies to all qualified military
service on or after December 12, 1994. Effective January 1, 2007,
in accordance with section 401(a)(37) of the internal revenue code,
26 USC 401, if a member dies while performing qualified military
service for purposes of determining any death benefits payable
under
this act, the member shall be is
treated as having resumed
and then terminated employment on account of death.
Sec. 15. (1) The reserve for employee contributions is the
account in which member contributions are accumulated and from
which
shall must be made refunds and transfers of accumulated
member contributions. The retirement system shall maintain 1 or
more separate subaccounts for each person having an interest in
this account. Member contributions must be accumulated at regular
interest to the subaccounts of the members.
(2)
Accumulated member contributions shall must be transferred
from the reserve for employee contributions to the reserve for
retired
benefit payments upon on the retirement or death of a
member or deferred member.
Sec. 15a. (1) Beginning with his or her first pay date and
ending on the member's termination of employment, each member first
employed on or after June 10, 2012 shall contribute an amount equal
to 4% of his or her compensation to the reserve for employee
contributions to provide for the amount of retirement allowance
that is calculated only on the credited service and compensation
received by that member.
(2) Beginning on October 1, 2012, and ending on the member's
termination of employment, each member hired before June 10, 2012
who, on October 1, 2012, was a bargaining unit employee covered by
the state police defined benefit retirement plan shall contribute
an amount equal to 1% of his or her compensation to the reserve for
employee contributions. Beginning on October 1, 2013, members
described in this subsection shall contribute an additional amount
equal to 1% of his or her compensation to the reserve for employee
contributions.
(3) The retirement system and state budget director shall
determine a method of deducting the contributions provided for in
this section from the compensation of each member for each payroll
and each payroll period.
(4) The state shall pick up the member contributions required
under subsections (1) and (2). Contributions picked up must be
treated as employer contributions in determining tax treatment
under the internal revenue code. The state shall pay these member
contributions from the same source of funds that is used in paying
compensation to the member.
(5) A member is entitled to the benefit of all contributions
made under this section in the same manner as provided under
section 15.
Sec.
23. (1) Except as otherwise provided by Act No. 59 of the
Public
Acts of 1935, being sections 28.1 to 28.15 of the Michigan
Compiled
Laws, every under 1935 PA 59,
MCL 28.1 to 28.16, an
employee of the department of state police who has subscribed to
the
constitutional oath of office shall be is a member of this
retirement system.
(2) A member of this retirement system who first becomes a
member on or after June 12, 2012 is a member of the Tier 1 plan and
also participates in the Tier 2 plan until the member terminates
employment or retires and receives a retirement allowance
calculated under section 24.
(3) (2)
A member who resigns, dies, is
transferred to a
position not covered by the retirement system, or is dismissed for
a reason other than his or her retirement or breach of the public
trust,
upon on application is entitled to receive in a lump sum,
payable to him or her or his or her legal representative if the
member dies or is legally disabled, 100% of the contributions made
into the reserve for employee contributions. Any unclaimed
contributions must be transferred from the reserve for employee
contributions to the reserve for retired benefit payments.
Sec.
24. (1) A Except as
provided in section 24b and subject
to subsection (14), a member who first became a member before June
10, 2012 and who has 25 years or more of credited service under
this
act or former Act No. 1935
PA 251, of the Public Acts of
1935,
or
both, may retire upon on his or her written application to the
retirement board, stating a date, not less than 30 nor more than 90
days after the execution and filing of the application, he or she
desires to retire. However, a member described in this subsection
who becomes 56 years of age shall retire. A member retiring under
this
subsection shall be is entitled to receive a retirement
allowance equal to 60% of his or her final average compensation.
(2)
If Subject to subsection
(4), if a retirant receiving a
retirement allowance under subsection (1) dies, the retirement
allowance
shall must continue to be paid to the surviving spouse of
the retirant for the rest of the spouse's life. If there is not a
surviving
spouse or upon on the spouse's death, then the retirement
allowance
shall must be paid to the children under the age of 18 of
the retirant, share and share alike. If the surviving spouse dies
and
there are not eligible children, there shall be paid the
retirement system shall pay to the retirant's estate or his or her
legal representative any residual accumulated contributions and
interest made by the retirant into the fund.
(3) If the director of the department of state police orders
the retirement of any member eligible to retire for reason or
reasons other than having become 56 years of age, and that member
is
aggrieved by the order, the member so affected shall be affected
by an order described in this subsection is entitled to appeal to
the
retirement board. An appeal shall must be in writing and filed
with the retirement board within 30 days after receipt of the order
of retirement. The retirement board shall set the appeal for
hearing within 30 days after the filing of the appeal and shall
review the facts as presented and determine whether the order of
retirement
shall will continue or be revoked.
(4) A member who first becomes a member on or after July 1,
2006 as a new bargaining unit employee shall elect to receive his
or her retirement allowance under 1 of the payment options provided
in this subsection. The election must be in writing and filed with
the retirement board at least 15 days before the effective date of
the retirement allowance except as provided for a disability
retirant under sections 26, 27, and 28. The amount of retirement
allowance under subdivision (b), (c), or (d) is the actuarial
equivalent of the amount of retirement allowance under subdivision
(a). The options are as follows:
(a) The retirant will be paid a straight retirement allowance
for life computed under section 24. An additional retirement
allowance payment will not be made on the retirant's death.
(b) The retirant will be paid a reduced retirement allowance
for life with a provision that on the retirant's death, payment of
the reduced retirement allowance will be continued throughout the
lifetime of the retirement allowance beneficiary whom the member or
deferred member designated in a writing filed with the retirement
board at the time of election of this option. A member or deferred
member may elect this option and designate a retirement allowance
beneficiary under the conditions set forth in subsection (5).
(c) A retirant must be paid a reduced retirement allowance for
life with the provision that on the retirant's death, payment of
1/2 of the reduced retirement allowance is continued throughout the
lifetime of the retirement allowance beneficiary whom the member
designated in a writing filed with the retirement board at the time
of election of the option.
(d) A retirant must be paid a reduced retirement allowance for
life with the provision that on the retirant's death, payment of
75% of the reduced retirement allowance is continued throughout the
lifetime of the retirement allowance beneficiary whom the member
designated in a writing filed with the retirement board at the time
of election of the option.
(5) Except as otherwise provided in this section, the
retirement allowance beneficiary selected under subsection (4)(b),
(c), or (d) must not be changed on or after the effective date of
the retirement allowance and must be either a spouse, brother,
sister, parent, or child, including an adopted child, of the
member, deferred member, retiring member, or retiring deferred
member entitled to make the election under this act. Another
retirement allowance beneficiary must not be selected. If a member,
deferred member, retiring member, or retiring deferred member is
married at the retirement allowance effective date, an election
under subsection (4), other than an election under subsection
(4)(b), naming the spouse as retirement allowance beneficiary, is
not effective unless the election is signed by the spouse, except
that this requirement may be waived by the board if the signature
of a spouse cannot be obtained because of extenuating
circumstances. For purposes of this subsection, "spouse" means the
individual to whom the member, deferred member, retiring member, or
retiring deferred member is married at the retirement allowance
effective date. Payment to a retirement allowance beneficiary must
start the first day of the month following the retirant's death.
(6) Except as otherwise provided in subsection (9), if the
retirement allowance beneficiary selected under subsection (4)(b),
(c), or (d) predeceases the retirant, the retirant's benefit must
revert to a straight retirement allowance including postretirement
adjustments, if any; is effective the first of the month following
the death; and must be paid during the remainder of the retirant's
life.
(7) If a retirant receiving a reduced retirement allowance
under subsection (4)(b), (c), or (d) is divorced from the spouse
who had been designated as the retirant's retirement allowance
beneficiary under subsection (4)(b), (c), or (d), the election of a
reduced retirement allowance payment option is considered void by
the retirement system if the judgment of divorce or award or order
of the court, or an amended judgment of divorce or award or order
of the court, described in the public employee retirement benefit
protection act, 2002 PA 100, MCL 38.1681 to 38.1689, and dated
after June 27, 1991 provides that the election of a reduced
retirement allowance payment option under subsection (4)(b), (c),
or (d) is to be considered void by the retirement system and the
retirant provides a certified copy of the judgment of divorce or
award or order of the court, or an amended judgment of divorce or
award or order of the court, to the retirement system. If the
election of a reduced retirement allowance payment option under
subsection (4)(b), (c), or (d) is considered void by the retirement
system under this subsection, the retirant's retirement allowance
must revert to a straight retirement allowance, including
postretirement adjustments, if any, subject to an award or order of
the court as described in the public employee retirement benefit
protection act, 2002 PA 100, MCL 38.1681 to 38.1689. The retirement
allowance must revert to a straight retirement allowance under this
subsection effective the first of the month after the date the
retirement system receives a certified copy of the judgment of
divorce or award or order of the court. This subsection does not
supersede a judgment of divorce or award or order of the court in
effect on June 27, 1991. This subsection does not require the
retirement system to distribute or pay retirement assets on behalf
of a retirant in an amount that exceeds the actuarially determined
amount that would otherwise become payable if a judgment of divorce
had not been rendered.
(8) A retirant, who is divorced after payment of his or her
retirement allowance begins and whose former spouse is his or her
retirement allowance beneficiary, may change his or her survivor
option to the straight life option only if an order of the court
states that the election of a survivor option under subsection (4)
is considered void by the retirement system. A retirant who
subsequently remarries may elect a survivor retirement allowance
option for his or her spouse of 100%, 75%, or 50% of his or her
actuarially reduced monthly payments, unless otherwise precluded by
court order.
(9) If the retirement allowance payments terminate before an
aggregate amount equal to the retirant's accumulated contributions
has been paid, the difference between the retirant's accumulated
contributions and the aggregate amount of retirement allowance
payments made must be paid to the person designated in a writing
filed with the retirement board on a form provided by the
retirement board. If the designated person does not survive the
retirant or retirement allowance beneficiary, the difference must
be paid to the deceased recipient's estate or to the legal
representative of the deceased recipient.
(10) A retirant who selected a retirement allowance
beneficiary under subsection (4)(b), (c), or (d) may change his or
her retirement allowance beneficiary if all of the following apply:
(a) The first retirement allowance beneficiary is a spouse.
(b) The first retirement allowance beneficiary predeceases the
retirant after the retirement allowance effective date.
(c) The retirant marries another spouse after the retirement
allowance effective date.
(d) Except as otherwise provided in an applicable collective
bargaining agreement, the retirant files a written request with the
retirement system to name his or her current spouse as a retirement
allowance beneficiary not earlier than 180 days and not later than
1 year after the marriage of the retirant and the current spouse,
except that a retirant whose first retirement allowance beneficiary
predeceases the retirant after the retirement allowance effective
date and before the effective date of the amendatory act that added
this subsection has 180 days from the effective date of the
amendatory act that added this subsection to file a written request
with the retirement system.
(11) A retirant who was not married on his or her retirement
allowance effective date and who did not select a payment option
provided in this section may select an optional form of benefit
payment under subsection (4)(b), (c), or (d) and designate a
retirement allowance beneficiary subject to all of the following:
(a) The retirant marries after his or her retirement allowance
effective date.
(b) The retirement allowance beneficiary is the retirant's
spouse.
(c) The retirement allowance beneficiary is only designated as
the retirement allowance beneficiary for that portion of the
retirant's retirement allowance that is not subject to an eligible
domestic relations order assigning a previous spouse a reduced
benefit under section 4(b) of the eligible domestic relations order
act, 1991 PA 46, MCL 38.1704.
(d) Except as otherwise provided in an applicable collective
bargaining agreement, the retirant files a written request with the
retirement system to select the optional form of benefit payment
under subsection (4)(b), (c), or (d) and to designate his or her
spouse as the retirement allowance beneficiary, not earlier than
180 days and not later than 1 year after the retirant's marriage
except that a retirant who marries after the retirement allowance
effective date and before the effective date of the amendatory act
that added this subsection has 180 days from the effective date of
the amendatory act that added this subsection to file a written
request with the retirement system.
(e) A spouse who is added as a survivor under this subsection
is not eligible for the payment of insurance premiums under section
42.
(12) The retirement allowance of the retirant who makes an
election under subsection (10) or (11) must not be greater than the
actuarial equivalent of the retirement allowance as determined by
the retirement board that the retirant would otherwise be entitled
to under subsection (4)(a) and must become effective the first day
of the month following the filing of the written request with the
retirement system.
(13) For purposes of determining actuarial equivalent
retirement allowances under this section, the actuarially assumed
interest rate is determined by the director of the department and
the retirement board in consultation with the actuary with
utilization of the mortality tables adopted by the department and
the retirement board.
(14) If the retirant dies no later than 12 months after the
effective date of his or her election under subsection (8), (10),
or (11), the retirement allowance for the surviving spouse
established under subsection (8), (10), or (11) must terminate 12
months after the death of the retirant.
(15) Unless otherwise provided in an applicable collective
bargaining agreement, or by order of the director of the department
of state police, a retirement allowance must not be paid under this
section if at the time the member submits his retirement
application the member is on suspension without pay for conduct
involving the breach of the public trust.
Sec. 24b. The calculation of a retirement allowance under this
act for a member who first becomes a member on or after June 10,
2012 includes only the following, as applicable:
(a) 2% of final average compensation multiplied by years of
service that do not exceed 25 years.
(b) For each year of service that exceeds 25 years, the 2%
provided under this section must be reduced by 40 basis points for
that applicable year until the percentage reaches 0% after years of
service have exceeded 30 years.
Sec.
25. (1) A Except as
provided in section 24(4) and subject
to subsection (4), the retirement system shall pay a retirement
allowance
shall be paid to the surviving spouse of a member of the
retirement
system who,
while in the discharge of his or her duty,
is killed or receives injuries or contracts a disease or illness,
by
reason of his or her occupation, which that results in his or
her
death. The retirement allowance shall must be equal to 60% of
the
member's final average compensation. Upon On the death of the
surviving spouse, or if there is no surviving spouse at the time of
the
death of the member, the pension shall retirement allowance
must be paid to the children of the member under the age of 18
years, share and share alike. When each respective child attains
the
age of 18 years, payment to him or her shall must cease
and his
or
her share shall must be prorated among the remaining children
under 18 years of age. If there is a retirement allowance payable
to a surviving spouse under this section, a retirement allowance of
$100.00
per month shall must be paid to each of the children under
the age of 18 years, if any, of the deceased member, and all
payments
to the children shall must
continue until each respective
child reaches the age of 18 years. If there is not a surviving
spouse,
nor children under the age of 18 years, then a retirement
allowance equal to 60% of the member's final average compensation
shall
must be paid to the mother or father, or both, of the
member,
if dependent on him or her for support, until the dependency
ceases. If there is not a dependent mother or father, a retirement
allowance
of $100.00 per month shall must
be paid to each of the
sisters or brothers, if there are any under 18 years of age
dependent upon the member for support. If there are not any
dependents,
then there shall must
be paid to the deceased member's
estate any residual accumulated contributions and interest made by
him or her into the reserve for employee contributions, or
$1,500.00, whichever is greater.
(2) The supplements to retirement allowances and minimum
annual
retirement allowance provisions of this act shall do not
apply to the special $100.00 per month allowance to children and
the allowance to dependent parents and siblings.
(3)
When an active or retired member is killed or dies from
injuries,
disease, or illness, contracted by reason of his or her
occupation
as a member of the department of state police, the
retirement
board shall provide a sum not to exceed $1,500.00 from
the
reserve for casualty experience for funeral expenses.
(3) (4)
The retirement allowance payable
under this section,
when added to the statutory worker's compensation benefits
applicable
in the case, shall must not exceed the average annual
salary paid to the member for the member's last 2 years of service
with
the department of state police prior to before his or her
death.
(4) For a member who first becomes a member on or after June
10, 2012, who while in the discharge of his or her duty is killed
or receives injuries or contracts a disease or illness, by reason
of his or her occupation, that results in his or her death, a
retirement allowance must be paid in the same manner as provided
for a duty disabled retirant under section 26. The retirement
allowance payable under this section to a duly designated survivor
beneficiary of a member who first becomes a member on or after June
10, 2012 must be offset by the actuarially determined value of the
employer-funded portion plus the associated investment growth of
the employer-funded portion of the member's defined contribution
account balance.
(5) A member, former member, or beneficiary of a deceased
member, which member first becomes a member on or after June 10,
2012 and who is eligible for a retirement allowance under this
section, is eligible for health insurance coverage under section 42
in all respects and under the same terms as would be a member who
first becomes a member before June 10, 2012.
Sec.
26. (1) A Except as
provided in section 24(4) and subject
to subsection (5), a member who retires due to duty incurred
disability after September 30, 1986, is entitled to receive a
retirement allowance equal to 60% of the member's final average
compensation.
(2) If a retirant receiving a retirement allowance under this
section dies, the retirement system shall continue to pay the
retirement
allowance shall continue to be paid to the surviving
spouse of the deceased retirant for the rest of the spouse's life.
(3) For purposes of this section, if there is no surviving
spouse
or upon on the spouse's death, the retirement allowance
shall
must be paid to the children under the age of 18 of the
member, share and share alike. If there are no eligible children
remaining
after the spouse's death, there shall must be paid to the
deceased member's estate any residual accumulated contributions and
interest made by him or her into the reserve for employee
contributions.
(4) The retirement allowance payable under this section, when
added to the statutory worker's compensation benefits applicable in
the
case, shall must not exceed the average annual salary paid to
the member for the member's last 2 years of service with the
department of state police before the duty disability retirement
allowance effective date.
(5) The retirement allowance payable under this section to a
member who first becomes a member on or after June 10, 2012 must be
offset by the actuarially determined value of the employer-funded
portion plus the associated investment growth of the employer-
funded portion of the member's defined contribution account
balance.
(6) A member, former member, or beneficiary of a deceased
member, which member first becomes a member on or after June 10,
2012 and who is eligible for a retirement allowance under this
section, is eligible for health insurance coverage under section 42
in all respects and under the same terms as would be a member who
first becomes a member before June 10, 2012. A member who is
eligible for health insurance coverage under section 42 as
described in this subsection is not vested in any employer
contributions under section 42a(1).
Sec.
27. (1) If Except as
provided in section 24(4) and
subject to subsection (3), if a member continues as a member of the
retirement system on or after the date he or she acquires 10 years
of service credit and suffers a nonduty related death leaving a
surviving
spouse prior to before the effective date of the member's
retirement, while a member of the retirement system, the surviving
spouse
shall be is entitled to receive a retirement allowance equal
to 2.4% of the member's final average compensation times the number
of years, including any fraction of a year, of service credited to
the
member pursuant to under this act or former Act No. 251 of the
Public
Acts of 1935, 1935 PA 251, or both, but not to exceed 25
years, as if the member had retired effective the day preceding the
date of death and nominated the spouse as beneficiary. If there is
not
a surviving spouse, or upon on
the spouse's death, then the
retirement
allowance shall must be paid to the children under the
age
of 18 years of the member, share and share alike. Upon On the
spouse's
death, if there are not eligible children, there shall
must be paid to the deceased member's estate any residual
accumulated contributions and interest made by him or her into the
reserve
for employee contributions. A retirement allowance shall is
not
be payable under this section if a retirement allowance is
payable under any other section of this act.
(2)
Payment of the retirement allowance shall must begin the
first day of the calendar month next following the month in which
the member died.
(3) The retirement allowance payable under this section to a
member who first becomes a member on or after June 10, 2012 must be
offset by the actuarially determined value of the employer-funded
portion plus the associated investment growth of any employer
contributions made under section 15a and forfeits the contributions
and earnings on the contributions.
(4) A member, former member, or beneficiary of a deceased
member, which member first becomes a member on or after June 10,
2012 and who is eligible for a retirement allowance under this
section, is eligible for health insurance coverage under section 42
in all respects and under the same terms as would be a member who
first becomes a member before June 10, 2012. A member who is
eligible for health insurance coverage under section 42 as
described in this subsection is not vested in any employer
contributions under section 42a(1).
Sec.
28. (1) A Except as
provided in section 24(4) and subject
to subsection (3), a member who retires due to nonduty incurred
disability on or after the effective date of this act and after
completing 10 years of credited service under this act or former
Act
No. 251 of the Public Acts of 1935, 1935 PA 251, or both, shall
be
is entitled to receive a retirement allowance equal to
2.4% of
the member's final average compensation times the number of years,
including any fraction of a year, of service credited to the member
pursuant
to this act or former Act No. 251 of the Public Acts of
1935,
1935 PA 251, or both, but not to exceed 25 years, during the
period
of disability. If Except
as provided in section 24(4), if a
retirant receiving a retirement allowance under this section dies,
the
retirement allowance shall must
continue to be paid to the
surviving spouse for the rest of the spouse's life in an amount
equal
to the retirement allowance which that the member was
receiving on the date of his or her death.
(2) For purposes of this section, if there is no surviving
spouse
or upon on the spouse's death, then the retirement
allowance
shall
must be paid to the children under the age of 18 of the
member, share and share alike. If there are no eligible children
remaining
after the spouse's death, then there shall must be
paid
to the deceased member's estate any residual accumulated
contributions and interest made by him or her into the reserve for
employee contributions.
(3) The retirement allowance payable under this section must
be offset by the actuarially determined value of the employer-
funded portion plus the associated investment growth
and employer contributions made under section 15a and earnings on
the contributions.
(4) A member, former member, or beneficiary of a deceased
member, which member first becomes a member on or after June 10,
2012 and who is eligible for a retirement allowance under this
section, is eligible for health insurance coverage under section 42
in all respects and under the same terms as would be a member who
first becomes a member before June 10, 2012. A member who is
eligible for health insurance coverage under section 42 as
described in this subsection is not vested in any employer
contributions under section 42a(1).
Sec.
32. (1) A member of this the
retirement system who has
accumulated 10 or more years of retirement system service credit
under
this act or former Act No. 251 of the Public Acts of 1935,
1935 PA 251, or both, and who, while an employee of the department
of state police, was or is drafted, enlisted, inducted, or
commissioned into active duty with the military, naval, marine, or
other armed service of the United States government and who is
accepted for reemployment as an employee of the department of state
police who subscribes to the constitutional oath of office within 6
months following discharge from active service, or if hospitalized
at date of discharge, is accepted for reemployment as an employee
of the department who subscribes to the constitutional oath of
office within 6 months following release from the military
facility,
shall have has not more than 2 years of the active
service credited as a member of the retirement system, in the same
manner as if the member had served uninterruptedly. During the
period of active service, and until reemployment, the member's
contributions
to the reserve for employee contributions shall must
be suspended and the member's balance in his or her account
standing to the member's credit as of the last payroll date
preceding
the member's leave of absence shall must be accumulated
at regular interest. If the member withdraws all or part of the
accumulated contributions from his or her account, the active
service
shall must not be credited until the member returns to the
reserve for employee contributions those amounts withdrawn,
together with regular interest computed from the date of withdrawal
to the date of repayment.
(2) A member of this retirement system who does not meet the
requirements of subsection (1) and who was drafted, enlisted,
inducted, or commissioned into active duty with the military or
other armed service of the United States government may elect to
receive service credit for not more than 2 years of active duty
upon request and payment to the retirement system of an amount
equal to 5% of the member's full-time compensation for the fiscal
year in which the payment is made multiplied by the years and
months the member elects to purchase up to the maximum. For the
purposes of computing payment under this subsection, the
compensation amount used must not be less than the highest fiscal
year
compensation previously received by the member. Service shall
must not be credited if the service is or would be credited under
any other federal, state, or local publicly supported retirement
system,
but this restriction shall does
not apply to those persons
who have or will have acquired retirement eligibility under the
federal
government for service in the reserve. Armed service shall
must not be credited under this subsection until the member has
accumulated 10 years of credited service, of which the last 5 are
continuous.
(3) Service credit may be purchased under this section instead
of, but not in addition to, purchasing service credit under section
33.
Sec.
33. (1) A Except as
otherwise provided in this section, a
member may elect to purchase service credit for not more than 2
years of full-time service as a volunteer in the VISTA program
provided for under sections 101 to 108 of title I of Public Law 93-
113,
42 U.S.C. USC 4951 to 4958, or as a volunteer, volunteer
leader, or employee in the Peace Corps under sections 5 to 7 of
title
I of Public Law 87-293, 22 U.S.C. USC 2504 to 2506, upon on
request and presentation of documentation of the employment
rendered
which that is verifiable from official reporting unit
records or other acceptable documentation as determined by the
retirement
board, and upon on payment to the retirement system of
an
amount which that is equal to the actuarial cost of the service.
For the purpose of computing payment under this subsection, the
compensation
amount used shall must not be less than the highest
fiscal year compensation previously received by the member.
(2)
Service shall must not be credited under this section
until the member has accumulated 10 years of credited service.
(3)
Service credit purchased under this section shall is not
be
creditable toward retirement under
this act if the member is or
will be receiving a pension or annuity for the same service from
another retirement system.
(4)
Service A member may
purchase credit may be purchased
under this section instead of, but not in addition to, purchasing
service credit under section 32.
(5) A member who first became a member on or after June 10,
2012 is not eligible to purchase service under this section.
Sec.
34. (1) A Except as
otherwise provided in this section, a
member who left or leaves service as an employee of the department
of state police for purposes of maternity or paternity or child
rearing, and returns to service as an employee of the department of
state police, without other intervening employment of more than 20
hours per week for each week for which service credit is claimed,
may purchase service credit for the time period or periods during
which
the person individual was separated from service as an
employee
of the department of state police upon on request and
payment to the board of an amount determined by the board to be the
actuarial
cost. The total service credited under this section shall
must not exceed 2 years. A member requesting purchase of service
credit under this section shall certify to the board the purpose
for which the member took leave and was separated from service as
an employee of the department of state police.
(2) Service credit purchased under this section may not be
used to satisfy the minimum of 10 years of service credit required
to receive a retirement allowance under this act.
(3) If a member who made payment under this section dies and a
retirement allowance beneficiary has not been designated, or if the
member leaves employment before his or her retirement becomes
effective,
the payment made by the member shall must be refunded
upon
on request to the member or to the member's legal
representative.
(4)
A Except as otherwise
provided in this section, a member
who reduces hours of employment with the department of state police
for purposes of maternity, paternity, or child rearing may purchase
service credit for those hours by which employment was reduced if
all other requirements of this section are met.
(5) A member who first became a member on or after June 10,
2012 is not eligible to purchase service under this section.
Sec. 42. (1) Hospitalization and medical coverage insurance
premiums payable by a retirant or his or her retirement allowance
beneficiary and his or her dependents under any group health plan
authorized by the Michigan civil service commission and the
department
shall must be paid in amounts provided by this
subsection from appropriations for this purpose made to the
retirement system. Until October 1, 1989, the amount payable by the
retirement
system shall must be 90% of the entire monthly premium
payable for hospitalization and medical coverage insurance.
Beginning October 1, 1989, the amount payable by the retirement
system
shall must be 95% of the entire monthly premium payable for
hospitalization and medical coverage insurance.
(2) Effective October 1, 1989, dental coverage and vision
coverage insurance premiums payable by a retirant or his or her
retirement allowance beneficiary and his or her dependents under
any group health plan authorized by the Michigan civil service
commission
and the department shall must
be paid in amounts
provided by this subsection from appropriations for this purpose
made to the retirement system. The amount payable by the retirement
system
shall must be 90% of the entire monthly premium payable for
dental coverage and vision coverage insurance.
(3) The health-dental-vision benefits fund is created and
shall
be is the fund into which appropriations of the this state
for health, dental, and vision benefits are paid. Benefits payable
pursuant
to under subsections (1) and (2) shall be are payable
from
the health-dental-vision benefits fund. The assets and any earnings
on the assets contained in the health-dental-vision benefits fund
and the health advance funding subaccount are not to be treated as
pension
assets. for any purpose.
(4) The health advance funding subaccount is the account to
which
amounts transferred pursuant to under
section 14(3) are
credited. Any amounts received from the health advance funding
subaccount
and accumulated earnings on those amounts shall must not
be expended until the actuarial accrued liability for health
benefits under this section is at least 100% funded. The department
may expend funds or transfer funds to another account to expend for
health benefits under this section if the actuarial accrued
liability for health benefits under this section is at least 100%
funded.
(5) Notwithstanding any other provision of this section, the
department may transfer amounts from the health advance funding
subaccount to the reserve for employer contributions created by
section
16 if the actuarial valuation prepared pursuant to under
section 14 demonstrates that, as of the beginning of a fiscal year,
and after all credits and transfers required by this act for the
previous fiscal year have been made, the sum of the actuarial value
of assets and the actuarial present value of future normal cost
contributions does not exceed the actuarial present value of
benefits.
(6) Except as otherwise provided in sections 25 to 28, this
section does not apply to a member who first becomes a member on or
after June 10, 2012.
Sec. 42a. (1) A member who first becomes a member on or after
June 10, 2012 must not receive any health insurance coverage
premium from the retirement system under section 42. In lieu of any
health insurance coverage premium that might have been paid by the
retirement system under section 42, a member's employer shall make
a matching contribution up to 2% of the member's compensation to
the Tier 2 plan for each member who first becomes a member on or
after June 10, 2012. A matching contribution under this subsection
must not be used as the basis for a loan from an employee's Tier 2
account.
(2) A member who first becomes a member on or after June 10,
2012 may make a contribution up to 2% of the member's compensation
to a Tier 2 account. A member described in this subsection may make
additional contributions to his or her Tier 2 account as permitted
by the department and the internal revenue code.
(3) Except as otherwise provided in this subsection, a member
is vested in employer contributions made to his or her Tier 2
account under subsections (1) and (2) according to the vesting
provisions under section 42b(2). A member who is eligible for
health insurance coverage under section 42 or as a result of
benefits provided under sections 25 to 28 is not vested in any
employer contributions under subsection (1) and forfeits the
contributions and earnings on the contributions.
(4) The contributions described in this section must begin
with the first payday after the member is employed and end on his
or her termination of employment.
(5) An individual who was a former member on June 9, 2012 and
who is reemployed by the department of state police and who
subscribes to the constitutional oath of office after June 10, 2012
is treated in a manner as determined by the retirement system in
consultation with the office of state employer.
(6) In lieu of any other health insurance coverage that might
have been paid by the retirement system, a $2,000.00 credit to a
health reimbursement account within the trust created under the
public employee retirement health care funding act, 2010 PA 77, MCL
38.2731 to 38.2747, must be made by the employer for a member who
first becomes a member on or after June 10, 2012 who has at least
10 years of service at his or her first termination of employment.
(7) The retirement system shall determine a method to
implement subsections (5) and (6), including a method for crediting
the amounts in subsection (6) to comply with any agreements between
the office of state employer and members, and the internal revenue
code, as applicable.
Sec. 42b. (1) A qualified participant is immediately 100%
vested in his or her contributions made to Tier 2.
(2) A qualified participant who is a member of Tier 1 vests in
the employer contributions made on his or her behalf to Tier 2
according to the following schedule:
(a) On completion of 2 years of service, 50%.
(b) On completion of 3 years of service, 75%.
(c) On completion of 4 years of service, 100%.
Sec. 60. Notwithstanding any other provision of this act, the
department shall implement the Tier 2 plan as soon as
administratively feasible, but not later than September 30, 2019.
Sec. 61. For the purposes of this section and sections 62 to
74, the words and phrases defined in sections 62 to 64 have the
meanings ascribed to them in those sections.
Sec. 62. (1) "Accumulated balance" means the total balance in
a qualified participant's, former qualified participant's, or
refund beneficiary's individual account in Tier 2.
(2) "Compensation" means the remuneration paid to a
participant on account of the participant's services rendered to
his or her employer equal to the sum of the following:
(a) A participant's W-2 earnings for services performed for
the employer.
(b) Any amount contributed or deferred at the election of the
participant that is excluded from gross income under section 125,
132(f)(4), 401(k), 403(b), or 457 of the internal revenue code, 26
USC 125, 132, 401, 403, and 457.
Sec. 63. (1) "Employer" means this state.
(2) "Former qualified participant" means an individual who was
a qualified participant and who terminates the employment on which
his or her participation is based for any reason.
Sec. 64. (1) "Plan document" means the document that contains
the provisions and procedures of Tier 2 in conformity with this act
and the internal revenue code.
(2) "Refund beneficiary" means an individual nominated by a
qualified participant or a former qualified participant under
section 72 to receive a distribution of the participant's
accumulated balance in the manner prescribed in section 73.
Sec. 65. (1) The department shall administer Tier 2 and shall
be the fiduciary and trustee of Tier 2. The department may appoint
an advisory board to assist the department in carrying out its
duties as fiduciary and trustee. The department and the state
treasurer shall comply with Executive Reorganization Order No.
1999-5, MCL 38.2721, in the administration of Tier 2.
(2) The department shall determine the provisions and
procedures of Tier 2 and the plan document in conformity with this
act and the internal revenue code.
(3) The department has the exclusive authority and
responsibility to employ or contract with personnel and for
services that the department determines necessary for the proper
administration of and investment of assets of Tier 2, including,
but not limited to, managerial, professional, legal, clerical,
technical, and administrative personnel or services.
Sec. 66. (1) A qualified participant, former qualified
participant, or refund beneficiary may request a hearing on a claim
involving his or her rights under Tier 2. On written request, the
department shall provide for a hearing that must be conducted under
chapter 4 of the administrative procedures act of 1969, 1969 PA
306, MCL 24.271 to 24.288. An individual may be represented by
counsel or other authorized agent at a hearing conducted under this
section.
(2) Chapters 2, 3, and 5 of the administrative procedures act
of 1969, 1969 PA 306, MCL 24.224 to 24.266 and 24.291 to 24.292, do
not apply to the establishment, implementation, administration,
operation, investment, or distribution of Tier 2.
Sec. 67. Each qualified participant, former qualified
participant, and refund beneficiary shall direct the investment of
the individual's accumulated employer and employee contributions
and earnings to 1 or more investment choices within available
categories of investment provided by the department. The
limitations on the percentage of total assets for investments
provided in the public employee retirement system investment act,
1965 PA 314, MCL 38.1132 to 38.1141, do not apply to Tier 2.
Sec. 68. The administrative expenses of Tier 2 must be paid by
the qualified participants, former qualified participants, and
refund beneficiaries who have not closed their accounts in a manner
determined by the department.
Sec. 69. A qualified participant shall not participate in any
other public sector retirement benefits plan for simultaneous
service rendered to the same public sector employer. Except as
otherwise provided in this act or by the department, this section
does not prohibit a qualified participant from participating in a
retirement plan established by this state or other public sector
employer under the internal revenue code. For the purposes of this
section, "public sector employer" includes, but is not limited to,
a reporting unit.
Sec. 70. (1) This section is subject to the vesting
requirements of section 42b.
(2) Unless the qualified participant affirmatively elects not
to contribute or elects to contribute a lesser amount, the
qualified participant shall contribute 2% of his or her
compensation to his or her Tier 2 account. The qualified
participant's employer shall make a contribution to the qualified
participant's Tier 2 account in an amount equal to 50% of the first
2% of compensation contribution made by the qualified participant
under this subsection.
(3) A qualified participant may make contributions in addition
to contributions made under subsection (2) to his or her Tier 2
account as permitted by the department and the internal revenue
code.
Sec. 72. A qualified participant or former qualified
participant may nominate 1 or more individuals as a refund
beneficiary by filing written notice of nomination with the
department. If the qualified participant or former qualified
participant is married at the time of the nomination and the
participant's spouse is not the refund beneficiary for 100% of the
account, the nomination is not effective unless the nomination is
signed by the participant's spouse if the signature of the
participant's spouse is required by the plan document. However, the
department may waive this requirement if the spouse's signature
cannot be obtained because of extenuating circumstances.
Sec. 73. (1) A qualified participant is eligible to receive
distribution of his or her accumulated balance in Tier 2 upon
becoming a former qualified participant.
(2) Upon the death of a qualified participant or former
qualified participant, the accumulated balance of that deceased
participant is considered to belong to the refund beneficiary, if
any, of that deceased participant. If a valid nomination of refund
beneficiary is not on file with the department, the department, in
a lump sum distribution, shall distribute the accumulated balance
in accordance with the plan document.
(3) A former qualified participant or refund beneficiary may
elect 1 or a combination of several of the following methods of
distribution of the accumulated balance:
(a) A lump sum distribution to the recipient.
(b) A lump sum direct rollover to another qualified plan, to
the extent allowed by federal law.
(c) Periodic distributions, as authorized by the department.
(d) No current distribution, in which case the accumulated
balance shall remain in Tier 2 until the former qualified
participant or refund beneficiary elects a method or methods of
distribution under subdivisions (a) to (c), to the extent allowed
by federal law.
Sec. 74. (1) The department has the right of setoff to recover
overpayments made under this act and to satisfy any claims arising
from embezzlement or fraud committed by a qualified participant,
former qualified participant, refund beneficiary, or other person
who has a claim to a distribution or any other benefit from Tier 2.
(2) The department shall correct errors in the records and
actions in Tier 2 under this act, and shall seek to recover
overpayments and shall make up underpayments.
