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Whether you’re leaving public school employment to pursue other opportunities or you’re facing a layoff or privatization, it's important to understand what will happen to your retirement benefits.
As explained under Contributions, you make contributions to the pension fund which helps fund your monthly pension benefits once you reach retirement eligibility requirements. However, when you leave public school employment before you're eligible to retire, you can choose what to do with your pension account. You can:
One of the biggest factors in your decision should be whether or not you are vested before you leave public school employment.
Note: Pension Plus 2 has been designed to ensure that sufficient funds are invested early in your career to support the benefit you will receive after age 60. If market fluctuations cause that benefit to be at risk (i.e., underfunded) you and your employer will share the cost of restoring the plan (50/50) to fully funded status over a 10-year period. Contributions for this situation are not refundable.
I’m not vested. What should I do?
If you have fewer than 10 years of service when you leave Michigan public school employment, you’re not eligible to receive a future monthly pension. But you do have options for your pension account as you leave the retirement system.
Can I take a refund?
Yes. You can request a refund (or transfer your pension contributions and interest to another qualified retirement plan) at any time after you terminate employment.
As noted above, Pension Plus 2 has been designed to ensure that sufficient funds are invested early in your career to support the benefit you will receive after age 60. If market fluctuations cause that benefit to be at risk (i.e., underfunded) you and your employer will share the cost of restoring the plan (50/50) to fully funded status over a 10-year period. Contributions for this situation are not refundable.
Consider the following before requesting a refund:
If you don’t take a refund of your pension contributions, they’ll remain on deposit with the retirement system where they’ll continue to earn interest annually and will count toward your future monthly pension if you return to public school employment and membership in the retirement system.
What happens if I die?
If you did not take a refund we’ll return any pension contributions and accumulated interest to your refund beneficiary or your estate once ORS is notified by your survivor.
I'm vested. What should I do?
If you are vested with at least 10 years of service when you leave public school employment and you leave your contributions on deposit with ORS, you will be eligible for monthly pension benefits when you reach the regular retirement age, currently set at age 60. Because you are deferring your pension until you reach the minimum age for retirement, you are a deferred member.
Should I take a refund?
Rarely is it advisable to take a refund of your pension contributions once you are vested. A refund forfeits all corresponding service and insurance eligibility for you and your survivor pension beneficiary. Carefully weigh your pension contributions against the value of your future lifetime pension and insurance benefits.
When can I get my pension?
As a deferred member, you will be eligible when you reach the regular retirement age, currently set at age 60.
Be sure to apply three to six months before you meet the age requirement. Your pension won't be any higher if you wait, and you could even lose money by waiting.
Your pension is calculated the same as a full retirement. Go to Calculating Your Pension for more information about your pension calculation.
Note: The current age for receiving benefits is 60. As Americans live and work longer, this may increase by one year for every year that life expectancy grows. If the retirement age increases to 61, members within 5 years of retirement age will be unaffected.
Will I get insurance benefits?
With the Personal Healthcare Fund, you, your spouse, and any eligible dependents may enroll in the retiree health plan if you enroll immediately upon retirement, but you will be responsible for the entire premium. If you disenroll from the plan at any time, you, your spouse, and your dependents will not be able to re-enroll.
See Retiree Healthcare for information about insurance eligibility.
What happens if I die?
Pension benefits. If you die before you're eligible for a pension (while in deferred status), your eligible survivor pension beneficiary will qualify for a monthly pension provided (1) you have at least 10 years of service; AND (2) you named your beneficiary with ORS before you terminated employment. Beneficiaries eligible for a monthly pension benefit include your spouse or an unmarried child under age 18; OR a child over age 18, parent, brother, or sister who is dependent on you for support.
The deferred monthly survivor pension becomes payable the month following when you would have turned age 60; it is paid as if you had chosen the 100 percent survivor option.
If you did not designate your survivor pension beneficiary while actively employed or your named pension beneficiary does not meet the eligibility requirements for a pension benefit, no monthly pension benefit can be paid. A refund of pension contributions and accumulated interest will be paid to your estate.
Insurance benefits. With the Personal Healthcare Fund, your survivors would not be eligible for any health, prescription drug, dental, or vision insurances through the retirement system.
Any separation from service allows you to receive payment from your retirement investment account. But don’t forget: You’re enrolled in an investment account so you can enhance your savings for retirement. It’s a good idea to leave your savings invested and growing on your behalf until you reach retirement. Use Voya Advisory Service to help you figure out how much you’ll need to save for retirement.
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