MPSERS Reform Implementation Temporarily Stalled
The Michigan Court of Appeals has upheld the Temporary Restraining Order (TRO) issued by the Court of Claims that indefinitely delays the October 26 deadline for current employees to make an election under the recently enacted MPSERS reform bill.
The TRO only affects current employees and means that the Sept. 4–Oct. 26 window that MIP and Basic members were originally given to make a choice between the three different pension contribution options no longer applies. Pension Plus employees and new employees are not impacted by this. A new election period will have to be set after the court rules. The hearing on the TRO is currently scheduled for November 1.
Per a memo issued by the Office of Retirement Services, this means that the MPSERS rate for this year will jump to 25.36% (from 24.46%) until the issue is resolved. The increase in the rate is due to the state collecting less revenue than projected because of the delayed implementation. The rate increase is only temporary and the rate will drop back down once the once the issues with the new law are resolved.
Because the timeline is written into law, the legislature will likely have to readdress the problem since neither the courts nor ORS can unilaterally change statute. New legislation poses the potential for the debate on converting to a defined contribution (DC) system could resurface during the lame duck session. There is no guarantee that the issue will resurface or that a DC conversion will have support, but if the legislature has to get involved to fix the MPSERS bill, this could come up.