LANSING ? Under the state worker retirement incentive passed by the Michigan Legislature on Thursday, state employees who are currently eligible to retire, have a combined age and years of service of 80, or have 30 years of service can apply for the pension multiplier once the governor signs the bill into law.
Workers who want to retire by November 1 have until October 22 to inform the state of their intention to retire, while workers planning to retire by January 1 have until November 5.
People eligible for retirement now will receive a 1.6 multiplier (normally 1.5) up to $90,000 of their final average compensation. Workers with 80 years of service and age, or those with 30 years of service, will see a 1.55 multiplier if they retire, also up to $90,000.
All workers will have to pay 3 percent of their salary toward future health care costs, but that mandate would end on September 30, 2013.
12,450 state workers are eligible for retirement under the bill, and budget assumptions are based off the school employee retirement pace: 36.9 percent of retirement-age employees and 16.4 percent for employees with 80 years of service/age or 30 years of service.
The increased pension multiplier costs $386.6 million, but is offset by replacing only two out of three employees, which saves $406.1 million.
Reducing the state’s premium share in the Tier 2 defined contribution plan for future employees to the maximum share given to civil service employees will achieve an unknown amount of savings over the next 10 years.
2010-11 gross savings are $205.1 million ($79.6 million general fund).
Over 10 years the bill saves $258.7 million ($100.4 million general fund).
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