MPSERS Pension Plus vs MIP: Key Differences Between Michigan's Plan Tiers

MPSERS members are assigned to a plan tier based on their original hire date — and the differences between tiers affect everything from your earliest retirement age to whether the state subsidizes your health insurance in retirement. If you're not certain which tier you're in, or how your tier's rules differ from a colleague's, start here.

The Three Main Tiers

Basic Plan — first hired before January 1, 1990 (without electing MIP). A non-contributory defined benefit plan. FAC is averaged over your highest 60 consecutive months (5 years). Full retirement: age 55 with 30 years of service, or age 60 with 10 years. No automatic post-retirement COLA — your pension stays at the amount calculated on your retirement date.

Member Investment Plan (MIP) — first hired between January 1, 1990, and June 30, 2010, or Basic members who elected MIP during historical windows. Variants include MIP Fixed, MIP Graded, MIP Plus, and MIP 7%. FAC is averaged over the highest 36 consecutive months (3 years). Full retirement: age 46 with 30 years of service (at least 15 years must be earned MPSERS service when universal buy-in is used), age 60 with 10 years, or age 60 with 5 years if you worked the last 5 consecutive years. MIP is the only tier with an automatic 3% annual post-retirement increase, calculated on the initial baseline pension.

Pension Plus — first hired between July 1, 2010, and January 31, 2018. A hybrid structure combining a defined benefit pension (1.5% multiplier) with a mandatory defined contribution account managed by Voya Financial. FAC is averaged over 36 consecutive months. Full retirement: age 60 with 10 years of earned public school service. No automatic COLA.

Pension Plus 2 (first hired February 1, 2018, or later) follows the same hybrid structure as Pension Plus but adds mandatory 50/50 employer-employee cost-sharing for the DB pension component.

The Biggest Differences in Practice

Earliest Retirement Age

MIP members with 30 years of service can retire as early as age 46 — decades before Pension Plus members, who must wait until 60 regardless of service years. Basic members can retire at 55 with 30 years, which is still 5 years earlier than Pension Plus.

Early reduced retirement (age 55 with 15 years of service) is available to MIP and Basic members, with a permanent reduction of 0.5% per month for every month under age 60 — that's 6% per year. Pension Plus has no early reduced option.

FAC Calculation Period

Basic Plan members average their five highest consecutive years. MIP and Pension Plus use three years. A shorter FAC window means your salary in the final few years has a larger impact on your pension — members approaching retirement should verify exactly which pay items qualify for FAC inclusion and which (like lump-sum sick leave buyouts) are excluded.

COLA

Only MIP retirees receive the automatic 3% annual post-retirement increase. It applies to the initial baseline pension amount — not to the Equated Plan advance portion, and it compounds annually. Over a 25-year retirement, this benefit adds up substantially.

Basic and Pension Plus retirees receive no automatic COLA. Their pensions are fixed at the amount calculated at retirement.

Healthcare in Retirement

This is where the 2012 reforms created the sharpest divide.

Premium Subsidy members (generally pre-2012 hires who kept the subsidy) receive a state-funded subsidy toward their retiree health insurance premium. The subsidy is graded: 30% at 10 years of service, increasing by 4 percentage points per additional year, up to 80% at 23 years. Public Act 127 of 2024 eliminated the mandatory 3% active payroll deduction for healthcare effective October 1, 2025 — members who kept the Premium Subsidy benefit see no reduction in their retirement healthcare eligibility.

Personal Healthcare Fund (PHF) members (generally post-2012 elections) receive no state health premium subsidy. They can enroll in MPSERS health coverage at retirement, but they pay 100% of the premium. If a PHF retiree ever disenrolls from MPSERS health coverage, the disenrollment is permanent — they and their dependents can never re-enroll.

The DC Component

Pension Plus and Pension Plus 2 members have a mandatory Voya-managed defined contribution account alongside their pension. The employer contributes 4% automatically, plus up to 3% in matching contributions. These DC balances are separate from the pension and are distributed directly by Voya at retirement — they don't affect your monthly pension calculation.

Basic and MIP members do not have a mandatory DC component, though some members who elected the DC conversion under PA 300 of 2012 have a frozen DB pension for pre-2013 service and a DC account for service after.

Confirming Your Tier

Log into miAccount and check your Member Statement. Your plan tier, service credit total, and FAC figures are all listed. If any detail looks wrong — especially service credit — contact ORS to resolve it before filing your retirement application.

The MPSERS Retirement Guide covers each tier's rules in dedicated sections, with worked examples for FAC calculations, payout comparisons, and healthcare enrollment steps tailored to your specific plan structure.

See more Michigan guides →