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MEA encourages service credit purchase before June 30 to avoid penalties
MEA members who wish to buy service credit so they can retire early need to make the purchase by June 30 to avoid penalties imposed by new state legislation.
Current MEA members who have satisfied the minimum service credit requirement to receive a pension, as well as the minimum age requirement, are eligible to receive the maximum health insurance premium benefit—the state pays 90 percent of the school employee’s health care costs, the employee pays 10 percent.
If members are going to buy service credit in order to retire earlier, they should make the purchase prior to June 30, MEA retirement consultant Chuck Agerstrand advises.
Under new legislation passed last fall, if you wait to purchase service credit until on or after July 1, 2008, that only qualifies you to receive an earlier pension. The insurance premium subsidy won’t begin until you would have become eligible for retirement without the purchase of service credit.
Agerstrand said members who want to purchase service credit by the June 30 cut-off date need to begin the process immediately.
“You can’t wait until the last minute to do this—you’ll be facing time constraints if you wait until the month of June,” Agerstrand said. “You need to do this now.”
The service credit purchase does not have to be completely paid by June 30, Agerstrand said. Members who enter into a tax deferred payment (TDP) contract that carries payment beyond June 30 will NOT be subject to the penalties of the new legislation.
For information on purchasing service credit, contact the Office of Retirement Services at 800/381-5111 or go to its Web site at www.michigan.gov/orsschools.