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 We have been advising many of our clients who are teachers in the Michigan Educational system on the proposed changes to their Retiree Healthcare and Pension options. The state wants to put more of the cost of retiree healthcare and pensions on the teachers themselves due to their fiscal issues. The most important advice we have for our clients is that they have to crunch the numbers or have someone crunch the numbers for them to see what the impact of their decision is on their total financial plan. Teachers should also consider how long they have worked as a teacher and how long they plan to continue working in the school system. Finally, consideration should be given to whether the teacher is comfortable with 100% of their healthcare and retirement future completely in the hands of the state of Michigan.

The first change is in the retiree healthcare options where they have the option of selecting a Premium Subsidy or Personal Healthcare Fund. With the Premium Subsidy the employee will continue to contribute 3% toward retiree healthcare and retain the retiree health insurance premium subsidy offered by the state upon their retirement. With the Personal Healthcare Fund a portable, tax-deferred fund is established for the employee that can be used for paying healthcare expenses in retirement. Source:

There are four proposed changes to the State of Michigan teachers pension plan which are: Option 1: Voluntarily elect to increase their contribution to the retirement plan to retain the 1.5 percent pension factor in their pension formula for future service and future compensation. Option 2: Voluntarily elect to increase their contribution to the retirement plan to retain the 1.5 percent pension factor in their pension formula for future service and future compensation up until they reach 30 years of service and then reduced to 1.25 after that. Option 3: Voluntarily elect to not increase their contribution rate, and use a 1.25 percent pension factor for future service; Option 4: Voluntarily elect to no longer contribute to the pension fund and switch to a Defined Contribution type retirement plan for future service. Source:

Cyril S. White, MBA, CFP® Managing Director

White House Financial & Settlement Consulting, LLC


114 South Main Street • Suite 300 • Chelsea, Michigan 48118 • Phone: (734) 433-1670 • Fax: (734) 433-1671

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Fee-based investment advisory services offered through Sigma Planning Corporation, a registered investment advisor

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