Cost

• The cost of enrolling in either the Basic or MIP plan depends on your length of service. First, determine your highest fiscal year earnings as an employee of the Michigan public school system. Next, determine your actuarial percentage, which depends on your age and length of service. In general, it varies from 10.5 to 20.5 percent of your highest compensation. For a full table, see Calculating Actuarial Cost on the michigan.gov website. The actuarial percentage is always four percent lower for the Basic plan than for the MIP.
  
  

Retirement and Service Requirements

• Retirement age differs between the Basic and MIP options. If you have served 30 years, you are eligible at age 46 with MIP or age 55 with basic. If you have served 10 years, you are eligible at age 60 with both plans. If you have served five years, you are eligible at age 60 with MIP and not eligible with Basic. Requirements and retirement age are the same for both plans if you opt for Early Reduced retirement, Duty Disability, Duty Death or Nonduty Disability. You are eligible for Nonduty death after 10 years of MIP, regardless of your age, or after five years if you were over 60 at the time of your death. These service requirements increase to 15 years and 10 years, respectively, if you opt for Basic retirement. These payments occur in the unfortunate event of your death or disability either while you are working -- duty death or disability -- or while you are engaged in another, non work-related activity -- nonduty death or disability. In this case, you would name a beneficiary to receive the payments on your behalf.
  
  

Formula

• The benefit formula for MIP and Basic is the same. They use the Final Average Compensation (FAC) times 1.5 percent times years of service to determine your compensation rate.
  
  

Which is Best?

• The key difference between Basic or MIP retirement is early eligibility. You are eligible for retirement at a younger age under MIP, meaning you'll receive your retirement benefits over a longer period of time. MIP does cost four percent more than Basic each year. As a result, the option is yours depending on your priorities. You'll have the option to elect one or the other when you choose your benefits as an employee, and you can use these main factors to determine which you prefer.