Employer Contribution Rate Set to Drop to 4 Percent - Lowest Since FY 2016

Subject to the Public Retirement Systems Actuarial Committee's approval, MPERS's employer contribution rate for FY 2022 is set to drop by four percentage points, from 33.75% to 29.75%. If approved, it will be the lowest employer contribution rate since FY 2016. This is good news, especially considering that the assumed long-term rate of return on investments was lowered from 7.125% to 6.95%.

This is a result of hard work done by the Board of Trustees since bringing me on as the executive director and general counsel, significantly on the legislative front. We are thankful that the Legislature has embraced almost all of the changes that the Board has recommended. 

For more details on the legislative changes, you can view the FY 2020 actuarial valuation here. MPERS will definitely need the support of employers in implementing these provisions.

Notably, for FY 2022, employer contributions will continue to be paid for employees who commence participation in the Deferred Retirement Option Plan (DROP) on or after July 1, 2021, employer contributions will continue to be payable. The amount that employers will save, if any, will depend upon how many of its employees begin participating in DROP on or after the beginning of that fiscal year.

While we know the rate won't stay at 29.75% forever, considering the COVID-19 revenue decreases, it's nice to see the potential for employer savings.

- Ben Huxen