How Do I Calculate MIP Benefits at Retirement in Michigan?

The Michigan Member Investment Plan, or MIP, provides pension benefits for employees of Michigan’s educational institutions. The Michigan teachers' retirement plan included contributions from teachers and from their employers until 1974. By 1977, only employer contributions funded teacher retirement plans. The MIP plan took effect in 1987. Employees covered by MIP contribute their own dollars toward the pension plan in addition to employer contributions. Employees covered under previous pension plans could choose to convert to the MIP, which provides more generous benefits, or remain in the older plan, now called the Basic Plan. Michigan teachers hired after January 1, 1990, calculate their retirement benefits according to the MIP guidelines.

Calculate your final average compensation, or FAC, which is an average of your highest annual earnings over three consecutive years. If you are a Basic Plan member, average your five highest earnings years.

Multiply your FAC by 1.5 percent, a pension factor for calculation purposes. For example, if your FAC equals $50,000, multiply by 1.5 percent (.015). This calculation equals 750.

Multiply your product from the previous calculation by your years of service, or YOS. In Michigan, you earn one year of service credit for every 1,020 hours you work in a fiscal year.

Divide your calculation total by 12 to determine your straight life monthly payment option. Multiply your final annual pension figure by 3 percent (.03) to determine your annual pension increase. Annual increases are the same each year based on your first-year benefit.


  • If you want to calculate options with survivor benefits, log into miAccount and use the pension calculator to review other options.