How Hybrid Works
The MERS Hybrid Plan offers two plans in one — the stability and security of a defined benefit plan (Hybrid Part I), combined with the flexibility and investment choice of a defined contribution plan (Hybrid Part II).
Formula
An employee’s benefit at retirement is based on a Hybrid Part I formula combined with a Hybrid Part II formula.
View Formula Details
Understanding Part I:
The DB formula is determined by multiplying an employee’s final average compensation (FAC) by their years and months of service (service credit) by a benefit plan multiplier (established by the employer). Then that number is divided by 12 to determine the monthly (Straight Life) benefit amount.
Final average compensation (FAC)
The average of the employee’s highest consecutive three years of earnings. We review the employee’s entire work history and pull the highest consecutive 36 months of wages, even if they are not the most current ones.Service credit
This is the total amount of all qualified periods the employee worked. To receive one month of service credit, an employee shall work (or be paid as if working) for a certain number of hours in a month, as defined by the employer. A common requirement is 80 hours (10 eight-hour days).Benefit multiplier
The benefit multiplier is the specific percentage that the employer adopts (1.0%, 1.25%, 1.5%, 1.75%* or 2.0%*). The benefit multiplier of your plan does not change, helping provide a more predictable monthly benefit in retirement.*1.75% and 2.0% multipliers available only for divisions that do not participate in Social Security.
Understanding Part II:
For more information on Employer Contributions and Employee Contributions, see page 5 of the Hybrid Participant Handbook.
Funding The Plan
The MERS Hybrid Plan is funded by a combination of employer contributions and employee contributions.
- Part 1 – Defined benefit is funded by the employer. An employee contribution provision is available for adoption by eligible employers.
- Part II – Defined contribution allows both employer and employee contributions, and the employer determines the contribution structure.
Plan Advantages
There are many benefits of the MERS Hybrid Plan.
Expert Guidance
An expert team of staff covering areas such as legal services, investments, employee education, customer service, and finance.
Administration
Regional teams that are available to assist you with planning and administering your MERS plans.
Sound Investments
The MERS Investment Menu provides your employees with investment options to help them design a diversified portfolio that matches their investment needs.
Participant-Outcome Focused
MERS employs behavioral economics to design a streamlined investment menu that guides participants to make decisions in their own best interest, while giving them the freedom to pursue their own investment choices.
Financial Wellness
Hybrid plan participants gain access to a personalized online dashboard with free financial tools to help them make budgeting, planning, and retirement decisions all in one place. Retirement consultants are also here to give your employees straightforward guidance about their retirement and investment strategy, at no cost, so they can plan better for their future.
Fiduciary Responsibility
As the sole fiduciary for our retirement plans, MERS takes on the liability for selecting the investment options, monitoring fund performance, and ensuring fees are reasonable. Learn more about fiduciary responsibility.
