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Tuesday, May 23, 2017, 11:25 AM

Bills To End Pensions For New Teachers Introduced

Legislation that would end the use of pensions for public school employees hired after September 30 and instead put them into 401(k) plans to save for retirement was introduced in the House and Senate today.

The bills, which have become a top priority of Republican legislative leaders, would mean no public school employees hired after that date would be added to the current hybrid plan that provides some pension benefit and some 401(k) benefit.

The bills’ prospects are unknown. Governor Rick Snyder has said the hybrid plan is working. While there is $29.1 billion in unfunded liability in the older plans within the Michigan Public School Employees Retirement system for those hired prior to 2010, the hybrid plan is fully funded, and the governor has raised concerns about the transition costs of moving new hires to a 401(k) system.

Top Republicans have said, however, that pensions create too much uncertainty into the future and are too costly to the state.

Mr. Snyder, House Speaker Tom Leonard (R-DeWitt) and Senate Majority Leader Arlan Meekhof (R-West Olive) held their regular leadership meeting this morning, but it appeared the governor and the two top Republican lawmakers remained steadfast in their positions on the issue. Mr. Leonard and Mr. Meekhof have indefinitely called off budget talks with Mr. Snyder, saying they want to see more progress on MPSERS first.

Under the bills, which are identical, the state would put funds equaling 4 percent of the employee’s salary into the employee’s 401(k). The employee could then contribute up to 3 percent of their pay with the state matching that contribution.

Contributions from the state would come from the School Aid Fund under the bills. The bills also contain an annuity option for employees.

Sen. Phil Pavlov (R-St. Clair) is sponsoring the Senate legislation, and Rep. Thomas Albert (R-Belding) is sponsoring the House bill.