AFT Michigan Retiree Legislative Update
NEW ATTACK ON DEFINED BENEFIT PENSIONS
Right before the legislature adjourned for the holidays, a seven bill package (SB 722-728) affecting school employee retirement benefits was introduced in the Senate, with the primary goal of moving all new hires into a defined contribution plan. The bills were sponsored by many of the senators who were on the "pro-defined contribution" side of the Senate Republican caucus during the legislative battle that led to PA 300's enactment last session. At that time, thanks to AFT-Michigan and its allies in this fight, we blocked their efforts to move new hires into a solely defined contribution plan. Currently, newly hired school employees may choose between the Pension Plus Plan (a hybrid defined benefit plus defined contribution plan) and the Defined Contribution plan. In the Pension Plus Plan, "Tier 1" refers to the defined benefit part of that plan and "Tier 2" to the defined contribution part of it.
AFT-Michigan anticipates hearings on these bills, all of which were referred to the Senate Appropriations Committee, early next year. We believe that these hearings will be held jointly by the Senate Appropriations Retirement Subcommittee, chaired by Sen. Jansen, and the K-12 Subcommittee, chaired by Sen. Howard Walker (R-Traverse City). See below for contents of each of these bills:
Clearly, these bills clear threat to the retirement security of school employees. With the exception of Senator Caswell's bill, all of the other bills would directly reduce the retirement security of school employees hired on or after July 1, 2014. To the extent that reducing membership of the defined benefit system negatively affects the number of members in the MPSERS system, it directly affects retirees in the defined benefit and hybrid plans by reducing, over time, the assets of the system and thus affecting investment options as well as the number of people with a stake in protecting retirees.
AFT-Michigan urges its active and retired members to contact their state senators in opposition to these bills.
December 19, 2013