MI Pension Bill Inked by Granholm

May 21, 2010 (PLANSPONSOR.com) – Michigan Governor Jennifer M. Granholm has signed into law legislation that reforms the Michigan Public School Employees' Retirement System (MPSERS).

A Granholm news release said, among other things, the bill redirects employees hired on or after July 1, 2010, into a new lower-cost defined benefit/defined contribution hybrid plan. 

Granholm said in the announcement that the reforms are expected to save Michigan school districts more than $3 billion over 10 years including almost $680 million in the 2010 to 2011 school year, an estimate based on 28,000 of the 56,000 eligible school employees taking retirement between July 1 and September 1, 2010, when they will get a slightly enhanced pension.

According to the announcement, beginning July 1, 2010, all MPSERS employees will contribute 3% of their salary to be deposited into an irrevocable health care trust in addition to what they already contribute to the pension system.  Funds will be used to offset employer contributions for health care costs of current retirees.

The reform package goes into effect immediately.