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Benefits April 19, 2010
MI Senate Passes Teacher Retirement Changes
April 19, 2010 (PLANSPONSOR.com) – The Michigan Senate has approved a measure that would place new public school employees in a hybrid retirement plan that combines the traditional pension with a 401(k).
Reported by Rebecca Moore
Under the bill, employees would not be able to receive pension benefits until age 60, would be required to work at least 10 years for public schools, and would pay more into their retirement plan, according to the Detroit Free Press. The Senate has also passed to the state House legislation proposed by Governor Jennifer Granholm to provide incentives for school employees to retire.
It’s questionable whether the Senate bills have enough incentives to get the 35,000 retirees Granholm hoped for since they do not include a Granholm proposal to slightly increase monthly benefits for those who retire by October 1, the news report said. However, the bill includes a Granholm requirement that those who don’t retire this year will pay an additional 3% of salary toward retirement.
The Senate also removed key Granholm proposals to eliminate state-paid dental and vision health coverage for future retirees, and to set a 30-year limit on the work time employees can accrue toward pension benefits.
Granholm spokeswoman Liz Boyd said the governor is pleased with the Senate approval, but will work with the House to make the bill stronger, according to the news report. She said Granholm’s original plan would save the state general fund $98 million next year, while the Senate Fiscal Agency estimates the Senate version would save $15 million.