Mich. Unions File Lawsuit Against Changes in State Retirement Plans

February 13, 2012 (PLANSPONSOR.com) – A coalition of unions in Michigan filed a lawsuit against a recent law that requires state employees to opt out of their defined benefit pension plans or start contributing 4% to cover the cost.  

The suit argues the law is unconstitutional because the Legislature acted without consulting or seeking the approval of the Michigan Civil Service Commission, which is responsible for state employee compensation issues, reports the Detroit Free Press.

Five unions representing 34,000 state workers—United Auto Workers Local 6000; the Service Employees International Union Local 517M; the American Federation of State, County and Municipal Employees Council 25; the Michigan Corrections Organization; and the Michigan State Employees Association—filed the lawsuit in the Michigan Court of Claims in Ingham County, according to the news report.

Under the Michigan law approved last fall, state workers employed since 1997 must either switch out of their pensions or start making the 4% payments. If they do not want to pay the 4%, employees can switch to a 401(k)-style pension plan. (See MI House Approves Changes to State Retirement Plans).