Michigan Pension Reform

Kathleen Gray

Lawmakers in the House and Senate forged ahead today with a plan to cut new teachers out of pensions and switch them to a 401(k)-type plan, despite a lack of progress between the Republican leadership in the Legislature and Gov. Rick Snyder on how to reform Michigan’s teacher pension system.

Rep. Thomas Albert, R-Lowell and Sen. Phil Pavlov, R-St. Clair, introduced bills that would close off the Michigan Public Schools Employee Retirement System – or MPSERS – to new teachers, beginning on Sept. 30 and put them into a defined contribution plan in which the state would contribute 4% of a teacher’s wages toward the retirement fund.

The employee could then contribute up to another 3%, which would be matched by the employer — for a total of up to 10% each year. The employer match would be covered by the state. Teachers currently in the MPSERS system would continue to get their pension benefits.