NFIB announced that a survey of its small business members showed strong support for moving government employee pensions to defined contribution plans.
The survey was shared with the Senate Appropriations Committee at a hearing held on Senate Bills 102, 1177 and 1178 that would make much needed reforms to the Michigan Public School Employee Pension System (MPSERS). The legislation would close the existing defined benefit pension plan for public teachers to new participants on a specified date. Newly hired employees after that date would be able to participate in a 401K type defined contribution plan instead. Efforts are being made to pass the legislation in the lame duck session before the end of this year.
The MPSERS government employee defined benefit plan is paid for by taxpayers and does not require a contribution by the employees. The cost and liabilities associated with defined benefit pension plans like these have caused them to become rare in the private sector in favor of defined contribution plans, such as 401K plans, that require employees to contribute to their own retirement plan – usually with an employer match up to a certain amount. State employees were moved from their defined benefit plans to defined contribution plans in 1997.
NFIB told the Committee that taxpayers can no longer afford to pay for Cadillac pension plans for government employees while most private citizens are in defined contribution – 401K type plans. Most of these plans are underfunded and in economic distress because politicians from both parties continue to make pension promises they cannot keep with taxpayer dollars.
When asked: “Should government employee pensions be converted to defined contribution plans?” 92 percent of respondents said “YES”, 6 percent said “NO” and 2 percent were undecided. A copy of the survey question can be found HERE.
NFIB supports efforts by lawmakers to move to defined contribution pension plans for government employees so that taxpayer money can meet other school funding needs rather than be used to prop up these unsustainable pension benefit plans.
