A major step in addressing the unfunded liabilities of generous government employee benefits has been accomplished with the passage of NFIB backed Senate Bill 401. The legislation will address the ongoing liability of the state’s teacher pension system (Michigan Public School Employees Retirement System – MPSERS), by encouraging newly hired teachers to opt into a 401(k)-type defined contribution plan.
Michigan small business owners support efforts to bring some common sense to expensive government pensions by moving them from the unsustainable defined benefit model to the defined contribution method used in the private sector.
Despite opposition from the teacher’s unions and other government employee labor unions, the legislation was passed and is expected to be signed by Governor Snyder.
The Reason Foundation has called the legislation “…a first of its kind, innovative pension reform bill that will provide a new set of retirement choices for state teachers and cap the growth of liabilities in the state’s current, structurally flawed retirement plan. The Michigan Public School Employee System (MPSERS)—currently only 60% funded with $29 billion in unfunded pension liabilities—will have its most realistic path to solvency in the past two decades.” You can read more about the details of the legislation HERE.