Gov. Rick Snyder last Thursday signed a bill modernizing the Michigan Public School Employees Retirement System, increasing the state's share to defined contribution plans, while reducing the unfunded liabilities of the overall system.
"Modernizing the school employee retirement system means these benefits will be there for retired school employees in the long term, while at the same time protecting taxpayers from escalating liabilities," Snyder said. "We worked hard to make sure everyone was at the table in discussions about how to best revise the system and I'm thankful for all of the input and collaboration that led to a great outcome for current and future retirees as well as all Michigan taxpayers."
Senate Bill 401, sponsored by state Sen. Phil Pavlov, will close the current MSPERS "hybrid" plan to new enrollees as of Feb. 1, 2018 and create a new 401(k)-style defined contribution plan with an automatic employer contribution of 4 percent of the employee's salary, and an additional voluntary matching contribution of 3 percent from the state School Aid Fund. It is now Public Act 92 of 2017.
The new law will also:
- Create a new optional revised hybrid plan that will include a 50/50 cost share between the employee and employer.
- Require regular studies to calculate the mortality age in the system, and increase the regular retirement age by at least one year if the mortality rate shows an increase of one or more years.
- Create a trigger under which the hybrid plan would be closed if it is less than 85 percent funded for two consecutive years.
Published: Mon, Jul 17, 2017
