We've Got Issues: GOP lawmakers seek to end teachers’ pension option

Dec 5, 2016

Credit David Cassleman

State Republicans want to reform the retirement system for public school teachers by eliminating pensions.

Since 2012, new teachers have received a hybrid retirement plan that blends a traditional pension with a 401(k). But legislation being debated during the lame-duck session would close the traditional pension system for future new hires and would offer them a 401(k)-style plan only. 

Republican lawmakers say the goal is to create a more reliable retirement system. The old pension system has unfunded liabilities totaling $26.7 billion, according to the Michigan Senate Fiscal Agency. 

 


“The state’s defined-benefit pension plan has been mismanaged for a generation,” says James Hohman of the Mackinac Center for Public Policy. “They continue to promise benefits now and have future taxpayers pay for it.”

Hohman says the current hybrid system carries the same underfunding risk as the older system. 

But many superintendents and education officials say it is a mistake to abandon the hybrid system. They say it will discourage future teachers from choosing the profession and will lead to high transition costs in the short term. 

“This is being rushed through during a lame-duck session,” says Mike Hill, superintendent of the Traverse Bay Area Intermediate School District. “It really is disappointing.”