Legislatures in Michigan, South Carolina Draft Pension Changes in Opening Days

New classes of lawmakers in several states are making their priorities clear as new legislative sessions begin; and altering pension benefits appears to be on the docket in Michigan and South Carolina.

In Michigan, the GOP majority has plans to close the state’s Teachers Retirement System to new hires, and instead shuffle those workers into a 401(k)-style plan.

But they might have trouble doing so, because Gov. Rick Snyder isn’t on board. From Detroit News:

Michigan’s Republican-led Legislature could be on a crash course with GOP Gov. Rick Snyder over plans to eliminate teacher pensions for new hires.

[…]

The incoming speaker has a powerful ally in the upper chamber, where Meekhof led a recent lame-duck push for legislation that would have closed Michigan’s teacher pension system to new hires and instead limited offerings to 401(k)-style retirement plans.

The legislation stalled out in late December amid opposition from the Snyder administration, which said the transition could cost the state $25 billion over the next 30 years.

The legislation was not a “cost-effective approach” to pension reform, said Snyder spokeswoman Anna Heaton, adding the governor is “open to working with the Legislature on this issue and reviewing the data again.”

Meanwhile in South Carolina, lawmakers are already drafting a bill that would increase contributions for workers and public-sector employers, and reduce the retirement system’s assumed rate of return.

From the Independent Mail:

A panel of S.C. House and Senate members kicked off the legislative session Tuesday by working to draft a bill to fix the state’s ailing system.

To begin addressing that $20 billion gap, lawmakers agreed Tuesday to include in a bill:

*Setting employee contributions to the state retirement system at 9 percent for the foreseeable future. Those contributions — now 8.66 percent — were set to increase to 9.2 percent of a worker’s pay check on July 1 if lawmakers do not act.

*Setting — and capping — law enforcement officers’ contributions in their retirement system at 9.75 percent of their salaries.

*Preserving the annual 1 percent cost-of-living increase, now capped at $500, promised to retirees.

*Allowing the contributions paid into the pension system by public-sector employers — including state agencies, local governments and school systems — to increase without an equal increase in the amounts paid into the system by employees. Currently, state agencies pay 11.56 percent of an employee’s salary into the pension system.

*Reducing the assumed rate of return on the pension system’s investments to 7 percent, down from 7.5 percent. The cost of that move — assuming the pension system’s assets will earn less — is roughly $140 million.

 

Share This Post

Recent Articles

Leave a Reply

Privacy Policy | © 2017 Pension360 and © 2014 Policy Data Institute | Site Admin · Entries RSS ·