This week a group of dedicated retirees in Michigan descended on Lansing to stand up for the retirement of their younger counterparts by lobbying their legislators to protect pensions.
We often cite Michigan as an example of a state that moved some (but not all) public employees from a defined benefit pension to a 401(k)-style retirement account – and suffered as a result. In 1997, Michigan closed its plan for state workers and since then debt has ballooned for the state while leaving workers woefully unprepared for retirement. Today, some legislators in Michigan want to do the same for teachers and other public workers. Here’s the cliffsnotes version:
-In 1997, Michigan closed its pension plan for new hires in the Michigan State Employees Retirement System. At the time of its closure, MSERS was overfunded with 109% of assets on hand to cover liabilities. By 2012, the plan’s unfunded liability grew to an enormous $6.2 billion.
-For those workers who now have a defined contribution 401(k)-style retirement plan, the average account balance is just $30,021. In other words, if a retiree wants to stretch out that defined contribution benefit over the course of their life expectancy, that’s a monthly benefit of just around $100.
-Now, some legislators have introduced bills to do the same to other public employees like teachers.
That’s why a number of retired and active public employees came to the state capitol on Tuesday to share with their legislators why their pension is important to them, and why it’s a better bang for the buck for taxpayers. Here’s what they said about the importance of their pension: