Anthony Randazzo and Len Gilroy from the Reason Foundation wrote a column entitled, “Pension reform will help Mich. teachers, July 6.” But this “reform” does little to help teachers and if anything, it will hurt recruitment and retention of our best educators.
Switching new hires into a more defined contribution-centered, 401(k)-style plan does not provide teachers with retirement security. In fact, this plan puts more of the liability and burden on our new teachers and on other new public school employees - putting their savings at the whims of the market. If we see another market crash like in 2008, many of our public school employees could see their retirement savings wiped out.
In 2012, Michigan lawmakers created a hybrid plan for public school employees, which before this new “reform” was passed, was 100 percent funded. This new bill was a chance for ideologues to attack public school employees rather than look out for what’s best for Michigan students and families. This plan is also another giveaway to Wall Street, which will collect large fees from the defined contribution, state-sponsored plan. It also places almost all the risk on public school employees. Randazzo and Gilroy should look into who is really taking the risk with this new plan, and what it actually does to lower the unfunded liability of MPSERS. The answer is pretty simple: nothing. If anything, this plan will deter some of our best educators from working in Michigan. Maybe they’ll look to Ohio, where the annual pension benefit is $30,924, or Wisconsin where it’s $23,430 per year. Only time will tell.
president, Coalition for Secure Retirement - Michigan