Latest attack on retirement unveiled in Senate Bill 1040
The latest legislative assault on retirement was launched on Thursday in the form of Senate Bill 1040. The bill makes sweeping changes to limit the pension benefits received by employees while increasing the out-of-pocket costs for both active and retired members.
MEA is conducting further analysis of SB 1040, but it is clear that this bill dismantles the retirement security of thousands of Michigan school employees and their families. MEA recently joined the Coalition for Secure Retirement and will be working through that coalition to fight against these destructive bills.
Key provisions of SB 1040 include:
- Increased contribution rates (to 5% for Basic or 8% for MIP, PLUS the additional 3% for retirement health) to retain the current multiplier of 1.5% for future years of service in the calculation of a pension.
- Employees choosing to not pay the higher contribution rates would either have to freeze their defined benefit accrual and shift to a 401(k) style plan with a 4% employer contribution OR have the multiplier for any future service lowered to 1.25%.
- Retroactively impose the graded premium subsidy program on all active employees (rather than only those hired after July 1, 2008).
- Cap the premium payment for retirement health benefits at 80% for active AND retired members -- effectively doubling the premium payment for many current retirees.
- Eliminate retirement health benefits for all future hires, replacing it with an employer-matched health savings account, and cap final average compensation at $100,000 for new employees.
For a full rundown of SB 1040's impacts on current employees and retirees, view CSR's Action Alert.
SB 1040's sponsor, Senate Appropriations Committee Chair Roger Kahn (R-Saginaw), and other Republican leaders indicate that this proposal will be moving through both chambers alongside the upcoming state budget process in April and May. Call your state Senator today and urge him or her to oppose this assault on the retirement of Michigan's dedicated school employees. Current employees should not have to pay even higher out-of-pocket costs to keep the benefits that have been promised to them. And retirees cannot afford for their health insurance premiums to increase, especially in light of the state's new pension tax.