(The Center Square) – The Michigan Legislature has approved a plan to improve the state’s retirement system and make it more stable.
Rep. Ann Bollin, R-Brighton Township, said the changes will protect pension recipients and taxpayers from spiraling costs.
“The changes we’re making now will offer long-term stability to the retirement system,” Bollin said. “This will prevent taxpayer costs from spiraling out of control in the future and help ensure retired public servants receive the pensions they were promised.”
Current law uses mortality tables, arguably outdated, and other assumptions to help determine benefits. House Bills 4263-66 would require updating mortality assumptions, adjusting the assumed rate of return, using layered amortization, and making other changes to ensure public pension obligations are adequately funded.
The plan also aims to reduce reconciliation payments from five years to three.
If signed into law, the plan would codify the current assumed rates of return and discount rates into statute, and eliminate retiree health care premium coverage for judges newly hired on or after this coming Sunday, and offer existing members the ability to monetize existing health care premium coverage and change to a health care savings plan.
“The assumed rate of return will be a more accurate reflection of the returns we see on a yearly basis,” Bollin said in a statement. “This will ensure adequate payments are made into our public retirement systems and provide better long-term solvency – because ultimately the state and its taxpayers would be on the hook if a public pension fund fails.”
The plan moves to Democratic Gov. Gretchen Whitmer for consideration. Whitmer’s office hasn’t responded to a request for comment.