Michigan Senate votes to steer more new teachers into 401(k)

(AP) — More newly hired teachers and other school workers would be steered into a 401(k)-style retirement plan instead of one that includes a traditional pension under a contentious bill that passed a critical test in Michigan's Republican-led Legislature on Thursday.

Republicans said the legislation would fix the Public School Employees Retirement System by keeping debt in check and giving new hires a more generous and portable retirement savings account with no risk to future taxpayers.

The Senate bill's sponsor, Republican Sen. Phil Pavlov of St. Clair, stressed that it would not affect current employees and said it would better protect retirees, taxpayers and the profession.

Starting Feb. 1, new hires would automatically default to a 401(k)-type retirement account like the ones that state employees receive.