Michigan panel votes to close pensions to new teachers

(AP) — A Michigan Senate committee narrowly voted Wednesday to close the pension system to new teachers and other school employees and to instead offer them only a 401(k)-style retirement plan, despite objections from Gov. Rick Snyder.

The switch in plans, which would be similar to one made for newly hired state employees nearly 20 years ago, is favored by many Republican lawmakers as a way to address the $26.7 billion in unfunded pension liabilities facing the Public School Retirees Retirement System.

The nonpartisan Senate Fiscal Agency estimated the switch could cost $1.6 billion to $3.8 billion in the first five years, depending on whether accounting rules are followed and other factors such as the estimated rate of return on investments.

Snyder and lawmakers in 2012 forced existing school employees to pay more toward retirement or receive a smaller pension, eliminated cost-of-living adjustments for new hires, and ended their retiree health insurance and replaced it with extra contributions to their 401(k).

Senate Minority Leader Jim Ananich, D-Flint, said Republicans are too blame for there being fewer active members in the teacher retirement system, in part by allowing the expansion of publicly funded charter schools where many teachers are not enrolled in MPSERS.