New plan could change retirement plans for newly hired teachers - WNEM TV 5

New plan could change retirement plans for newly hired teachers

Posted: Updated:
(Source: WNEM) (Source: WNEM)

A new deal in Lansing between the governor and Republican lawmakers could change future retirement plans for newly hired teachers across the state.

It would shift the current plan of a small 401-K and a pension into a 401-K only plan, similar to what state employees receive.

The plan won't affect those already in the classrooms, but it does lay out a new retirement plan for new hires - a plan union leaders believe could make future teachers think twice about that career choice.

"I think it is a horrible way of attracting new employees into public education. In fact, I don't think you're going to attract them," said Saun Strobel, MEA Union advocate.

New teachers would choose between a 401-K style plan with 7 percent employee contribution or a new hybrid pension plan.

Some see problems with the new hybrid plan. Not only will it cost more for new hires, but teachers would have to pay more if the stock market drops.

"It appears to me to be another shell game coming out of Lansing to shift costs from individuals to pay for mistakes made at Wall Street," said Rick Meet, with the Bay City Education Association.

Another flaw of the hybrid pension plan is if the plan dips below a certain amount of funding, the pension will close.

John Mozena, with the Mackinac Center for Public Policy, said he thinks this plan will actually be better for current teachers and future ones as well.

"What it does do is it puts any future hire teacher into a much more sustainable 401-K type plan that really gets their retirement out of the hands of politicians and bureaucrats who have been screwing it up for 40 years," Mozena said.

There are still a lot of unanswered questions because the plan was hashed out by the Senate Republican Caucus behind closed doors.

Senate Minority Leader Jim Ananich said the current retirement system is a draw for top-notch teachers. He said he still needs to see full details of the bill to determine its impact on the classroom.

Copyright 2017 WNEM (Meredith Corporation). All rights reserved.

Powered by Frankly
Powered by WorldNow CNN
All content © 2018, WNEM; Saginaw, MI. (A Meredith Corporation Station) . All Rights Reserved.
For more information on this site, please read our Privacy Policy, and Terms of Service, and Ad Choices.