Retirees! Join fellow pro-pension advocates for Nov. 29 Pension Action Day
Tuesday, Nov. 29 is CSR-MI Pension Action Day in Lansing and it’s the chance to tell your legislators that pensions are the bedrock of a secure retirement for public employees. To tamper with pensions is tampering with the state’s economy that benefits every Michigan community.
But tampering with public and municipal employee pensions is what legislators are considering—whether in the upcoming lame duck session or first thing next year. Those legislators have put pension reform at the top of their agenda. And we know that “reform” really means reducing, cutting or abolishing!
CSR-MI will be sponsoring the day, beginning at 9 a.m. in the Mackinac Room of the House Office Building at 124 N. Capitol Ave. in Lansing.
CSR-MI leaders will provide advocacy training and issue education before participants head to the Capitol for the Senate session to talk with their Representatives about the value of their pensions and retiree health benefits.
Lunch will be provided at 11:30 a.m. back at the Mackinac Room before participants return to the Capitol at 1 p.m. for the House session and a conversation with their Senators.
If you plan on attending, please RSVP to Capitol Services at 517-372-0860 today.
Will pensions, retiree health be on the lame duck agenda?
Even though the urgency to do pension reform has diminished somewhat after the election since Republicans held on to their majority, there are continued indications that there may be some kind of pension legislation moving and passing in the upcoming lame duck session.
This means our fight to protect public sector pensions and retiree health care is far from over.
As a possible lead up to action on pension reform, especially as it impacts the Michigan Public School Employees Retirement System (MPSERS), Sen. Phil Pavlov (R-Port Huron) introduced SB 1177 and 1178. Both bills deal with paying off MPSERS’ unfunded liability as a way of relieving the burden on the School Aid Fund. The bills are tie-barred to SB 102 that would close MPSERS to new hires and allow only a defined contribution plan in the future. Pavlov’s bill would pave the way for that action.
Rumors of pension reform began last summer and were confirmed in late September when Amway President Doug DeVos said restructuring government employee pension was the top priority of the West Michigan Policy Forum. To garner support for the issue, the DeVos family contributed nearly $1.5 million to Republican legislative candidates in the August primary.
In the extreme, legislators could move to shut down public employee pension systems and replace them with a 401(k) retirement plan. The current secure and efficient way of providing for retirement would end and its place would be a risky investment plan subject to fluctuations in the stock market.
Legislators have already begun setting the stage for some kind of action prior to the start of lame duck.
Sen. Phil Pavlov’s SB 1177 and SB 1178 would modify the actuarial process for paying off MPSERS’ unfunded accrued liability and lessen the burden on the School Aid Fund. The bills are tie-barred to SB 102 that would close MPSERS to new hires and only allow a defined contribution plan instead of the 2012 hybrid plan—a combination of a defined benefit plan and a 401(k) defined contribution plan. All of this could be an indication that legislators will be looking at making changes to MPSERS in the lame duck session,
There is also concern that legislators will go beyond school employee pensions and affect public pension systems and health care benefits at the state and local levels. Rep. Earl Poleski (R-Jackson) is pushing for lame duck reforms that focus on retiree health care and how local governments are funding those benefits and dealing with large unfunded liabilities.
Supporters and critics have also surfaced with their positions.
The Marketing Resource Group recently published the results of their fall poll of 600 likely Michigan voters gauging their feelings about pubic pensions. The poll, designed to elicit a desired response, featured misleading questions and inaccurate information. Supposedly, 60 percent of those polled support the idea that newly hired teachers and local government employees should be forced into 401(k) type pension plans.
In general, the public is not familiar with public pensions systems, so It’s hard to accept the validity of this poll when those polled were told that teachers receive a retirement pension negotiated by their union. Not true. It’s the Legislature that that sets the criteria for pension plans—not employee unions.
There is also no direct reference in the poll questions of the major 2012 reform to MPSERS which creates the hybrid plan that is now 100 percent funded. It ignores the fact that switching to a 401(k) only retirement plan would greatly increase any unfunded liabilities—not help pay them off faster.
The poll questions also imply that a 401(k) retirement plan is as good as—if not better—than traditional retirement plans. Again, not true. State employees shifted to a 401(k) plan lost an average of one third of their retirement value.
Governor Snyder has not officially offered any proposals to the Legislature to address unfunded liabilities in municipal employee retirement benefits. Instead, he says he will wait until the Legislature acts. However, in the past he has defended the hybrid pension plan. A year ago, he formed a workgroup to study the issue, but the group has not met since March.
On the other side of the issue, the State Board of Education opposes changes to MPSERS in the lame duck session. And Democrats in the House are not looking for any compromises if the issue of pensions comes up in lame duck. Minority Floor Leader Sam Singh (D-East Lansing) says there is not enough time in lame duck to decide an issue as important as the economic survival of senior citizens who worked hard to earn their pensions.
Call to action!
There are things you can do immediately to prepare for this pension fight—whenever it happens. You can start by contacting your legislators—by email or in person at CSR’s Pension Action Day on Nov. 29 —and educating them on the devastating effect losing pensions or retiree health care will have, not only on public employees, but also on the state’s economy.
The messages we need to send are clear. Pensions are not broken as legislators and critics have been claiming. Closing down pension systems would generate large transitions costs—larger than the current pension debts. The Office of Retirement Services (ORS) estimates an additional $500 million in new funds would be needed just for MPSERS alone if it is shut down.
Pensions are vital to Michigan’s economy and seniors’ well-being. The National Institute for Retirement Security (N(RS) reports that Michigan seniors provide $11 billion in economic security for the state and support for 77,000 jobs. Current traditional defined benefit pension plans offer a 1.5 percent better return on investments than 401(k) plans.
You are the perfect messenger. You know how important a secure retirement is and how devastating losing it would be. Your stories are what legislators need to hear. If you’re willing to tell your personal story emphasizing the importance of a pension and/or retiree health care, please contact CSR-MI Communications Consultant Rosemary Carey at email@example.com for assistance.
Resources you can use
There’s no shortage of information available on pensions and retiree health benefits that you can easily access to show the importance of a secure retirement. Whether you’re communicating with legislators, the media, members, family, friends, or the general public, use these resources to support your message.
- In its Nov. 18 story, “Lawmakers considering city pensions reforms” (http://www.lansingstatejournal.com/story/news/local/watchdog/2016/11/17/pension-showdown-possible-lame-duck/93296232/#_=_) and its Nov. 20 coverage, “What’s ahead for public pensions?”, the Lansing State Journal offered speculation on the future of public pensions. The focus is retiree costs for local governments where flat income is being eaten up by pensions and retiree health care costs.
- Coalition for Secure Retirement-Michigan (CSR-MI) csr-mi.com. CSR is the unified voice of active and retired school, state, and municipal employees and their pension and retiree health care issues at the state level. It’s also a clearinghouse for pension-related information. Attached to this newsletter are letters to the editor and talking points for your convenience. You can also use CSR’s Facebook page for regular updates on what’s going on with pensions in the state.
- National Public Pension Coalition (NPPC) https://protectpensions.org. The Coalition represents teachers, nurses, police, firefighters and other public sector employees. It has worked hard to protect the financial security of working families who rely on public pensions. NPPC works with a national network of state and local efforts to achieve this goal. Their blog, state news updates, and stories from retirees can help you personalize retiree issues.
- National Institute on Retirement Security (NIRS) nirsonline.org. The Institute is a non-profit research and education organization established to contribute to informed policymaking by fostering a deep understanding of the value of retirement security to employees, employers, and the economy as a whole. The Institute has created a “Pension Primer” which explains, in easy-to-understand terms, how pensions work; which plans are successful; and how to enhance the long-term sustainability of pension plans into the future.