Michigan's Switch To 401(k)-Style Public Pensions Saved $4.3 Billion

Michigan's switch to a 401(k)-style public pension plan has saved
the state up to $4.3 billion in unfunded pension liabilities,
according to a recent study from the Mackinac Center for Public
Policy.

The report finds that the state's 1997 pension reform, which
ended defined pension benefits for new state employees, has cut
the unfunded pension liability in half over the past 14 years,
saving the state between $2.3 billion and $4.3 billion. The
plan's unfunded liability is currently about $4.1 billion.

The success of Michigan's pension reform supports the argument
for similar changes to the traditional pension plan now used by
the state's 260,000 public school teachers, the report's author,
Rick Dreyfuss,
told the Lansing State Journal. That plan has an unfunded
liability of $25 billion.

Michigan's teachers' unions have adamantly opposed the
switch.

Michigan's Republican Gov. Rick
Snyder is also looking to trim the state's unfunded retiree
healthcare obligations by ending retiree healthcare insurance for
state employees hired after 1997. Under his proposal, those
workers would get lump sum payments ranging from $66,642 to
$2,000.