Sen. Jansen introduces retirement reforms for state employees

Legislation designed to save the state money by encouraging eligible state employees to retire was introduced in the Michigan Senate recently, said sponsor Sen. Mark C. Jansen, R-Gaines Township.

“This is a reform measure that we must consider during such challenging financial times,” said Jansen, a member of the Senate Appropriations Committee. “The state is facing a $1.4 billion shortfall this year and we must control costs to help stretch taxpayer dollars.”

Senate Bill 1226 would reform the Michigan State Employment Retirement System (SERS) to provide incentives to retire for eligible state employees with 30 or more years of service.

To help ensure SERS remains financially sound, Jansen’s measure also would reinstate a three percent employee contribution. The Michigan Office of State Budget estimates that the three percent employee salary contribution for SERS participants would produce $23.6 million in gross savings during fiscal year 2010-2011 and a total of $289.6 million in gross savings from FY 2011 to FY 2020.

Measures to encourage state employees who are members of the defined benefit plan to retire include:

• Capping the earned service credit at 30 years. State employees continuing to serve beyond 30 years will be moved to a defined contribution plan for any additional years of service accrued after September 30 (excluding what is purchased by the employee).

• Eliminating state-subsidized retiree vision and dental coverage as part of the health plan for state employees retiring after September 30. Employees retiring after that will be able to purchase coverage for a monthly fee.

The administration has unveiled a retirement incentive plan to reduce the size of the public workforce by offering incentives to approximately 7,000 state employees and 39,000 public school employees eligible for retirement.

Jansen’s bill is modeled after of the governor’s proposed changes to the retirement system.

SB 1226 has been referred to the Senate Appropriations Committee

for consideration.

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