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School and State Pension Bill Activity
The following is your "one-stop shop" for information concerning the bills dealing with pension changes for school and state employees.
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Retirement Legislation Questions and Answers

The SEIU office has received a huge volume of questions concerning the retirement bills moving through the legislature. Please note that the bills are not in their final form and any and all provisions are subject to change. The school bill is now at conference committee and the state employee bill has not been voted on. SEIU will stay on top of the changes as they happen so check www.seiu517m.org often for the most up to date information. We have grouped the questions into broader categories and will address them here.

Is there any enhancement for defined contribution members?
There is no language that allows for any enhancement of a defined contribution member retirement.

Is there still a minimum age requirement for retirement?
No, the legislation would do away with the minimum age requirement. If you have 30 years of service, you can retire.

Can I retire without reaching 30 years of service to receive an increased multiplier?
Yes, if you are eligible now to retire under the defined benefit system you will be eligible to earn the increased multiplier.

What is the IRS Trust mentioned in the bill summary?
House Bill 4073 authorizes the creation of an IRS 115 trust. An IRS 115 trust is an irrevocable trust to be used for the purpose of holding, investing, and distributing assets for state and school retiree health care coverage. A voluntary employee benefits association (VEBA) is a similar, but less secure mechanism for funding healthcare. MESSA, which funds the healthcare benefits for a number of school employees is an example of a VEBA. Currently, retiree healthcare benefits are paid on a "pay as you go" basis, which has caused our state's unfunded liability for state and school retiree healthcare costs to balloon to a figure of $40-billion. Because of recent changes in accounting laws this unfunded liability must be included in our financial statements (aka books) and it is having a negative impact on our bond rating and the interest rates our state is being charged. The version of the bill that passed the House has some strong language that provides state and school retirees a contractual right to health care benefits- this is absolutely essential.

Do I keep my vision and dental coverage?
Yes, the provision that takes away dental and vision coverage has been removed. No changes to what you are currently eligible for.

Can you include purchased service credit in the 30 years of service retirement requirement?
Under the current version of the bill yes.

Isn’t the provision to require employees to pay 3% towards retirement a violation of our contract?
No. Retirement is not a bargained issue. The Michigan Constitution only requires the State guarantee a pension benefit. The Constitution doesn’t say anything about guaranteeing retirement health care coverage.