I wanted to share with you some of the information we received from our speaker at Tuesday night’s meeting at Clifford Smart. Most of this information is from the House Fiscal Agency Report. The House of Representatives is now calling the SB1040 Retirement Bill, H-1.
1) H-1 would require all School employees (except those already in the Hybrid plan- newer hires) to choose one of the following options by August 31, 2012 and would take effect October 1, 2012:
a. Those on the Basic Plan – Increase contributions to 4% to maintain the 1.5% multiplier
b. Those on the MIP Plan – Increase contributions from current level to 7% to maintain the 1.5% multiplier
c. Continue current contribution rates (Basic – 0%, MIP – around 4% depending on when you were hired) TO FREEZE CURRENT BENEFITS AT A 1.5% multiplier, but receive a 1.25% multiplier for future years of service
d. Freeze existing pension benefits and move into a defined contribution plan (401K style) and get a flat 4$ employer contribution for future service.
2) Cap FAC to $100,000
3) Increase retire health insurance premium contribution to 20% for CURRENT retirees and future retirees
4) Eliminate retiree health insurance for all those hired after July 1, 2012; replaced with a 401k or 457 plan with an employer match of up to 2% plus a lump sum deposit of $1000 or $2000 upon termination.
5) Continue the 3% employee contribution for retiree health but guarantee an employee’s individual contributions. Use the 3% contributions to prefund future retiree health benefits. Current employees can opt out and move into the 2% matching plan described above.
6) Shift paying for retiree health care benefits to a prefunding system with employee and employer contributions, as well as state funding
FROM TERESE: I will send the entire Fiscal Agency Report later today.
MY OPINION: The state is still breaking the promises they made to everyone regarding their retirement and what they would have to count on. Future school employees will not be contributing substantially to the plan, thus at some point the retirement fund will run out of money again (unless there is some gigantic gain on the stock market).
We should be very cautious of 401K plans and would advise anyone who is considering that avenue to consult with their financial planner. It may work for you, or it may not. There are a few problems with it.
First, it further depletes monies being paid into the retirement fund, thus creating a future financial problem for retirees, school districts, and the school state aid fund which might be held liable for deficits in the future.
Secondly, I believe the state is setting the stage for education to be “business friendly” businesses. By thrusting retirement costs onto the employees, businesses don’t have to pay the costs of pension plans which have strict prepayment requirements. It makes education cheaper to take over.
Thirdly, the state is proposing a 4% employer contribution rate for the 401K type plans. However, they are capping the employer’s retirement fund charge at 24.46%. That is good for the districts, but if you pull out of the retirement fund to get 4% from the district, they are saving 20.46% on you!!!! You deserve more!
Also, if the payment to the state exceeds 24.46%, the state will require the excess to come from the State Aid Fund, which means less money being given to the school districts.
The House is also planning to change the way they assess the districts the charge for pension and health care, which could ultimately cost the districts more depending on how many employee groups they have privatized. While this will help cover some of the retirement fund costs for school employees who have been privatized and no longer pay into the fund, it really isn’t providing much relief for the districts considering the increase in contributions members of MPSERS are making.
WRITE YOUR HOUSE REPRESENTATIVE AND TELL THEM these things. Do they really understand what they are doing? It is worth a shot to see if they listen.
lease WRITE or CALL your REPRESENTATIVE in the HOUSE.
TALKING POINTS -Use the references above or your own!