Michigan to steer new school workers into 401(k)-only plan
LANSING, Mich. (AP) - Gov. Rick Snyder has signed into law a plan to steer more newly hired school employees into a 401(k)-only retirement benefit instead of one with a pension.
Republicans say Thursday's move will prevent future underfunding, while teachers unions worry the measure could ultimately lead to closing the pension system entirely to new hires.
Starting Feb. 1, new school workers will be automatically enrolled in a 401(k)-only plan like what state employees receive. They could opt out and instead pay more of their salary toward a pension than current school workers do, assuming more of the risk of underfunding.
New school employees have qualified for both a pension and a small 401(k)-type plan since 2010.
It's unknown how many new hires will take just the 401(k). Currently, 20 percent do.