News Story

Center-Left Interest Group's Whopper On Michigan Teacher Retirement Benefits

Most private sector workers only dream of such security

A center-left group that promotes spending more on public schools claimed in recent report that Michigan’s public school teachers get “poor or no retirement offerings.”

Called the Education Trust-Midwest, the group included the claim in a paper explaining its belief that Michigan public schools have a hard time retaining teachers.

The paper stated, “Other common barriers to higher salaries and teacher retention include under-compensation for additional responsibilities and poor or no retirement offerings.”

Public school teachers in Michigan receive very substantial "retirement offerings.”

The state of Michigan paid $2.8 billion to fund public school employee pensions in 2020, and another $709 million for school retiree health insurance. These are recurring annual expenses, with large and growing amounts having come out of state tax collections for decades.

The amount does not include the cost of substantial taxpayer-funded contributions (up to 7% of an individual's annual salary) into the tax-deferred retirement accounts of teachers hired starting in February 2018. The newer teachers can use that money to purchase an annuity. These teachers also get taxpayer-funded contributions of up to 3% of their pay to post-retirement health benefits.

Teachers hired before 2018 received a defined-benefit annual pension. For example, a teacher that worked 35 years and made $70,000 a year, would receive an annual pension of $36,750 a year and would still be eligible for Social Security.

The Education Trust-Midwest did not respond to an email seeking comment.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.