Union Says Don’t Change Pension System, But Most Teachers Get No Pension

56.6 percent get nothing from ‘most efficient and secure’ school retirement system

The American Federation of Teachers has sent out an online letter to union members urging them to oppose reform of Michigan’s underfunded school employee pension system.

The missive links to a form AFT members can use to deliver a letter to their state representative and senator.

The AFT communication claims that bad things will happen if the state stops enrolling new school employees in its underfunded defined benefit pension system and instead gives contributions to an individual 401(k)-like account each new employee would own. It says:

“This would mean that hundreds of thousands of public employees would no longer have access to the most efficient and secure method of providing for retirement.”

ForTheRecord says: The majority of new teachers never get the “secure method of providing for retirement” that the union says is important. That’s because most of them never become “vested” or eligible for eventual retirement benefits — something that happens only after 10 years on the job.

More than half of Michigan’s public school teachers, 56.6 percent, never put in the 10 years needed to qualify for a pension, according to a 2014 report by Bellwether Education Partners. If those individuals had instead been given employer contributions to their own 401(k)-like accounts, the money and investments would be theirs no matter how limited their tenure.

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.