Signed by Governor Rick Snyder

Vote Smart's Synopsis:

Vote to concur with House amendments and pass a bill that amends the retirement system for state employees.

Highlights:

• Requires state employees hired before January 1, 2012 to elect one of the following options during the election period that begins on January 3, 2012 and ends on March 2, 2012 (Secs. 35, 50 & 68):
• The option to contribute 4 percent of their compensation earned after March 1, 2012 to the employee’s savings fund for the payment of a retirement allowance; or
• The option to contribute 2 percent of their compensation to a tax-deferred account and receive a matching contribution of up to 2 percent from the state.

• Requires state employees hired on or after January 1, 2012 to contribute 2 percent of their compensation to a tax-deferred account and receive a matching contribution of up to 2 percent from the state (Sec. 68).

• Defines “tax-deferred account” as an account existing for deferred compensation plans established by the retirement system for which the retirement system has the authority to determine membership, eligibility, terms, and conditions (Sec. 55).

• Repeals the requirement that the state pay a portion of health insurance coverage premiums for employees hired on or after January 1, 2012 (Sec. 68).

• Repeals the requirement that state employees pay 3 percent of their compensation from November 1, 2010 until September 30, 2013 to the appropriate funding account for the payment of retirement health care benefits  (Sec. 35).

• Requires the state to refund the contributions of state workers, including any accrued interest, that were deposited into funding accounts for the payment of retirement health care benefits by the first payday after April 1, 2012 (Sec. 35).

Full Bill Text

Vote Smart's Synopsis:

Vote to pass a bill that amends the retirement system for state employees.

Highlights:

• Requires all public employees who are members of the state pension plan on December 31, 2011 and who elect to continue participation in the plan to contribute 4 percent of their compensation to the pension fund beginning on the first pay date after April 1, 2012, whereas existing law did not require such contributions (Secs. 35A & 50A).

• Requires public employees hired on or after January 1, 2012 to be enrolled in the Tier 2 plan or any tax-deferred retirement account for which the retirement system has the authority to determine the membership, eligibility, terms, conditions, and other administrative features (Sec. 55).

• Repeals the requirement that all public employees contribute 3 percent of the employee’s compensation to the public employee retirement health plan (Sec. 35).

• Requires the State or the retirement system to refund to members and former members all amounts contributed to the public employee retirement health plan by May 13, 2012 (Sec. 35).

• Authorizes public employees hired on or after January 1, 2012 to elect not to receive any health insurance coverage premium from the State, and specifies that in lieu of such coverage premium the employer will make a matching contribution of up to 2 percent of the employee’s compensation to a tax-deferred account (Sec. 68B).

Full Bill Text