Signed by Governor Rick Snyder

Vote Smart's Synopsis:

Vote to pass a bill that amends teacher retirement plans by converting teacher retirement accounts into 401(k) accounts

Highlights:

• Requires that all retirement contributions must be split 50-50 between the employer and employee (Sec. 41).

• Requires the retirement system to have both fixed and variable annuity options available (Sec. 108).

• Prohibits the normal cost contribution rate to teacher retirement plans from being less than the cost of the immediately preceding year (Sec. 41).

• Specifies that the unfunded actuarial accrued liability of an employer’s payroll may not exceed 20.96% for a reporting unit that is not a university (Sec. 41).

• Establishes that the department will assume a 6% rate of return on investments per year of teachers who entered the retirement savings system after February 1, 2018 (Sec. 41).

• Specifies that the department assumes an annual salary increase of 4% for teachers (Sec. 41).

• Authorizes the retirement system to determine different rates for individuals who became members between July 1, 2010 and February 1, 2018 (Sec. 41).

• Specifies that if a member dies, the payments they made must be refunded to their beneficiary if requested (Sec. 42).

• Prohibits individuals from purchasing more than 5 years of service credit towards retirement allowance eligibility (Sec. 69).

• Requires service credit to be granted when an individual is on a sabbatical leave authorized by a reporting unit (Sec. 71).

• Prohibits purchasing service credit for the time of an individual’s absence that occurred during childbirth and recuperation (Sec. 79).

Full Bill Text

Vote Smart's Synopsis:

Vote to pass a bill that amends teacher retirement plans by converting teacher retirement accounts into 401(k) accounts

Highlights:

• Requires that all retirement contributions must be split 50-50 between the employer and employee (Sec. 41).

• Requires the retirement system to have both fixed and variable annuity options available (Sec. 108).

• Prohibits the normal cost contribution rate to teacher retirement plans from being less than the cost of the immediately preceding year (Sec. 41).

• Specifies that the unfunded actuarial accrued liability of an employer’s payroll may not exceed 20.96% for a reporting unit that is not a university (Sec. 41).

• Establishes that the department will assume a 6% rate of return on investments per year of teachers who entered the retirement savings system after February 1, 2018 (Sec. 41).

• Specifies that the department assumes an annual salary increase of 4% for teachers (Sec. 41).

• Authorizes the retirement system to determine different rates for individuals who became members between July 1, 2010 and February 1, 2018 (Sec. 41).

• Specifies that if a member dies, the payments they made must be refunded to their beneficiary if requested (Sec. 42).

• Prohibits individuals from purchasing more than 5 years of service credit towards retirement allowance eligibility (Sec. 69).

• Requires service credit to be granted when an individual is on a sabbatical leave authorized by a reporting unit (Sec. 71).

• Prohibits purchasing service credit for the time of an individual’s absence that occurred during childbirth and recuperation (Sec. 79).

Full Bill Text