The House Financial Services Committee today voted to advance a pair of proposals, including one from state Rep. Thomas Albert, providing annuity options for public school and state employee retirement planning.
The Office of Retirement Services would provide at least two fixed annuity options and may provide a variable annuity under House Bills 4274-75. Currently, public school and state employees are limited to only two options for retirement investments – a defined 401(k) or a 457 plan.
“It’s important to have several good, sound options on the table for people who are planning for one of the most important moments of their lives – retirement,” said Albert, of Lowell. “Employees would be able to buy into their annuity product while they are still employed, allowing them to plan earlier for a better and more reliable retirement income.”
Offering a quality product through the annuities is a pivotal feature of the legislation. An investment board within the Department of Treasury would be responsible for choosing a provider in the best financial position to meet the needs of employees who elect to go with an annuity retirement option. Certain criteria will be evaluated within the selection process.
The provider would be required to submit reports on their financial stability to show that funding promises made from the provider will be kept.
“It’s a vast industry and the amount of choices can be overwhelming from a customer’s perspective,” Albert said when testifying before the House Financial Services Committee on the plan. “Offered annuities should be vetted and safe, and we have stopgaps within these bills to ensure that.”
While under consideration by the committee, the plan was supported by groups from the Service Employees International Union as well as the Michigan Corrections Officer Organization. HBs 4274-75 now move to the House Appropriations Committee for further review.