State Rep. Ben Frederick of Owosso this week voted in favor of legislation that would provide more than 4,000 teachers and other school employees across Michigan an improved option for their retirement savings.
The bill approved by the Michigan House would ensure that all public school employees who switched from a pension to a 401(k)-style plan are eligible for an improved savings option signed into law earlier this year – the same plan available to all state employees. The new bill makes the enhanced option available to school employees who originally chose to switch to a 401(k) plan in 2012, freezing their pension benefits.
These 4,000-plus school employees were not included in the retirement reforms signed into law in September.
“This is an important fix,” Frederick said. “It will make sure all teachers who have opted to have a 401(k) are treated the same – and treated the same as state legislators and other state employees as well.”
The switch allows the employees to receive an additional employer match of up to 3 percent of their compensation for their 401(k) savings plans. The extra match comes on top of an automatic employer contribution equal to 4 percent of compensation.
House Bill 5093 advances to the Senate for consideration.