Michigan Votes Forum

Introduced in the House on January 27, 2005

Click here to view bill details.

Aldo is such a nice guy that people forget what is political roots are: Old line socialist. He was the editor or publisher of a socialist newspaper for some years. This bill shows the Left's continuing hostility and resentment to capitalism. It says to government workers, "You can't trust yourselves or free markets to fund your retirement, you can only trust the government and its power to coerce and take from others." The contradiction in this philosophy is bizarre: We hate those free markets and businessess that produce the wealth that makes us all so comfortable, yet government cannot fund the politician's paternalistic wealth redistribution schemes without free markets and businesses creating that wealth.

Aldo, there is a rea$on for the shift from a defined-benefit to a defined-contribution retirement program. How many of Michigan's taxpayers have retirement benefits? How many employers could afford matching 7.65% for social security/medicare and pay an additional 15% for retirement benefits? That's right, this is for the employees of the State of Michigan, not the private sector. I thought that the state was facing a financial crisis?

Yooper is right, employers moved away from defined benefit plans because of the problems with accrual accounting recognition of unfunded liability. Don't do it.

Many people don't realize the Michigan State Police officers, elected officals, and teachers still to this day are under the defined benefit (pension) plan and not the current defined contribution plan for other state employees. Simply put, state employees such as social workers, probation officers, correction officers, and other people with college degrees will not get pensions when they retire. This is very unfortunate. Many public sectors (such as counties, cities, and the federal government still give their employees pensions. Without a pension, many Michigan state employees will work elsewhere. Turnover already is high for Michigan government, (for example, in the department of corrections alone, last Oct. I saw a memo stating the department of corrections looses over 25% of their workforce within an 18 month span) and will only become greater unless a defined benefit plan is passed. Another point worth mentioning is training costs. It is pointless to send a correction officer to a paid 16 week acadamy only to have approximatly 1 out of 4 quit witin a year and a half. I say a compromise would be have the state of Michigan and the State of Michigan employees split the defined benefit cost. For example, if the defined benefit plan cost is 15%, then have the state pay 7.5% and the state employee pay 7.5%.

Defined benefit is dead as the Dodo bird in the private sector. Only in the public sector, where revenue can be collected at gunpoint if needed (vs. through honest trade), and where spoiled, entitlement-happy employees have absurdly excessive influence over the political system, would anyone ever consider going back to defined benefits. Here's a suggestion for state workers: When you turn 59 1/2 and retire, take your 403(b) or whatever, cash it in, and buy yourself an annuity from a reputable insurance company. You will then have a guaranteed income stream - a defined benefit.