Lawmakers don’t often like to talk about it, but our nation’s state and local pension systems nationwide are broken.
If nothing changes, our generation of current and future taxpayers will be forced to pick up the tab for these outdated and costly retirement systems.
Luckily, some states are beginning to recognize that unfunded pension liabilities are a ticking time bomb and that they need to become more efficient and effective custodians of our tax dollars.
In Michigan alone, the state’s pension system has accumulated $29.1 billion in unfunded liabilities. This debt has been a looming threat to the state’s public education system, posing a serious problem for teachers, taxpayers and students throughout the Wolverine State.
Fortunately for young Michiganders, a sweeping set of new reforms is being considered by the Michigan legislature that will begin to address The Wolverine State’s pension problem before it’s too late.
The reforms to the Michigan Public Schools Employees Retirement System (MPSERS) will phase out the old system and “prioritize defined contribution plans and limit the future scope of the pension system, while fulfilling commitments to current teachers and retirees,” according to the Mackinac Center for Public Policy. The reforms will keep the old pension system active for current employees who rely on it. The system will only change for new employees. Michigan public school employees hired after Sept. 30, 2017, will be automatically enrolled in the new system.
These reforms are a crucial first step to ensure the state’s pension system is solvent and that spending decisions made today do not destroy our generation’s future.
As pension system problems continue to plague state and local governments across the country, elected leaders need to pursue real reforms that will protect young adults and future generations of taxpayers.