Retire now for better pension?

LANSING, Mich. - Older Michigan teachers would receive padded pensions in exchange for leaving the workforce soon under a plan in the works by the Michigan Education Association and a bipartisan group of lawmakers, the Detroit Free Press reported.

The plan would increase pension benefits by about a third, or $500 per month, for teachers who already are eligible for full pensions - typically after 30 years of experience - and who agree to retire now, according to the Free Press. Because school districts could then hire beginning teachers at lower wages, the proposal could save public schools up to $411 million next year, the MEA said, according to the Free Press. That savings would disappear over time, as new teachers climbed the salary schedule, the Free Press reported.

An estimated 90,000 teachers are now eligible to retire, and the MEA predicted about 10 percent would accept the one-time deal, if offered, the Free Press reported. The plan would require legislation.

Jeanne Bunn, a Detroit teacher, told the Free Press that the boost would help older teachers but asked about the burden on the teacher pension fund overall.

"It sounds like it might be a wonderful opportunity, but with the number of teachers that might retire, couldn't this have a huge negative effect on the payroll system?" Bunn said.

A teacher with 30 years on the job who earns $75,000 could receive up to $42,000 in pension benefits under the plan, Ray Bihun, executive director of human resources for Plymouth-Canton Community Schools, told the Free Press.

SOURCE:
The Detroit Free Press, "Michigan Education Association has plan: Get teachers to retire," Jan. 28, 2009

FURTHER READING:
Michigan Education Report, "It's time to get serious about school employee pension reform," Feb. 23, 2007