Mackinac Center Research Topic of Council Meeting

Local news covers pension problems in Norton Shores

One Michigan city’s unfunded pension liability was the subject of a city council meeting this week after a concerned resident read about the problem in Michigan Capitol Confidential and decided to call on local officials for a fix.

Norton Shores resident Jim Riley told Fox 17 — which covered the meeting after Riley encouraged other residents to attend — his city must begin to address its unfunded pension liability to avoid severe cuts to services, major tax hikes, or cuts to employee retirement.

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These retirees are counting on this. … If you have a fiscal cancer, and you avoid doing any type of treatment for that fiscal cancer, it will get worse. And we have a fiscal cancer.

Riley raised the issue after reading a recent report in Capitol Confidential explaining that Michigan’s local government pensions have less than 65 percent of the funds they need to cover obligations to retirees. Norton Shores only has 49 percent of the funds it needs, with an unfunded liability of over $20 million.

Mackinac Center Community Engagement Manager Anne Schieber Dykstra attended the meeting and told Fox 17 that Norton Shores and other municipalities that have unfunded liabilities need to close the system to new employees. Instead, new hires should be offered defined contribution plans similar to 401(k) retirement accounts.

Read and watch the full coverage by Fox 17 here.

Read Michigan Capitol Confidential’s report here.

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The Lose-Lose Situation in Pension Funding