Welcome to the latest edition of This Week in Pensions! We have gathered the best stories about pensions and retirement security from the previous week. You need to know this news in the fight for a secure retirement.
NPPC News
Pensions are making a big splash in the news lately. While many claim that defined benefit pensions are a thing of the past, the truth is that the public workforce has continued to leverage the value only pensions provide for decades. In case you missed it, check out our latest blog, Don’t call it a comeback: We’ve been here for years.
House May Force Vote on Bill Regarding Pensioners’ Social Security Benefits
Two controversial laws, the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO), which have an outsized impact on public employees’ retirements, will likely be revisited in Congress.
A bill known as The Social Security Fairness Act has bipartisan support across the House and Senate.
On Thursday, Reps. Abigail Spanberger, D-Va., and Garret Graves, R-La., announced they had enough signatures on their discharge petition to force a vote on the House floor for the bill.
The WEP and the GPO reduce the retirement benefits that public employees receive. Often, public employees who earn pensions are not taxed for social security. This can be a perfectly reasonable arrangement for some workers with robust pensions who have worked the same career their entire adult lives.
Many workers have several jobs throughout their lives, and oftentimes workers enter public sector work later in life. This means if someone paid into Social Security with their private sector career for years, they often are not be able to collect their earned Social Security benefit along with their defined benefit pension.
The House version of the bill currently has 327 co-sponsors. Experts say it may pass if it is put up for a vote in the House. Then, it would go to the Senate, where it has 62 co-sponsors. So, public employees may soon see a great relief in their retirement situation.
We expect to see more movement on this issue in the coming weeks.
Michigan Senate Votes to Permanently Lower School Districts’ Retirement Contributions
The Michigan Senate voted to decrease the cap permanently on contributions that school districts must make toward unfunded liabilities in the teacher retirement system.
This would be a decisive win for teachers and other public school employees who have advocated for this bill. When the state budget was passed earlier this year, a cap on the contributions was proposed in the House, but was not finalized in the budget.
The Senate has now passed the bill, setting the rate cap at 15.2%, which is an immediate 5.75% reduction. Beginning in fiscal year 2026, the bill would eliminate a requirement that certain educators contribute 3% of their compensation toward the normal costs of retiree health care benefits, shifting those costs, estimated at $150 million annually to the districts.
As Coalition for Secure Retirement—Michigan president Nick Ciaramitaro wrote in May, “the best ways to address public-employee recruitment and retention issues are to ensure that people are treated fairly, with quality pay and benefit packages.” Reducing out-of-pocket costs for educators is vital to improving the overall retirement package.
Chandra Madafferi, president of the Michigan Education Association, said the bill would “permanently end the state’s 3% tax on more than 100,000 veteran teachers and school support staff.
The plan overall is in good shape. A 2022 annual report shows that the system’s fund had $641 million in assets, exceeding its liabilities.
If this passes, it will significantly reduce the amount of money that teachers and public school employees pay directly out of their paychecks toward pension fees. This will be helpful in the appeal for more public education employees as Michigan, like so many other states, deals with the shortfalls of recruitment and retention problems.
Be sure to check back next Friday for the latest news in the fight for a secure retirement! For now, sign up for NPPC News Clips to receive daily pension news from across the country directly to your inbox.