Pension plans are one of the most important parts of employee benefits programs, because despite the fact that people believe they will work forever, there will eventually come a time when a person is forced to retire. However, workers need to be properly informed about pension plans, because sudden changes can result in years of additional work.
For example, Bloomberg Businessweek reported the Senate Appropriations Retirement Subcommittee in Lansing, Michigan, is evaluation a proposal that would affect all school employees in the state. These workers would be required to put at least three percent of their salaries toward their retiree health care program. However, on top of this they would have to give up to five percent of their salaries toward a pension fund to keep their retirement on track. The nail in the coffin is that anyone who retires will have to pay around 20 percent of their health care premiums, but this is not even offered before the age of 60.
"I'm potentially three years from retirement and now I'm looking at another 14," said Saginaw Township English teacher Terri List, according to the Detroit News. "I understand times are tough and we all need to tighten our belts a bit, but we don't need to use the tourniquet."
The bill allows employees who have not contributed to retirement already to avoid higher payments by receiving adjusted pension plans, which would cause them to move them onto a 401(k) plan rather than freeze their pension, according to the news source.
If you are unsure of whether this change will affect you, it would be a good idea to speak with your company's employee benefits consulting professionals. Even if you are not working in education in Michigan, these people can still give critical advice on pension plans and retirement funds.
