LANSING, Mich. - Michigan state Rep. Mark Jansen will introduce legislation in the next month or so that would implement at least some of a pension commission's recommendations.
The Michigan Commission on Public Pension and Retiree Health Benefits was convened last year by Gov. John Engler to review state laws affecting retirement systems, assess the funding capabilities of public pension plans and make recommendations for legislative changes.
After a year of studying public plans in the state, the commission, led by Peter F. Secchia, noted few serious problems with funding levels and reported to the governor in late February that most of Michigan's state and local pension systems are well-managed. Mr. Secchia is chairman of Universal Forest Products Inc., Grand Rapids, and a former U.S. ambassador to Italy.
The focus of the commission's report is the need for increased public information about public pension funds. One recommendation likely to be implemented would require each public plan in Michigan to provide information about assets, investments and funding levels to a statewide report card on public pension plans. The annual report card would be available on the state's website.
Among the most controversial recommendations, said Mr. Secchia, is one that would give the state treasurer the ability to withhold revenue-sharing or other assets from municipalities that don't meet their benefit obligations. Another suggests that some smaller plans might want to merge or join multiemployer plans. The Municipal Employees' Retirement System of Michigan, Lansing, has $3.5 billion in assets from various local plans around the state, but many municipal plans, even smaller ones, are not participants in that plan.
The commission also recommended the state:
* clarify for each system what an "appropriate required employer contribution" is and provide a procedure by which the amount can be determined;
* grant itself the power to review public plans in cases of violation of fiduciary duty or gross mismanagement;
* require actuarial evaluations of the impact of pension benefit increases before they are granted and that the public be informed about those effects;
* increase the financial penalties for improper use of retirement funds;
* promote ongoing pension trustee education, local monitoring of such educational programs and establishment of written trustee education policies by local pension boards; and
* require better employee education about plan benefits and investments, especially for employees enrolled in public defined contribution plans, including a requirement that sponsors offer a minimum number of model portfolios with varying risk profiles for employees to select.
Mr. Jansen said he and his staff are researching the commission's recommendations to determine which will require policy changes and which will need legislative fixes. While he stressed that much remains to be determined, he expects legislation will be introduced by a bipartisan group of legislators once the research is complete.
Referring to the report, Mark Hilbert, director of the Bureau of Local Government in the Department of Treasury, said the state pension plans already do all of these things, as do many local plans. The driver behind the commission's suggestions was "preventative, as not many problems were uncovered. The idea is to encourage public plans to get information about the plan to the public in a way that people can use it." The state's pension report card on the web, for example, will allow anyone to compare the benefits of one local plan with another or with the state plans, he said.
Overall, the changes are not onerous for public plans, Mr. Hilbert said.