Michigan State Sen. Michael “Mickey” Switalski is prepping for battle over legislation he co-sponsored that will move management of the now-independent Detroit Retirement System into the Municipal Employees' Retirement System of Michigan.
The Senate bill and its companion House version, known as the Distressed Municipal Pension System Act, was introduced in mid-March with bipartisan co-sponsors, a fact in its favor when it comes to passing the bill, Mr. Switalski said in an interview.
Detroit Mayor Dave Bing strongly supports the legislation, confirmed spokesman Dan Lijana. That's another factor that will help in moving the bill through the state Legislature, Mr. Switalski said.
Anne M. Wagner, CEO of the Lansing-based municipal employees' system, also supports the legislation. In a statement on the system's website, she wrote: “This is a significant step for MERS. MERS was created in 1946 for this very reason — to provide retirement solutions to all of Michigan's municipalities, regardless of the size or location.”
The bill would require that management of municipal pension plans with more than $2 billion in assets that meet two or more of six distress triggers be moved to MERS, which manages in excess of $6 billion for more than 700 municipalities.
Those triggers include failure to make periodic payments toward required annual contributions; the conviction or a plea bargain over misuse of pension assets by an investment fiduciary; and annual average returns for pension fund that are at least two percentage points less than MERS' over the same period.
While Mr. Switalski stressed “this is not a bill about Detroit that seeks to punish its pension boards,” he said the two Detroit pension funds are the only municipal funds in the state that meet the $2 billion minimum size. The Police and Fire Retirement System of the City of Detroit had $3.4 billion as of Dec. 31 and the General Retirement System of the City of Detroit had $2.4 billion as of June 30, the most recent dates available.