Policy Documents

Pension Reform Case Study: Michigan

Anthony Randazzo –
March 1, 2014

In 1996, the Michigan state legislature passed a first-of-its-kind bill that froze the state employees’ defined-benefit pension fund for new members and created a defined-contribution pension system for future hires. Members already in the defined-benefit system were allowed to remain and their benefits continued to accrue as originally promised, though the workers were given an opportunity to take a buyout of their earned benefits and have those transferred to a definedcontribution account. New workers had their pension contributions put into personal accounts that they could manage on their own and take with them if they left employment with the state.