Tuesday, June 15, 2010

Suit challenges part of Mich. school retiree plan - Boston.com

Suit challenges part of Mich. school retiree plan - Boston.com

Suit challenges part of Mich. school retiree plan

By Tim Martin
Associated Press Writer / June 15, 2010
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LANSING, Mich.—Five members of the state's largest teachers union have filed a lawsuit challenging part of Michigan's new law related to the public school employee retirement system.
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The Michigan Education Association said Tuesday the class-action suit filed in a state court seeks to overturn a provision that requires school employees who don't retire this summer to start paying an extra 3 percent of their compensation into a fund for retiree health care starting July 1.
The union said the suit doesn't challenge a provision that gives slightly higher pension benefits to school employees who retire this summer. At least 17,000 school employees have applied for the retirement incentive and have informed the state they plan to retire this summer.
The expected retirement wave is the major reason state officials project schools statewide could save more than $500 million in the first year of the program. But the longer-term, more stable savings behind the plan relies heavily on the higher contributions to retiree health plans from employees who remain on the job.
The suit claims the contribution provision violates the contract formed when the Michigan Public School Employees Retirement System was set up in 1980. The



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