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House Panel Approves Retiree Benefit Changes

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LANSING (AP) - Legislation aimed at reining in retiree benefit costs for Michigan state workers was approved Thursday by the Republican-led House Appropriations Committee.

The measures affecting future state retirees, approved 17-10 along party lines, advances to the House floor.

Employees covered by state pension plans would have to decide whether to remain in the defined benefits plans or convert to a 401(k) system. Workers who choose to remain in the pension plan would have to contribute 4 percent of their compensation to remain in the system.

The bill would eliminate the 3 percent employee contribution that state workers have been making since last year to help cover retiree health care costs. Those contributions, which have been challenged in court cases, would be refunded to workers by mid-2012.

Retiree health insurance coverage would be eliminated for new employees hired after Jan. 1, 2012. That benefit would be replaced through a 401(k)-type system funded by up to a 2 percent contribution from workers and a match from the state.

The bill contains multiple other changes, with effects varying based on when employees were hired by the state.

Republicans supporting the changes say they’re aimed at handling what they consider unsustainable state employee retirement costs. Democrats question whether the state’s system is truly unsustainable, and say the changes will make it more difficult for some state workers to retire.

The bills are House Bills 4701-2.

Copyright 2011 by The Associated Press. All Rights Reserved.

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