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Michigan State Retirees’ Ranks Could Swell Soon

Michigan’s state employee retirement plan could be paying out a sizable chunk more in benefits four years from now. According to the Lansing State Journal, approximately 30% of the 48,617 state employees will be eligible to retire by 2019, nearly twice as many as this year.

According to the Michigan Civil Service Commission, at least 22% of the workforce in every department of the state government will be eligible to retire in 2019. Two departments lead the pack — the Department of Agriculture and Rural Development and the Department of Environmental Quality, at just over 40%. The Department of Licensing and Regulatory Affairs is close behind at 38.5%.

Those potential retirements could spell more than job openings or even trimmed-by-attrition staffs — they also could mean more rapid growth than usually occurs in one year in the number of retirees to whom the state retirement systems would pay out benefits. Will the four plans in Michigan’s state retirement system — the Public School Employees’ Retirement System, the State Employees Retirement System, the State Police Retirement System and the Judges Retirement System — be up to the task?

The Michigan Office of Retirement Services reports that all four were solvent in the 2014 fiscal year. Their status was as follows:

Public Schools: assets exceeded liabilities by $47.3 billion.
State Employees: assets exceeded liabilities by $12 billion.
Police: assets exceeded liabilities by $1.3 billion.
Judges: assets exceeded liabilities by $272.1 million.

That solvency is good news. However, it is worth noting that four years remain before the sharp increase in employees eligible to retire and economic conditions, and the health of the plans, could be different by then.

Still, even if circumstances are more challenging for the Michigan state employee retirement systems by 2019, the mere fact of increased eligibility does not necessarily spell an immediate exodus from state employ. It is certainly possible that employees who are eligible to retire will not all take advantage of that immediately, which would mitigate the demands on the systems.