The University Senate of Michigan Technological University
Proposal 28-15 (amended 03-18-15)
(Voting Units: Full Senate)
“Proposal on Opt-out Pension Design Retirement Plan”
PDF Version of Proposal 28-15
For employees of Michigan Technological University to receive matching contributions from the University through the Defined Contribution Plan, employees must presently “opt-in” to benefit from this program, specifying that they want to participate and indicating what percentage of their compensation annual salary they want put away towards retirement. Currently, the University will match contributions for eligible employees up to 7.5% of their salary.
An analysis of current participation patterns reveals that some employees either neglect or choose not to participate in this program by failing to “opt-in.” In 2014, the Michigan Legislature passed a law that enables employers to automatically enroll employees in a defined contribution plan unless they choose to specifically “opt-out” of such participation.
II. Proposed Change to the Employee Matching Defined Contribution
The present proposal is to automatically divert 3% of an employee’s compensation annual salary with a 3% University-funded match, into the Defined Contribution Plan unless that employee chooses to actively “opt-out” of the program. The intention of this proposal is to encourage employees to begin saving for retirement early in their careers in order to accrue funds to augment retirement income from other sources such as Social Security and other personal savings plans that may prove to be inadequate to meet retirement expenses. The employer will continue to match the employee's contributions up to 7.5% of the annual salary.
Introduced to Senate: 04 March 2015
Friendly Amendment (in red): 18 March 2015
Approved by Senate: 18 March 2015
Rejected by Administration: 01 June 2015 (With a current estimated increase of $1.7 million in benefit costs for FY16, the administration cannot approve this proposal in it's current form. However, in the fall, BLG will deliberate the ideas proposed in this proposal and possible alternatives and will communicate back to the Senate)
Senate Sent Proposal Back to Fringe Benefits and Finance & Institutional Planning Committee: 09 September 2015