Michigan has been the leader of such reform. Under its new system, the state contributes 4 percent of the worker’s salary into an individual retirement account and will match another 3 percent. The worker also may contribute an additional 13 percent that will not be matched by the government.
According to state legislator Donald Gilmer, the reform has two virtues. First, “the old system simply wasn’t sound from an actuarial standpoint.” Plus, under the old system — in which state employees needed ten years on the job to become fully vested — “over 60 percent of workers never drew a dime of benefits. And that seemed to me to be fundamentally unfair.” Under the new system, an employee is fully vested after four years and can take the money he and his employer have contributed with him should he leave his job.
Such a change, Gilmer argues, is family friendly. “The old system discriminated against women because they are the ones who get pregnant and often have to leave their jobs. We were punishing people for choosing full‐time parenting.”