Small Business Rallies Support for Underfunded Pension Liabilities

If small business members of the National Federation of Independent Business have their way, legislation addressing underfunded liabilities for pension and retiree health care plans of local governments would earn passage.

NFIB lobbyists told House and Senate Competitiveness Committees today that small business members support such legislation.

Charles Owens, the Michigan State Director at the National Federation of Independent Business, says “The Governor’s Task Force Report has estimated that these ‘other post-employment benefit’ or ‘OPEB’ obligations by the state’s local government entities such as cities, townships and counties are underfunded by an estimated $17.4 billion.” He adds, “The report also indicated that, for many Michigan cities, roughly 20 cents on the dollar in annual budgets goes to pay pension and OPEB costs.”

Senate and House legislation that would create the “Protecting Local Government Retirement and Benefits Act” was the subject of the committee hearings. The bills are, however, being opposed by police and fire-fighter unions.

Owens says that Michigan small business owners support efforts to bring common sense to government pensions by moving from the unsustainable defined benefit model to the defined contribution method used in the private sector. They also believe that health insurance benefit levels of state and local government employees should be no greater than the average private-sector benefit levels. Owens argues that the legislation moves the management of these plans “in that direction” while addressing many of the concerns expressed by current and future participants in the plan.

Owens contends, “Most local government defined benefit pension and retiree healthcare plans are underfunded and in economic distress because politicians from both parties continue to make pension promises they cannot keep with taxpayer dollars.” He adds, “While opponents of this legislation have made claims that lawmakers are trying to cut the pensions of local government employees, future cuts in benefits are a guaranteed consequence of doing nothing.”

NFIB is one of the nation’s leading small business associations, with offices in Washington, D.C. and all 50 state capitals. Founded in 1943 as a nonprofit, nonpartisan organization, NFIB gives small and independent business owners a voice in shaping the public policy issues that affect their business. NFIB’s powerful network of grassroots activists sends their views directly to state and federal lawmakers through a unique member-only ballot, thus playing a critical role in supporting America’s free enterprise system. NFIB’s mission is to promote and protect the right of its members to own, operate and grow their businesses. More information is available online at