SANTA FE, N.M. (AP) - New Mexico’s Democratic governor on Monday sweeping pension fund reforms into law that affect more than 100,000 current and former state and local government workers.
The legislation increases employee and taxpayer contributions to a public pension fund that has more than $6 billion in unfunded liabilities. The legislation calls for a $55 million cash infusion this year and annual cost-of-living increases will be tied to pension fund investment returns for the trust overseen by the Public Employees Retirement Association.
The governor had acknowledged during the legislative session that the changes would require some sacrifice but they allowed for vulnerable groups to be protected.
“By paying out more than it was taking in, PERA was on a path to eventual bankruptcy. Now we’ve reversed course, and I’m confident New Mexico can keep its promises to current and future retirees,” Michelle Lujan Grisham said.
The governor also described the changes as tools that can be used to recruit and retain the state’s workforce.
The changes also are expected to improve city and state credit ratings, making it cheaper for them to borrow money for infrastructure projects.
Core provisions of the bill were outlined by a policy task force appointed by the governor to address pension solvency issues. That commission looked for reforms that could fully fund the pension fund within 25 years.
At hearings during the recent legislative session, retired public employees voiced divided opinions about the reform plan and whether it was necessary.
Under the legislation, new pension contributions equal to 4% of pay will be phased in and divided equally between employees and taxpayers. The increases will be delayed for local government employees for two fiscal years and as the pension plan comes closer to being fully funding employees and employers could see incremental decreases in their contributions.
State police, adult corrections officers and low-income public employees are exempted from the changes relating to higher contribution levels.
More pension reforms will likely be on the agenda for the 2021 legislative session as the governor, the Educational Retirement Board and others are expected to push for shoring up the pension system that serves former teachers and school employees.
Supporters of that effort say retired teachers’ benefits have long been worse than those of state employees and little has been done to address the disparity, the Santa Fe New Mexican reported Monday.
“Teachers aren’t respected,” said Sen. Mimi Stewart, D-Albuquerque, a retired educator. “They’re not thought of as professionals and it’s reflected in their retirement benefits.”
Educational Retirement Board executive director Jan Goodwin said a plan to speed up her system’s path to solvency is likely and her staff will be working with the governor’s office on that.
Goodwin said reform should involve increasing the state’s contributions to the pension system, which are already significantly lower than the amount it gives to the other public employees’ pension fund. That discrepancy will widen further once the reforms adopted this year effect.
Please read our comment policy before commenting.