Pension reform advances with bipartisan support
SANTA FE – Direly needed pension reform legislation passed the New Mexico State Senate on Wednesday on a bipartisan 25-15 vote. Gov. Michelle Lujan Grisham issued the following statement:
“We have made promises to New Mexico’s current and future retirees, and these changes will ensure those promises are kept. A stable and solvent PERA matters to all New Mexico taxpayers. We must make changes now – the alternative is to saddle New Mexicans with unacceptable risk. I want to thank senators of both parties for recognizing the essential nature of this reform and the shared sacrifice required to ensure New Mexico’s pension plan remains the finest in the country.”
Senate Bill 72 would put the New Mexico Public Employees Retirement Association on a path to solvency, beginning with a $76 million cash infusion this year. The pension fund currently has a $6.6 billion unfunded liability.
The bill is supported by the New Mexico Municipal League, New Mexico Counties, AFSCME Council 18; Communication Workers of America; New Mexico Professional Firefighters Association; Fraternal Order of Police; National Association of Police Officers; and the Albuquerque Fire Department Retirees’ Association.
Key components of Senate Bill 72 include the following:
- Ensure a 2.5 percent cost-of-living adjustment, an increase from 2 percent, for retirees over the age of 75 as of July 1, 2020, roughly a third of the state’s public retirees and exempt other vulnerable groups of retirees – disability retirees and retirees with pensions lower than $25,000 after 25 years of service – from the contemplated changes;
- Continue the current 2 percent cost-of-living adjustment for other retirees for three years; after that, COLAs would be based on a new “profit-share” model aligned with investment performance, with COLAs rising as high as 3 percent;
- Restore the two-year wait period to qualify for cost-of-living adjustments;
Incrementally increase contributions in a model that shares the burden across active workers and public employers;
- Delay contribution increases for municipal and county workers for two fiscal years;
- Provide for incremental decreases in employer and employee contributions as coverage plan funded ratios improve, per the governor’s direction;
- Allow return-to-work employees such as retired police officers who serve as school resources officers, to receive a COLA.