Bipartisan pension reform wins House approval
“I applaud the Legislature for their commitment to current and future retirees. With their vote today and with the tremendous bipartisan support this proposal has earned throughout the session, lawmakers have sent a clear message to public employees and public retirees: We will honor the promises that have been made, we will ensure the solvency of our retirement fund and New Mexico’s pension system will remain the best in the country. There should be no illusion: These changes require sacrifice. The legislation ensures the sacrifice is shared and that vulnerable groups are protected, as is retirees’ sacred defined benefit.”
Senate Bill 72, sponsored by Sen. George Muñoz, 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; Albuquerque Police Officers’ Association; 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.