Wayne Propst, PERA executive director, described the changes as “minor” but said they will bolster the solvency plan, which is aimed at erasing the pension fund’s $4.9 billion — and growing — unfunded liability by 2029.
“I think all three of these (modifications) strengthen it in some way and give us a better chance of getting meaningful pension reform approved during the coming session,” Propst said after Thursday’s board meeting.
One of the changes approved by the PERA board calls for the gradual implementation of a proposal to push back how long employees must wait after retirement before being eligible to receive annual of cost-of-living increases, or COLAs.
The plan adopted earlier this year called for such benefit increases to take effect seven years after retirement instead of the current two years. However, the change approved Thursday would phase in the new rules between 2014 and 2016 so as not to encourage a massive wave of worker retirements, Propst said.
Other modifications approved Thursday would bar employees who retire and then return to work from accruing additional retirement benefits and would apply the seven-year COLA wait period to future employees as well as current workers.
The PERA solvency proposal endorsed in June calls for retirement benefits to be scaled back for retirees, future employees and more than 54,000 current government workers covered by the retirement system.
It would also increase the amounts of money that both employees and their government employers, via taxpayer dollars, pay into the retirement fund, and impose stricter retirement eligibility to future workers and those hired after July 2010.
PERA’s unfunded liability, the difference between future retirement benefits due and cash on hand, more than doubled in a recent two-year span. Investment-driven losses and workers retiring earlier and living longer have been primary causes of the pension fund’s increased liability.
In order for the PERA solvency plan to take effect, it will have to be approved by the Legislature during the 60-day session that begins in January. Lawmakers are also expected to consider a solvency fix for the state’s other public retirement system, the Educational Retirement Board.
— This article appeared on page C1 of the Albuquerque Journal