Sweeping changes proposed for NM pensions - Albuquerque Journal

Sweeping changes proposed for NM pensions

Copyright © 2019 Albuquerque Journal

SANTA FE – A task force established by Gov. Michelle Lujan Grisham released preliminary recommendations Thursday aimed at wiping out the $6 billion unfunded liability in New Mexico’s pension system for municipal, county and state workers.

The complex proposal would require public employees and the agencies they work for to pay more into the retirement system, and it would reduce the cost-of-living adjustments available to retirees over the next three years.

Eventually, the state would abandon the annual 2% raises that retirees now get in their pensions and instead establish a profit-sharing model – with the raises fluctuating each year based on investment returns and the financial health of the retirement system.

The ideas are a preliminary recommendation, and the task force took no action on them Thursday. Legislative approval would be required to change the retirement system.

“This debate is far from over,” said Diego Arencón, chairman of the task force and Lujan Grisham’s deputy chief of staff. “This is just the beginning.”

The governor’s task force is focusing on the Public Employees Retirement Association, not the pension system for educators.

About 40,000 retirees now draw pensions from PERA, and about 50,000 employees are working and paying into the system.

Dozens of retirees packed into a committee room at the Capitol to listen to the presentation. Many slammed the proposal, arguing that they had already given up some of their pension benefits in 2013 legislation.

Rita Sanchez, a retired city of Albuquerque employee, said retirees depend on their annual cost-of-living increases to keep up with inflation and other price increases.

“To skim from the bottom of the pot, there’s nothing left,” she told the task force. “We don’t make a lot of money – please, leave our cost of living alone.”

A representative of local governments also expressed concern.

Leandro Cordova, a former Taos County manager who now works for the New Mexico Association of Counties, said the recommendations for increased employee and employer contributions would reduce the take-home pay of employees and increase costs for taxpayers. Cordova is a member of the task force.

It wasn’t clear Thursday how much the increased contributions would cost the state and local governments.

Nevertheless, others at the meeting – including a few firefighters – said the recommendations are a reasonable way to keep the pension fund solvent.

They noted that the pension benefits would be better, in some cases, under the recommendations.

Retirees, for example, would have to wait only two years, not seven, to start receiving their annual cost-of-living adjustments. And if investments were strong and the health of the pension fund improved, the profit-sharing component of the proposal would boost the annual raises above the 2% retirees typically get now.

Employees could also receive increased pension benefits – retiring at their full salary or more – if they worked long enough.

Sen. George Muñoz, a Gallup Democrat and member of the task force, said lawmakers should proceed cautiously on the recommendations, given their complexity and the need to explain the potential changes to retirees and current employees.

But he also said it’s unrealistic to expect investment returns alone to generate the revenue needed to turn around the pension system.

“Changing pensions is not any fun,” Muñoz said. “It should be a slow, well-thought-out process.”

There are a variety of exceptions built into the complex proposal to help lower-income retirees and spare police and correctional officers from some of the changes.

But the new system would put the PERA on track to wipe out its $6.1 billion unfunded liability within 25 years, based on projections by actuaries working for the task force. The unfunded liability represents the difference between assets on hand and future retirement benefits owed.

Under the recommendations, the funded ratio of the retirement system would climb from about 70% this year to about 100% in 2043, based on the median projection by actuaries.

New Mexico has struggled for years with underfunded pension systems – one for educators and another for other public employees.

Pension liabilities, in fact, have already prompted a national credit rating agency to downgrade the state’s bond rating.

Lujan Grisham established the task force in February after pension legislation stalled in the legislative session.


Home » Journal North » Journal North Recent News » Sweeping changes proposed for NM pensions

Albuquerque Journal and its reporters are committed to telling the stories of our community.

• Do you have a question you want someone to try to answer for you? Do you have a bright spot you want to share?
   We want to hear from you. Please email yourstory@abqjournal.com

taboola desktop

Tears of joy fill Isotopes' locker room after Bernard ...
ABQnews Seeker
After more than 1,000 games and ... After more than 1,000 games and a decade in the minors, Wynton Bernard gets his Major League call up to the Colorado Rockies.
As lawmakers eye changes, NM gets low marks for ...
ABQnews Seeker
Legislature looking to retool structure amid ... Legislature looking to retool structure amid ongoing revenue boom
Republicans open Hispanic community center in ABQ
ABQnews Seeker
GOP aims to attract groups who ... GOP aims to attract groups who typically vote Democrat
Forensics return from ‘Rust’ set
ABQnews Seeker
Sheriff's Office says agency still needs ... Sheriff's Office says agency still needs to review Alec Baldwin's phone records
Los Ranchos delays action on developments
ABQnews Seeker
Board adjourns after hours of comment ... Board adjourns after hours of comment without decision
Four suspects charged in 2021 carjacking-homicide
ABQnews Seeker
Alleged shooter, 3 others face multiple ... Alleged shooter, 3 others face multiple counts
SUV rams police vehicle, injuring one officer
ABQnews Seeker
Rio Rancho police fire at vehicle; ... Rio Rancho police fire at vehicle; driver detained
Fire could impact Las Vegas water system for years
ABQnews Seeker
State rushes to provide city with ... State rushes to provide city with filtration as reservoir runs low
Man arrested in June crash that killed two teens
ABQnews Seeker
APD says suspect rammed car with ... APD says suspect rammed car with girls inside, running it off Central near the Rio Grande