Fixes proposed by Gov. Michelle Lujan Grisham’s state pension task force would hurt pensioners and taxpayers.
A recap: New Mexico’s Public Employees Retirement Association is providing income to about 40,000 retired government workers, all of whom contributed to the plan when they were working. Another 50,000 or so state, county and municipal employees are paying into PERA. And its unfunded liability – the distance up a creek the state would be if every public employee paying into PERA today retired and started collecting a pension tomorrow – is $6.1 billion.
According to an Aug. 9 article by Journal reporter Dan McKay, Lujan Grisham’s task force has a few ideas to get PERA – actually 31 retirement plans and two benefit tiers – fully funded, a goal it believes can be met around 2043. Unfortunately, it is more of the same: A major component asks the prospective pensioner and their employer – i.e. you, Mr. and Mrs. Taxpayer – to increase their contributions to the fund by another 2% of that employee’s salary.
According to the PERA website, the contributions an employee makes “over your career are paid out in pension benefits in the first three to four years of retirement. Pension payments for the rest of your lifetime are funded by contributions and earnings on PERA investments.” That means contributions by taxpayers, many of whom do not have a pension waiting. Taxpayers already put in as much 26.37% of juvenile correction officers’ salaries vs. those employees’ 6.28%, 21.9% for some firefighters’ 9.5%, 19.15% for some police officers’ 8.5% and 17.24% for state employees’ 8.92%. (Those include the 0.25% increase in taxpayer contributions the Legislature and governor put into law July 1.)
Another plan, replacing 2% annual cost-of-living hikes with a less expensive lump-sum option, is likely unpopular with retirees but respects court decisions and taxpayers.
As McKay’s story noted, pensioners are already queuing up to voice displeasure with cuts to benefits. That’s understandable. Many are dedicated front-line civil servants – state, municipal and county police officers, firefighters, judges, magistrates, etc. – who say they toiled for lower salaries for a guaranteed retirement income. The sad irony is most private-sector workers never see a pension check.
For years, PERA managers have issued warnings and lawmakers have failed retirees with their proclivity to kick the clearly labeled crisis can down the road. But coming back to the public well fails taxpayers even more. In 2017, nearly one in five New Mexicans lived below the poverty level. According to AARP, 64% of our private-sector workers have no access to an employer-sponsored retirement plan, and many New Mexicans will have to make due on an annual Social Security benefit around $13,980.