In its recent editorial “Reform Judges’ Pensions,” the Journal Editorial Board correctly identified a technical issue that would allow a judge to name anyone, of any age, as a survivor beneficiary – although naming someone other than a spouse requires the spouse’s written permission – which needs to be corrected.
Thank you to Thom Cole of the Journal for identifying this issue and bringing it to light.
Reasonable limits should be part of any reform legislation in the 2014 legislative session. As a practical matter, PERA actuaries conduct a study of pensions every five years, and the most recent study of judicial retirements did not find a single instance of PERA paying a deceased judge’s benefits to anyone of an unusually young age.
The Journal’s editorial touches on the critical need to reform judicial pensions, especially the solvency of judicial retirement funds.
Without legislation such as SB25 that was vetoed in April, judicial retirement funds carry an unfunded future liability of $100 million. Nobody wants to get to the point Detroit recently reached where years of underfunding retirement plans resulted in the city filing for bankruptcy and retirees suing the city.
Presently, the primary source of funding of the judicial retirement funds is a portion of the filing fee in each civil case. That system creates the situation where the decline in foreclosure and other collection lawsuits renders the future solvency of the judicial retirement system uncertain.
Relatively modest changes now will resolve the need to appropriate many millions of dollars in the future.
Along with decreasing benefits for judges, SB25 increased both employer and employee contributions to eliminate or greatly reduce the unfunded liability. New Mexico’s existing obligations, which cannot be reduced, to judicial retirement create $100 million of future debt to be paid to retired judges.
Because we are not funding that obligation and accruing obligations sufficiently, the amount of future debt grows each month. This situation is entirely avoidable.
There is a legitimate need to avoid the chance that a child could collect millions of dollars over many years as a survivor beneficiary receiving judicial retirement pay.
We need legislation that eliminates the problem recognized by the Journal, reduces or avoids taxpayers being forced to pay enormous sums in the future and provides our judges with a stable and solvent retirement system. Reasonable reform now will avoid trouble in the future and will leave New Mexico’s financial books balanced.
One fact to consider in any reform of judicial retirement funding is that benefits are not superior to retirement benefits for judges in other states.
New Mexico judges have historically paid a higher percent of their salary toward retirement than judges in most states. Those judicial salaries are among the very lowest in the nation and the very lowest in the western region.
New Mexico judges also have to stay on the job as long as or longer than judges in most states before they can retire.
Retirement benefits for judges are reasonable, especially with a more limited survivor beneficiary provision.
A moderate increase in contributions from the state and some additional contribution from the judges would protect New Mexico taxpayers from the existing unfunded liability. The Legislature should pass, and Gov. Susana Martinez should sign, legislation that stabilizes judicial retirement funding while also bringing survivor benefits in line with legislative intent.