That’s the bottom line of the justices’ unanimous determination last week that the Legislature can in fact trim certain public retirement benefits. The decision sprang from a challenge by four retired educators that the benefits represent promised property rights through their Educational Retirement Board plan.
Justices determined annual cost-of-living adjustments are an add-on to earned retirement, not a core benefit, and legislation that trims them until a pension fund’s solvency figures improve is legal. That’s a sound financial path for the state’s teacher retirement system, which has more than 61,000 active members, covers roughly 40,000 retirees and has been struggling with worsening solvency problems caused by market-driven investment losses and a growing number of retirees. Both the ERB and the state’s other public retirement system – the Public Employees Retirement Association – are facing unfunded liabilities in the billions.
Meaning they owe future retirees more than they have.
Enrique Knell, a spokesman for Gov. Susana Martinez, says she “is pleased with the ruling in that it upholds the bipartisan effort to reform and preserve the state’s educator pension system.” It also staves off similar challenges to fiscally-minded reforms of other pension funds.
This year the state’s biggest pension funds adopted changes including COLA reductions, stricter retirement eligibility guidelines and increased contributions from employees and taxpayers. And while more needs to be done to get all of New Mexico’s public pensions closer to solvency (including setting an age of retirement eligibility for legislators and narrowing survivor benefits for judicial pensions) the Supreme Court’s ruling ensures that with the new year administrators have a better chance of actually having pensions to hand out.
And that’s good news for retirees depending on them.
This editorial first appeared in the Albuquerque Journal. It was written by members of the editorial board and is unsigned as it represents the opinion of the newspaper rather than the writers.