When our legislators point their index finger at PERA, I challenge them to look at their remaining three fingers pointing right back at them.
New Mexico’s legislative history is reflecting decades of flip-flop legislation largely responsible for facilitating PERA’s pension challenges. Let the pension reform of SB 27 do its job without making more special exemptions and/or pension enhancements.
For decades legislative bills were enacted upon that made special benefit enhancements and special exemptions without researching actuarial financial impacts to the fund. For example, in 2003, there was a strategic introduction of bills, both in the House and Senate that intertwined double dipping along with an enhanced Legislative Pension plan bill (SB620).
The fiscal implications noted on the Fiscal Impact Report dated March 20, 2003, stated: “SB 620 represents a significant plan change to State Legislator Member Coverage Plan 1, and no actuarial study was requested for this change. The amount necessary to fund these benefits improvements unknown.”
Coincidentally, there was a companion bill, SB 621, which developed a funding stream for the enhanced legislative retirement plan from oil and gas tax revenues.
Then after the 2008 stock market crisis, New Mexico’s Legislators were calling PERA’s unfunded accrued actuarial liability a crisis to New Mexico’s taxpayers and demanded benefit reductions across the board.
In 2010 the Legislature deemed double dipping a liability to the PERA fund and put a stop to it. From 2011 to 2012 legislators threatened extreme measures of pension reform. The extent of these measures included changing the defined benefit program to a defined contribution program (401K) and the total elimination of a cost of living adjustment.
In 2013, the PERA Board recommended a plan to reduce and/or eliminate its unfunded accrued actuarial liability within a 30 year time frame. It developed a pension reform plan through shared sacrifices amongst the entire membership, which was known as Senate Bill 27.
This bill was touted as an all-encompassing sacrifice with no special exemptions. Besides faith in our market over long-term investments, the success of this reform hinged on four factors: members working longer before retiring, an increase in membership contributions, a delay in COLA eligibility after retirement and a one-third reduction within the COLA.
Now in 2015, only a year and a half after SB 27 was passed and signed into law by Gov. Susana Martinez, legislators are sponsoring bills that are contradictory to SB 27. Such bills include the encouragement of early retirements by making exemptions for return to work, otherwise known as “double dipping.”
These bills represent special interest entitlement by attempting to shift the liabilities throughout the other membership groups. Our legislators must realize that they are accountable to more than 80,000 public servants that realized pension reductions in 2013.
Opening the door to exemptions for certain membership groups brings question to fairness and equity amongst the 31 membership plans, and especially the single largest membership group of over 35,000 retirees.