New Mexico public pension reform faces vote in state Senate

by Associated Press
| February 12, 2020 10:10 AM

SANTA FE, N.M. (AP) — The New Mexico state Senate was scheduled Wednesday to vote on a proposal to shore up New Mexico's overextended pension fund for about 115,000 state and local government workers and retirees.

Reform efforts have the backing of Democratic Gov. Michelle Lujan Grisham, but some Democrats in the legislative majority have opposed the the current bill. Senate approval would send the bill to the House for consideration.

The bill from Democratic state Sen. George Munoz of Gallup responds to concerns about $6.6 billion unfunded liabilities that are weighing down the credit rating of the state and its largest city and driving up borrowing costs.

Managers of the $16 billion fund overseen by the Public Employees Retirement Association say an economic downturn could severely undermine the fund's long-term solvency and ability to meet retirement obligations.

Core provisions of the bill were outlined by a policy task force appointed by the governor to address pension solvency issues. That commission looked for reforms that could fully fund the pension fund within 25 years.

At legislative hearings, retired public employees have voiced divided opinions about the reform plan and whether it is necessary. The bill as currently written would phase in new pension contributions equal to 4% of pay, divided equally between employees and taxpayers.

The second major solvency measure would link future cost of living increases to investment returns, with a 0.5% minimum annual increase. Current automatic annual cost of living adjustments are as high as 2.5% for some retirees.

State police, adult corrections officers and low-income public employees are exempted from the changes to pension contributions.

The increases are delayed until 2023 for local government employees. The cost-of-living changes do not apply to current retirees age 75 and over.

Member of the pension fund include about 57,000 public employees and 41,000 retirees.

This version corrects that current cost of living adjustments are as high as 2.5%, not 3%.