Quantcast
Channel: Capitol Report | New Mexico » Investments Oversight Committee
Viewing all articles
Browse latest Browse all 3

More on NM state pension plans: ERB plan gets cool reception

0
0

Like a couple in a rocky marriage, the state legislature and the New Mexico Educational Retirement Board (ERB) are going along to get along.

On Tuesday (Dec. 21), ERB officials met with the Investments Oversight Committee at the State Capitol and told lawmakers about the new proposal that the 63,000 workers and 33,000 retirees of ERB agreed upon last Friday. A number of legislators — including Democrats — were less than enthused with the offer but both sides left the meeting thinking a deal will be struck.

Here’s the rough outline:

Like many state pension plans across the country, the ERB plan faces long-term financial issues. While there is enough money to take care of current retirees, unless some structural changes are made soon, the future of the pension plan is dicey.

Originally, it was proposed that ERB members increase their individual contribution and put in more years on the job — for some, up to 10 years more — in order to right the pension plan’s financial ship. But ERB members hit the roof and after meeting in Albuquerque last Friday, the ERB came back to the legislature Tuesday with a new proposal:

ERB members would pay a half a percent more per year for the next four years — amounting to a 2 percent increase — while the state would kick in an additional 3 percent (to be phased in over six years).

ERB Executive Director Jan Goodwin said teachers feel they’ve already made significant sacrifices over the past few years to the fund and, while some legislators Tuesday seemed irritated with the idea of the state contributing 3 percent more over time when New Mexico is in the throes of a budget crunch, Goodwin pointed out that back in 2005, the state agreed to increase its contribution rate by 3 percent (from 10.9 percent to 13.9 percent back). Here’s Goodwin:

ERB is basing its figures on annual investment returns of 7.75 percent projections, which some committee members believe is overly optimistic and while they indicated they would accept the ERB’s new proposal, a number of lawmakers Tuesday expressed concern that the new ERB proposal doesn’t go far enough. Here’s Sen. John Sapien (D-Corrales):

Regardless of grumbling from both sides, both the ERB and the legislature need each other. Any ERB proposal has to be ultimately OK’d in the next legislative session (which begins Jan. 18) and the legislature has an obligation to make sure the ERB plans remain solvent.

In the end, the Investments Oversight Committee passed a motion to bring the ERB proposals to the Roundhouse this winter.

If you’d like to see the breakdown of the ERB plan presented to lawmakers Tuesday, here it is.

*****

A couple of other interesting notes:

First, officials from state’s other major pension plan — from the Public Employees Retirement Association (PERA), which is made up of about 49,000 workers and 27,000 retirees among police, fire, judges and other public employees — also appeared before the committee on Tuesday.

After some persistent questioning from Sen. John Arthur Smith (D-Deming), PERA Executive Director Terry Slattery produced statistics showing there are 11 PERA members who retired before the age of 40 who are receiving benefits. 

Second, in a related note, Rep. Mimi Stewart (D-Albuquerque) — a former teacher and co-chair of the Retirement Systems Solvency Task Force — pointed out that one-third of PERA and one-third of ERB retirees retired before the age of 55. Concerned that such trends could jeopardize the future of the pensions, Stewart said she is willing to craft a bill that would prohibit future members to retire before the age of 55.

It should be pointed out that Stewart’s proposal would not affect current members and would consider exempting uniformed members such as fire and police.

The committee put forth a motion to have such a proposal introduced in the upcoming legislative session and the motion was approved with Sen. Smith cracking, “I’m in favor of anything that makes Rep. Stewart more conservative.”


Viewing all articles
Browse latest Browse all 3

Latest Images

Trending Articles





Latest Images