News Column

NM Employees Would 'Take Hit' Under Bill to Shore Up Pension Fund

Feb. 22, 2013

Steve Terrell

Most current and future state workers would have to pay more into their retirement funds, get smaller cost-of-living increases and work longer to receive retirement benefits under a bill working its way through the state Senate.

A spokesman for the leading public employees union in the state said Wednesday that state employees definitely will "take a hit" if Senate Bill 27 becomes law.

Still, Carter Bundy, legislative director for the American Federation of State, County and Municipal Employees, said the union supports the legislation, sponsored by Sen. George Munoz, D-Gallup and Rep. Luciano "Lucky" Varela, D-Santa Fe.

"I'm not happy," Bundy said. "But if the [pension] funds tank," it will hurt all employees.

Indeed, a fiscal impact report by the Legislative Finance Committee concludes, "Failure to redesign pension benefits this year will mean more drastic changes next year."

And to add to the pressure to pass some kind of pension fix, Gov. Susana Martinez has threatened to call lawmakers back in special session if the pension solvency issue isn't dealt with.

SB 27 deals with the Public Employees Retirement Association, which handles pensions for thousands of retired and current state workers. The retirement fund is facing a growing $6.2 billion unfunded liability.

Under the bill, workers, beginning in July, would be hit with a 1.5 percent increase in the amount of money deducted from their paychecks to pay into the pension fund. The state would be paying another 1.5 percent into the fund. That would be phased in over two years.

The bill would reduce the cost-of-living adjustments from the current 3 percent increase to 2 percent. In 2016, retirees would have to wait three years to get the cost-of-living increase instead of the current two-year wait.

The bill unanimously passed the Senate Judiciary Committee last week. It's now headed to the Senate Finance Committee.

Meanwhile, other legislation aimed at fixing the state's retirement fund for teachers, school administrators and other school employees also is being considered by the Legislature. That fund also is facing unfunded liabilities close to $6 billion.

Senate Republican Leader Stuart Ingle of Portales is sponsoring SB 115, while a similar bill, House Bill 64, is sponsored by Rep. Mimi Stewart, D-Albuquerque. Stewart's bill was heard in the House Appropriations and Finance Committee on Wednesday. The committee delayed taking action on the bill until the next meeting.

Both education pension-fix bills would increase employee contribution rates 2.8 percent over a two-year period for employees earning more than $20,000 a year.

Beginning in July, those hired would have to work for 30 years and retire no sooner than the age of 55 to receive full retirement benefits.

The Senate Education Committee unanimously passed SB 115 early this month.

"Hopefully we can fix it this year," Ingle said Wednesday. "We've got to get pass something that will get signed on the Fourth Floor."

Ingle blamed part of the problems with the pension funds on the stock market in the 1990s. "The stock market was so good then, money was just pouring into these funds," he said. However, the unsteady nature of the market since the turn of the century has made the state's pension benefit unsustainable, Ingle said.

Sen. John Arthur Smith, D-Deming, who chairs the Senate Finance committee, said he expects to hear SB 27 , as well as Ingle's SB 115, as early as Monday.

"I've been fighting this battle for 12 years," Smith said, referring to pension funds. "We really need to make some significant changes. The longer we procrastinate, the more harsh the fix is going to be."



Source: (c)2013 The Santa Fe New Mexican (Santa Fe, N.M.) Distributed by MCT Information Services


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