Correction appended

If New Mexico’s retirement system doesn’t undergo a major overhaul, the next economic recession could have a dire impact on the state’s ability to pay for teachers, firefighters and other public employees’ retirement plans, according to the head of New Mexico’s retirement system.

“Any change that we make today will pale in comparison to any change we’ll have to make if we don’t address this now,” Wayne Propst, executive director of the Public Employees Retirement Association, told state lawmakers Wednesday.

“If we wait until the next recession, we may be at a point where we begin to break promises,” he said.

Propst’s warning was offered to a state panel tasked with sorting through Gov. Michelle Lujan Grisham’s task force recommendations on how to overhaul New Mexico’s public retirement system.

It was the lawmakers’ first open discussion on Lujan Grisham’s plan to shore up roughly $6 billion in unfunded liabilities largely from current retirees’ public pension plans. Most of the discussion Wednesday centered on trying to understand the task force plan and the scope of the problem.

The proposal asks employees and employers to pay a combined 4 percent increase in pension contributions and links annual cost-of-living adjustments to returns on investments tied to the pension program.

The proposal would lead to a roughly $1,000 annual cost increase for employees paying into their retirement plans who make an annual $50,000 salary, Propst said.

It also would cut cost-of-living increases for retirees for three years and calls for a one-time $76 million payment into the retirement system.

Lawmakers are working on transforming the recommendations into a bill.

The legislation should be made public before Dec. 4, when the Investments & Pensions Oversight Committee plans to hold its next meeting. Retirees and others will have a chance then to testify on the plan, said state Sen. George Muñoz, a Democrat and chairman of the committee.

While lawmakers on the panel have not reached a consensus on whether to support Lujan Grisham’s recommendations, Muñoz stressed that he believes something needs to be done now to avert economic catastrophe.

“We don’t have $6 billion to just throw into the fund. So if we hit a recession and lose $2 billion or another billion dollars … we’re bankrupt,” Muñoz said.

“So how do we make it less painful now rather than taking your arm later?” Muñoz added.

Much of Propst’s presentation centered on the impact that a recession would have on the state’s ability to pay retirement benefits.

Muñoz mentioned during the hearing that he expects more than 100 retirees to testify

Dec. 4 about keeping their benefits intact. He suggested that he may limit that discussion.

“I understand where they’re coming from, but they’ll have time to talk to their local legislators,” Muñoz said.

This story has been amended to reflect the following correction. A previous version of this story incorrectly reported that the governor had made recommendations on how to overhaul the state’s public retirement system. The governor appointed members to a task force that made those recommendations.

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(10) comments

Mary Jensen

As a retired social worker with a pension, I support the increased fees—- and so should all public employees. You can complain about the private sector making more money, but when you retire with a pension, and your private sector employees do not, you will be very happy. I am living a comfortable retired life thanks to my public sector pension.

Chris Mechels

Another test for our Democracy, which works well for distributing "Pork", but not so well at pay the bills; "Don't tax you, don't tax me, tax the feller behind the tree". MLG has to this point not been effective on such issues, trying to please all parties, which can't be done. We must stop passing OUR bills to those who come after us, and that is what we've been doing.

Jeff Varela

While I am no fan of Gov. Lujan-Grisham, I as a public retiree support the task force recommendations to address this serious solvency issue with our PERA fund. We are not going to invest our way out of the hundreds of millions in unfunded liability. We cannot and should not continue to "kick the can down the road." The PERA Board and staff continue to slap each other around while the fund is at 71% solvency...71% percent folks! The Gov. and legislature will brush the board aside and attempt to address the problem. Let's make Retiree Health Care part of the solution by challenging that Board to stop the practice of automatically voting for 8 percent increases in health insurance premiums for retirees. Solutions call for all PERA members, active and retirees to sacrifice otherwise we will be looking at more drastic proposals in the near future affecting retiree pensions and future vesting benefits for active public employees.

Peter Neal

This would be amusing if it wasn't so sad. Besides the fact that government employees make 20 to 30 percent less than their private sector counterparts (as mentioned by another commenter), the small cola increases they do get don't make up for inflation, and healthcare premium hikes. The proposals will result in net decreases in income for the retirees, many of whom have no easy way to supplement their income.

Chris Mechels

It seems that Peter is a retired SFPD officer. Those cops can retire after 20 years at 80% of their base, and then "double dip" in jobs like school security officers. They deserve NO sympathy, as they are the worst of the free loaders, who keep seeking to modify laws to make double dipping easier. See the recent New Mexican piece, which shows SFPD cops making over $100k per year.

Peter Neal

The Police Officers making "over 100k a year" are working a lot of overtime....often at night, or on weekends and holidays. If you think it's such a great deal, why didn't you become a cop? Oh, yeah, because you could make a lot more money (while not putting your life on the line) with your cushy Los Alamos (government funded) office job, which I'm sure gives you a pension way higher than mine, and plenty of free time do what you love to do....diss on Law Enforcement.

Jim Clark

This is infuriating, especially when you realize that our pensions are in trouble because of the rule changes under Gov. Richardson that allowed for risky investments such as hedge funds. Further, we are also experiencing budget windfalls. To ask employees to contribute more because of the mistakes of others is outrageous. Stop this outrage now!

Arnold Mayberg

"The percentage of workers in the private sector whose only retirement account is a defined benefit pension plan is now 4%, down from 60% in the early 1980s. About 14% of companies offer a combination of both types."

Why should government workers get a defined benefit pension plan ? Honor the commitments that were promised and institute a defined contribution plan for future state workers. In the USA we have a form of royalty called state workers, who get to retire early, and get pension plans that were prevalent in the 1980's and before. To sum it up, government has stood by and let private employers abolish their defined pension plans, but scream bloody h*ll if someone wants to touch THEIR defined pension plan.

Mark Kendrick

Just to make sure you’re fully aware of the details I contribute 10% of my salary to my retirement fund and also make about 25-30% less than in the private sector. So if you’d rather give me a $7/hr raise, which would be double the states retirement contribution, that would be great.

BARRY SILVER

before retiring, i contributed 8% of my earnings to our retirement plan. i was glad they had such a plan.

but, before beginning my work life, i decided to earn at the highest level my field and qualifications would allow.

i had considered earning 20 or 30% less during my working years, but felt it was not a great plan for me and my family.

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