New Mexico’s Educational Retirement Board wants to raise the retirement ages of its teachers, as well as raise taxpayer contributions to patch up a pension deficit. Meanwhile, the large state and municipal workers’ fund is hustling to find its own bailout blueprint.
The educators’ plan would make teachers retire at 58 (up from 55) to get full benefits and hike the healthcare payments by 50%. The education pension board noted that it would help fully fund the plan in 30 years.
The $12.9 billion education pension plan is currently $7.5 billion in the hole.
Another proposal calls for employer contributions to rise an extra percentage point per year for three years.
Teachers that work fewer than 10 years would also receive smaller benefits.
Current members kick in 10.7% of their salaries into the fund, and another 13.9% comes from the state. Beneficiaries were previously eligible to collect after 25 years of service, but hires after July 2010 aren’t eligible until they’ve racked up 30.
Meanwhile, the state’s Public Employee Retirement System (PERA), a $15.3 billion fund, is dealing with a $6 billion liability problem of its own. It is instead debating making changes to cost-of-living adjustments.
PERA covers police, firefighters, and other state workers. They pay about 8.92% of their earnings into the pension fund, while taxpayer-funded state contributions are nearly 17%. PERA employees could retire after 25 years of service, regardless of age, but eligibility guidelines have now tightened, reports the Albuquerque Journal.
The PERA fund was caught off guard by the education board’s Monday proposal, and did not have suggestions of its own to present to a legislative group. It has scheduled a December meeting on the topic.
Separately, the Educational Retirement Board will ask for a one-time appropriation of $248.3 million to level out funding issues created by budget-balancing measures between 2009 and 2011 that stalled scheduled tax hikes.
The suggested changes come as credit ratings agencies have lowered the state’s bond rating. Other recent pension provisions New Mexico created include increases to employee- and taxpayer-funded contributions, and enforcement of stricter retirement guidelines for future hires.
Both retirement funds have lowered their annual investment rate of return.
The proposals would only affect new teachers and would need approval of the full legislature and Gov.-elect Michelle Lujan Grisham, who will start in January. During her campaign, Grisham was against any benefit reductions.
Overall, the New Mexico plan is 65% funded.