New Mexico’s Two Largest Public Pensions Could See Benefit Reforms

Despite double-digit returns, the systems aren’t out of the woods yet.

New Mexico’s two biggest public pension funds recently saw double-digit returns, but their funds’ managers admit that there’s still a long way to go in terms of fulfilling funding obligations to retirees.

New Mexico Educational Retirement Board (NMERB) Executive Director Jan Goodwin informed a Thursday panel of lawmakers that the funds have been considering pension reforms to address unfunded liabilities, which totaled $7.4 billion as of June 2016.

Goodwin said that to guarantee proper funding for future public school and college workers’ retirements, reforms could be proposed ahead of the 2019 legislative session, according to the Associated Press.

“The bad news is that it will take 84 years to get us toward 100% funding” for retirements, Goodwin said. “Our board feels that 84 years is too long.”

NMERB reported 12% returns for the fiscal year ended June 30—a $967 million increase to $12.3 billion.

Meanwhile, Wayne Propst, executive director of the New Mexico Public Employee Retirement Association (NMPERA)—the pension fund for state, county, and municipal workers along with judges and volunteer firefighters, said that there were no immediate plans to restructure the funds’ benefits and contributions, but confirmed that investment gains can change the situation. Propst admitted that the fund “probably can’t” reinvest its way back to fully funded status.  

Legislative Finance Committee lawmakers expressed dismay at the NMPERA’s oversight board for not acting quickly enough to ensure adequate funding for future pensions.

One-year investment earnings of just over $1.5 billion helped NMPERA’s assets return 11.13%, growing the fund to $15 billion in the period ending June 30. However, the NMPERA has not been fully funded since 2002.

NMPERA was unavailable for comment.

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