SANTA FE, N.M. (AP) — The Public Employees Retirement Association board backed a plan that would cut benefits for about 40,000 New Mexico retired state workers in the coming years.
The board, which approved the proposal on Tuesday, also voted to ask lawmakers for a $200 million lump-sum appropriation to shore up the pension fund.
The decision comes as the pension system struggles to reach full funding under the watch of credit-rating agencies that have raised alarms about the financial state of the New Mexico's government retirement programs, which have about 50,000 active members as well as 40,000 retirees and beneficiaries.
If state lawmakers and the governor approve the proposal next year, all employees in the municipal general, municipal police, municipal fire and state general divisions would see their contributions increased by 1.5 percent until those divisions reach 80 percent funding. Employers would also see an increase of 1.75 percent during that time. State police and adult corrections divisions would be exempt.
The employer and employee contributions would gradually decrease as the division funding levels improve.
Cost-of-living adjustments would be suspended for three years, from mid-2019 to mid-2022.
After that point, cost-of-living adjustments would be based on the consumer price index and the total PERA funded ratio.
The current requirement that retirees wait seven years to get a cost-of-living increase would be eliminated. Instead, eligibility would be based in large part on age. Retirees would get cost-of-living adjustments when at least 65 years old or retired for one year, whichever is later. The minimum age would be 60 for public safety employees.