The Albuquerque Journal reports that the plan would trim the annual “cost-of-living adjustment” increases from an average over time of 2% to an average of 1.75%. A minimum retirement age of 55 would not take effect for 10 years.
The president of a teachers union said the plan isn’t acceptable because it would reduce benefits for both future and current retirees. “We can’t support any plan that affects currently vested employees,” said National Education Association-New Mexico President Sharon Morgan, according to the Albuquerque Journal.
The plan will be presented next month to an interim legislative committee. The full Legislature could then take it up during its 30-day regular session that starts January 17.
The new report said the solvency crunch facing the state’s education pension fund is chiefly due to workers retiring younger and living longer, a state budget crunch that has prompted lawmakers to delay approved contribution hikes and market-driven investment losses in recent years. The Educational Retirement Board had an estimated unfunded liability of about $5.9 billion as of earlier this year.
As of June 30, the pension fund had about $15.4 billion in liabilities and about $9.5 billion in assets. The fund’s balance had decreased to $9.1 billion at the end of October.The proposed changes are projected to improve the funded ratio to 78% by 2030. The current funded ratio for the ERB is about 61%.