|AFSCME Council 18|
Future of Public Pension Plans Hang in the Balance
During Tuesday’s interim legislative committee meeting Public Employee Retirement Association (PERA) Executive Director Wayne Propst said, “PERA is a bit like a patient…in critical condition.” The question for Union PERA / ERB (Educational Retirement Board) members is, do we attach the oxygen, stabilize the heart, and get our patient breathing, or, endanger the patient’s life by standing around debating what needs to be done in order to ensure our patient will play pro-football again.
At Tuesday’s meeting, Propst revealed the gap between future retirement benefits owed and assets on hand has grown to $6.2 billion dollars over the past year.
Solvency of public employee pension funds will undoubtedly be a top legislative issue during the 60-day session in January. There is a great deal of consensus among lawmakers from both sides of the aisle that New Mexico’s public pension systems must and can be fixed during the upcoming legislative session in January.
Regarding the October 12, 2012 PERA Board Refined Pension-Reform Legislative Proposals, Martinez spokesman Greg Blair said, “Governor Martinez has some significant concerns about the assumptions made in this proposal and also the possibility of additional increases in the contribution levels that would ultimately fall on the backs of taxpayers.”
What the Governor’s Office is referring to are percentages used to predict how large of a return PERA and ERB investments will realize. A fairly conservative 7.75% assumed rate of return was used by PERA and ERB as a baseline to create the long term solvency plans.
PERA professionals and investment experts maintain that a 7.75% rate of return on investment is a realistic expectation which has proved out over decades.
One certainty is that AFSCME will continue to pursue pension reform that minimizes the impact to current retirees and members while ensuring that PERA and ERB are safe and solvent for decades to come.
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