SANTA FE, N.M. (AP) — The Senate approved a proposal Thursday to revamp benefits and eligibility of a pension system for nearly 90,000 state and local government workers and retirees in New Mexico.
Supporters said the changes were necessary to improve the long-term solvency of the Public Employees Retirement Association, which has a $6 billion gap between its assets and the cost of future retirement benefits.
If enacted, the proposal would reduce annual cost-of-living adjustments for pension benefits. It would impose new retirement provisions on employees hired on or after July 1, 2013, including requiring them to work longer before collecting pension benefits.
The bill passed the Senate on a 38-4 vote and goes to the House with time running out on the legislative session.
Lawmakers adjourn in nine days, and supporters of the proposed overhaul warned that the failure to approve the legislation would allow the pension system’s finances to worsen and potentially force more drastic benefits cutbacks in the future.
“The longer we postpone this the more painful it becomes,” said Sen. John Arthur Smith, a Deming Democrat and chairman of the committee that handles the state budget.
New Mexico’s PERA covers about 31,000 retirees and 55,400 workers for state and local governments, including police and firefighters.
Annual cost-of-living adjustments for pension benefits would be lowered to 2 percent from 3 percent under the legislation. Those currently start two years after retirement, but the legislation proposes to phase in a seven-year waiting period for the inflation adjustments. For some retirees with pensions of $20,000 or less, 2.5 percent cost-of-living adjustments would be provided.
Workers and taxpayers would be required to contribute more to the retirement fund. Payroll contributions by governmental employees — in effect, taxpayers — would increase 0.04 percent.
The Senate rejected a proposed amendment that would have boosted taxpayer contributions by an additional 1.1 percent. There were concerns that higher taxpayer contributions could doom chances of the bill passing the Legislature and being signed into law by Republican Gov. Susana Martinez.
Most public employee unions are backing the legislation, although municipal firefighters, whose pension program is among the most underfunded in the PERA system, have objected to the proposed overhaul.
Four Democrats voted against the legislation — Senate Majority Leader Michael Sanchez, of Belen, Peter Wirth, of Santa Fe, Linda Lopez, of Albuquerque, and Richard Martinez, of Espanola, a retired magistrate judge.
The Senate unanimously approved a separate measure to revise the judicial retirement system to improve its solvency. The proposal would require state judges and magistrates to increase their payroll contributions and eliminate the use of court docket fees for financing the pension plan. Cost-of-living adjustments would be suspended for the next two years.
Legislation to shore up the pension system for educators has passed the House and is pending in the Senate.