New Mexico Gov. Michelle Lujan Grisham’s Public Employees Retirement Association’s Pension Solvency Task Force released preliminary recommendations and related actuarial analyses for a set of policy approaches that improve PERA’s solvency by eliminating over $6 billion in unfunded liabilities over the next 25 years. The changes, proposed earlier this month, are significant and positive steps for PERA, but leave some systemic challenges—namely actuarial methods and assumptions—unaddressed.
Several months back, financial experts urged policymakers to prepare for potential scenarios that could endanger the health of the state’s pension plan. The task force has done so by exploring recommendations that include increased contribution inflows, adjusting cost-of-living (COLA) provisions, and implementing other policies to improve PERA’s financial health, as detailed in this brief.
If New Mexico legislators decide to implement the task force’s recommendations, PERA would no doubt be better funded and have more assets to spare than under the status quo. State policymakers should also consider other options for PERA beyond the task force’s proposals to prevent missed actuarial assumptions, lengthy amortization schedules, and other current practices from further increasing unfunded liabilities.
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