New Mexico’s public pension system, one of the most troubled in the nation, cut its unfunded liabilities gap by $1.6 billion from last year, its board of trustees announced.
The Public Employees Retirement Association of New Mexico, which covers 55,000 workers and 34,000 retirees, attributed the good news to pension reforms approved by the state legislature and signed into law in April. The changes included reducing benefits for everyone covered under the system, including those already retired.
The executive director of the fund, Wayne Propst, told the Albuquerque Journal that reductions in cost of living adjustments were the main reason the amount of liabilities fell more than was expected. Those adjustments are the subject of a lawsuit being heard by the state supreme court.
The board said the system’s percentage of unfunded liabilities for fiscal 2013 was 73 percent. Last year, it was 65 percent. In dollars, it fell from $6.2 billion to $4.6 billion.
New Mexico ranked fifth from the bottom in a ranking of pension liability per capita, according to a September study by State Budget Solutions. That study made the startling claim that state pension funds are underfunded by a total of $4.1 trillion.
Public pension funds have come under increasing pressure as an aging population and new actuarial standards have changed assumptions about their funding. In June, Moody’s released its own ranking of pension funds and its calculations were similar to those used by State Budget Solutions.
Across the nation, state legislatures have passed reforms to ensure public pension funds remain solvent as the baby boom generation continues to gobble up benefits. In many cases, as in New Mexico, retirees have filed lawsuits arguing that benefits negotiated during collective bargaining cannot be changed outside that process.
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