HOUSE JOINT MEMORIAL 2

52nd legislature - STATE OF NEW MEXICO - first session, 2015

INTRODUCED BY

Jim R. Trujillo

A JOINT MEMORIAL

REQUESTING A MORATORIUM ON THE PROPOSAL AND CONSIDERATION OF LEGISLATION AFFECTING RETIREMENT BENEFITS ADMINISTERED UNDER THE PUBLIC EMPLOYEES RETIREMENT ACT AND REQUESTING THAT MEMBERS BE URGED TO DEFER SUCH LEGISLATION.

     WHEREAS, in 2013, the legislature reformed the Public Employees Retirement Act; and

     WHEREAS, many stakeholders agreed upon the necessity of the enacted reform measures to improve the fiscal health of the funds administered under the Public Employees Retirement Act in order to continue provision of benefits that rank among the best in the nation; and

     WHEREAS, the enacted reform measures represent shared sacrifices among retirees, active members and future members of the public employees retirement system; and

     WHEREAS, the enacted reform measures, particularly the new tier benefits and the provisions regarding the reemployment of retired members, need to be in place for several years to demonstrate actuarial gains; and

     WHEREAS, although recent investment gains have improved the funded ratio of the funds:

          A. investment market volatility and economic uncertainty continue to be a major concern;

          B. the funded ratio has only begun to recover;

          C. the implementation of newly mandated accounting standards is likely to increase the volatility of the plan's funded ratio and the net pension liability well into the future; and

          D. there remains a significant unfunded liability; and

     WHEREAS, the recently improved funded ratio could lead to efforts to modify the enacted reform measures through proposals that could alter the cost-of-living eligibility periods, age and service retirement requirements, deferred retirement option plans and other retirement options or benefits; and

     WHEREAS, even slight modifications to the enacted reform measures could adversely affect the legislature's goal of reaching a funded ratio of at least one hundred percent by 2043, as projected by the actuaries; and

     WHEREAS, the public employees retirement system should be protected from premature calls for statutory changes that could erode the funds or otherwise undermine the funding and fiscal health objectives promoted by the legislature through its passage of the enacted pension reform measures; and

     WHEREAS, Article 20, Section 22 of the constitution of New Mexico vests the retirement board of the public employees retirement association, as trustees, with the sole fiduciary duty and responsibility for the administration of the funds and for holding all assets in trust for the sole and exclusive benefit of its members, beneficiaries and retirees; and

     WHEREAS, Article 20, Section 22 of the constitution of New Mexico states that the legislature shall not enact any law that increases public employee retirement benefits or that changes the funding formula for a retirement plan unless adequate funding is provided; and

     WHEREAS, a five-year moratorium on benefit changes under the Public Employees Retirement Act would allow sufficient actuarial experience to be aggregated in order to properly evaluate the enacted reform measures and their effects on the long-term solvency of the funds; and

     WHEREAS, a fiscally responsible and reasonable course of action combining contributions, plan assets and future investment earnings must continue to be employed, without reversals or reconsideration of the enacted reform measures; and

     WHEREAS, the public employees retirement system must remain an enduring, dependable and actuarily sound defined benefit plan in order to provide the retirement benefits promised to public employees;

     NOW, THEREFORE, BE IT RESOLVED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO that a moratorium on the consideration of legislation affecting benefits administered under the Public Employees Retirement Act be requested through December 31, 2020, absent an unforeseen emergency situation such as a drastic downturn in the economy or investment markets or a significant increase in the funded ratio of the funds included under the Public Employees Retirement Act to one hundred percent; and

     BE IT FURTHER RESOLVED that legislative committee members be urged to defer any proposed legislation affecting the benefits administered under the Public Employees Retirement Act; and

     BE IT FURTHER RESOLVED that copies of this memorial be transmitted to the directors of the legislative council service and the legislative finance committee; the house appropriations and finance committee; the senate finance committee; the office of the governor; and the retirement board of the public employees retirement association.

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