The information posted below is provided to bring an understanding to citizens and elected officials as to the true solvency and operation of the Public Employee Retirement Association.
By Doug Crandall, RPENM Member and Former PERA Board Chair
underlying assumptions (none of which have been brought up by Representative Stewart), and is not a true gauge of the solvency of the pension plan. Pension standards generally recognize a plan that is 80% funded as a safe and acceptable level. At the last actuarial valuation, through June 30, 2010, PERA was 78%
funded. This figure is based upon a five year “smoothing” method that takes into account the ups and downs of the financial markets. In other words, the two worst years of the past several decades are included in the calculation and PERA is still in quite good shape. Considering that the past two years have produced double digit returns, the plan is in even better shape today. In fact, total PERA assets once again exceed
$12 billion and have nearly recovered every dollar lost in the great recession.
increases are already in effect, “but to address the current budget crisis, not solvency of
the retirement fund.” It is true that the State Legislature chose to reduce their share of
retirement funding and pass it along to State employees to assist in closing the budget
deficit, but this is irrelevant to the argument of solvency.
contributions when any of the PERA plans (e.g., state employees, municipal firefighters
or police) fails to meet acceptable funding standards. The budgetary issues are entirely
separate from PERAʼs fiduciary due diligence in assuring that all of the PERA plans
remain adequately funded.
pension plan financing and investing each PERA Board member is required to attend at
least one trustee conference each year that deals exclusively with public employee
pension issues. Additionally, every year the Board spends at least two full days at a
mandatory retreat on nothing but investment and actuarial issues involving the PERA
plan. Even further, the PERA Board and investment committee meets twice monthly to
review investments, market trends and money manager performance.
Both fiduciary law and the New Mexico state constitution provide the PERA board
members with the sole authority and duty to manage and protect the PERA fund for
both future and current retirees. Representative Mimi Stewart is a good legislator and
well respected by RPENM, her peers and the voters in her district. But Representative
Stewart has many responsibilities and does not have the time to truly understand the
needs and challenges of a $12 billion pension fund. However, Representative Stewart,
RPENM members, New Mexico taxpayers and the thousands of current an future
PERA retirees may rest assured that the PERA Board is diligently administering the
PERA fund to assure that it is safe and sound today, tomorrow and for generations to