SENATE MEMORIAL 31
57th legislature - STATE OF NEW MEXICO - second session, 2026
INTRODUCED BY
Elizabeth "Liz" Stefanics and Linda M. Trujillo
and Natalie Figueroa and Michael Padilla and Peter Wirth
A MEMORIAL
REQUESTING THE CREATION OF A WORK GROUP TO STUDY THE PUBLIC EMPLOYEES RETIREMENT ASSOCIATION FUND, POLICIES IMPACTING BENEFITS AND THE SOLVENCY OF THE FUND AND THE IMPACT OF CHANGES MADE TO RETIREE COST-OF-LIVING ADJUSTMENTS AND TO MAKE RECOMMENDATIONS TO IMPROVE FUND SOLVENCY AND EXPLORE THE POSSIBILITY OF PROVIDING COST-OF-LIVING ADJUSTMENTS TIED TO INFLATION.
WHEREAS, the long-term stability of the public employees retirement association fund is necessary to ensure that public retirees receive their earned pensions; and
WHEREAS, the public employees retirement association fund's unfunded liability has risen dramatically in recent years; and
WHEREAS, in the six years since passage of Senate Bill 72 in the 2020 regular legislative session, many public retiree pensions have not kept up with inflation, significantly reducing retiree spending power; and
WHEREAS, changes enacted by the legislature in 2020 suspended cost-of-living adjustments for three years and altered the methodology of compounding cost-of-living adjustments for approximately thirty thousand current public retirees, shifting their basis from inflation to a statutory formula based on public employees retirement association fund solvency and investment performance; and
WHEREAS, although the changes made in 2020 were intended to reduce the public employees retirement association fund's unfunded liability and projections were that retirees would receive average compounding cost-of-living adjustments of one and sixty-four hundredths percent, those projections have not materialized; and
WHEREAS, the rise in the public employees retirement association fund's unfunded liability since 2020 suggests the possibility that factors other than cost-of-living adjustments were the cause of the large unfunded liability prior to 2020 and that elimination of the cost-of-living adjustments was not an effective solution to the solvency crisis; and
WHEREAS, under the current cost-of-living adjustment formula, the value of a public retiree pension when adjusted for inflation may shrink to just over one-half of its 2019 value in another twenty-five years; and
WHEREAS, the projected loss in economic activity resulting from the reduced spending power of almost thirty thousand senior citizens across New Mexico could be as high as three hundred million dollars ($300,000,000) since 2020, and by 2030 could exceed one billion dollars ($1,000,000,000) in lost economic activity and more than fifty million dollars ($50,000,000) in lost income taxes to the state; and
WHEREAS, public employees retirement association actuary reports for the last four years indicate that of the three billion one hundred million dollars ($3,100,000,000) growth in unfunded liability, six hundred million dollars ($600,000,000) is primarily the result of investment underperformance and one billion six hundred million dollars ($1,600,000,000) is the result of higher-than-expected salary increases for active employees; and
WHEREAS, fund solvency projections by the public employees retirement association actuary necessary to achieve long-term solvency are based on assumptions of annual three and one-fourth percent salary increases for active employees and that increases above that amount will add to the unfunded liability of the public employees retirement association fund unless accompanied by increased employer contributions to cover the increase in benefits driven by the salary increases; and
WHEREAS, the average public employee salary has increased an average of forty-seven percent since 2019, an average increase of more than nine percent annually, far above the three and one-fourth percent required to achieve public employees retirement association fund solvency;
NOW, THEREFORE, BE IT RESOLVED BY THE SENATE OF THE STATE OF NEW MEXICO the legislative finance committee be requested to create and staff a work group to study the public employees retirement association fund to examine the impact of cost-of-living adjustment changes on current retirees and consider improvements to restore compounding annual adjustments, to examine fund solvency factors in order to ensure that pensions will be provided to future retirees, to examine the causes of increasing unfunded liability, to examine the impact of fund contributions from employers and employees and to evaluate benefits for and impacts to future retirees; and
BE IT FURTHER RESOLVED that the work group be requested to examine formulas for the calculation of benefits, rules and policies governing benefits and incentives for delaying benefits, including consideration of social security incremental pension formulas to determine what changes in retirement program requirements will improve fund solvency without negatively impacting retirees and giving consideration to directing those changes for new hires; and
BE IT FURTHER RESOLVED that the work group be requested to study and evaluate the impact of changes to retiree cost-of- living adjustments since 2019 and consider options to restore cost-of-living adjustments for retirees that are tied more closely to actual cost-of-living changes and that the work group develop recommendations that do not negatively impact the solvency of the public employees retirement association fund or the financial stability of retirees in their retirement years; and
BE IT FURTHER RESOLVED that the work group be requested to seek the assistance of an outside entity with expertise in pension funds to independently evaluate issues impacting fund solvency, including investment performance and investment oversight; and
BE IT FURTHER RESOLVED that the work group be composed of nine members with demonstrated experience in finance, budget and government policy, including one public employees retirement association retiree appointed by the speaker of the house of representatives, one public employees retirement association retiree appointed by the president pro tempore of the senate, one public employees retirement association retiree appointed by the governor, the chair and vice chair of the appropriate interim legislative committee that oversees investments and pensions or their designees, the chair of the public employees retirement association board, the executive director of the public employees retirement association, an analyst of the department of finance and administration and an analyst of the legislative finance committee; and
BE IT FURTHER RESOLVED that the work group be requested to make its recommendations to the appropriate interim legislative committee that oversees investments and pensions and to the legislative finance committee no later than December 31, 2026; and
BE IT FURTHER RESOLVED that copies of this memorial be transmitted to the governor, the legislative finance committee, the executive director of the public employees retirement association and the department of finance and administration.
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