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The New Mexico State Legislature is to vote in January on a measure that would reduce benefits for retirees and establish a minimum retirement age after the measure passed in legislative committee on Friday.
The plan, which reduces retirees’ Cost of Living Adjustment from 2 percent to 1.75 percent and establishes a minimum retirement age of 55, narrowly passed 4-3 during the New Mexico Legislature’s Investment and Pensions Oversight Committee meeting Friday.
The plan now awaits approval by the New Mexico Legislature during the legislative session, which begins Jan. 17.
Mary Clark, the UNM Staff Council president, said the Cost of Living Adjustment (COLA) is a percentage of a retiree’s total retirement compensation that increases yearly to combat inflation, and if the proposed decrease is approved, retirees’ yearly cost of living allowance won’t keep up with rising prices.
“I’m very disappointed they changed the COLA,” she said. “That’s not fair.”
The proposed decrease means retirees receiving the ERB average allowance of about $20,000 per year would get an average annual increase of $350 instead of $400, said Jan Goodwin, ERB executive director, to the Albuquerque Journal.
ERB members don’t receive their COLA until age 65. The proposal establishes a minimum retirement age of 55. Currently, there is no set age; employees can retire after working for 25 years.
The proposal includes a “grandfather period” that would allow current workers already eligible for retirement and those that will be eligible within 10 years of when plan takes effect to be exempt from the minimum age requirement.
ERB Chairwoman Mary Lou Cameron said the proposed changes are intended to improve the ERB’s funding ratio, which measures assets against liabilities.
The current ratio is 61 percent.
“The proposal is consistent with the board’s goal of improving the retirement plan’s funding ratio to 80 percent by 2030 and 95 percent by 2040, and ensuring its long-term sustainability,” she said in a Nov. 21 statement.
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