It’s a little known fund stockpiled in Santa Fe, valued at $44 million. Take a close look at the details surrounding this multi million-dollar bankroll. If you read the fine print, you’ll find it’s a retirement plan created by state legislators, for state legislators. And, it’s one of the most unusual pension plans in the country.
“The New Mexico (legislator’s pension) plan in certain respects, especially the way that it calculates the retirement benefit, is a bit of a horse of a different color,” says Keith Brainard, Research Director for the National Association of State Retirement Administrators (NASRA).
Retirement plans depend on employee payroll deductions and employer contributions for funding. As an example, a school teacher making $43,553 a year pays $4,601 annually to the Educational Retirement Board. The teacher’s school kicks in another $5,977. If you are a state employee, 8.92 percent of your paycheck is earmarked for PERA. New Mexico chips in another 16.99 percent of your salary. That’s how pension plans work. Well, that’s how most pensions work.
“This is the first retirement plan that I’ve seen in the public sector that is not based on a salary or wage,” says NASRA’s Keith Brainard.
Unlike other pension plans across the country, it’s taxpayers who mostly fund the “New Mexico Legislative Retirement Plan.” Where school teachers shell out thousands of dollars every year towards their retirement, state legislators annually contribute just $600 a year. Since 2003, lawmakers have diverted tens of millions of dollars from oil and gas revenue to fund their pensions. During last year’s Special Session, lawmakers reduced the taxpayer contribution to their pension fund from $2.4 million to $900,000.
Legislators justify their retirement plan because, as a Citizen’s Legislature, members do not receive a salary. New Mexico is the only state in the country with an unpaid legislature. Lawmakers receive $161 in per diem for each day the legislature is in session. The per diem is a reimbursement for expenses, not a salary.
“If we’re ever a paid legislature our retirement will be so much higher than it is now and cost the taxpayers so much more it will be pitiful,” says Senate Minority leader Stuart Ingle. “(The legislative pension) is something that will give somebody a little bit of a benefit for serving in a non-paying job for these years.”
Legislative retirement benefits are calculated by a formula involving per diem and years of service. The longer a member serves the more money they make in retirement. A lawmaker who has served ten years in the Roundhouse can retire at any age and receive full benefits. Not bad for working 30 or 60 days a year.
For example, John Ryan retired last year after serving 11 years in the State Senate. Ryan’s annual pension is $11,688. Former Senate President Pro Tem Manny Aragon served 29 years in the legislature and collects $30,815 a year for life. Former House Appropriations Chair Kiki Saavedra takes home $39,316 after a 37 year career at the State Capitol.
Today, so much money has been poured into the taxpayer supported Legislative Retirement Plan that it is overfunded at 151 percent. That means the lawmaker’s pension fund has $14 million more than it needs to pay future benefits. Compare that to the teacher’s retirement plan (Educational Retirement Board) which is funded at 63 percent. PERA’s State Employee Division also lacks enough assets to meet future liabilities. The State Employee plan is funded at 66.2 percent.
“Almost every public pension plan in the country these days is underfunded which means that they have more in obligations than they do in assets,” says NASRA’s Keith Brainard. “With regard to the New Mexico Legislative Pension Plan (it has) accumulated much more in assets than (it has) in obligations. I’m not familiar with any public pension plan that’s funded at that level right now,” Brainard says.
Albuquerque State Rep. Jim Dines says there is a better use for the $900,000 lawmakers spend annually to fund their retirement. “When we take a look at what is needed on everything from public safety to education, absolutely (there is a better use for that money).”
“When our teachers and public employees in the state of New Mexico have their fund, which is their future retirement, in the 60 percent range of being funded and the legislature on the other hand is 151 percent, that makes no sense to me at all,” Dines said. Rep. Dines is one of only a handful of state legislators who do not participate in the Legislative Retirement Plan.
“Nine-hundred-thousand dollars is clearly too much because (the lawmaker pension fund) is more over-funded now than it was when we tried to fix it last Spring in a Special Session,” Speaker of the House Brian Egolf says. “I do think it would be appropriate to suspend those payments basically in their entirety until the pension gets more in line with where it should be.”
“It’s a little curious that the state continues to make contributions to the plan when the actuaries have indicated that no contributions are required,” NASRA’s Keith Brainard says. “At the same time the state is not contributing the full required amount to the other big pension plans in the state, the one for state employees, local government employees and school teachers. (They) are not getting anywhere close to the full required contribution that they should be receiving,” Brainard says.
Rep. Dines says when his constituents learn the details of the lawmaker’s pension plan, “They’re astounded.”
Sen. Ingle says he would like to see the lawmaker’s $600 contribution to the pension fund be increased. “It’s generous in the fact that we don’t contribute much in it. It wasn’t my idea. I wanted it to be higher,” Sen. Ingle says. “I’ve tried a time or two and can’t get the votes to do it. I’d love to get to at least a thousand dollars a year and that’s still very reasonable. But I only have one vote. I can get a few votes but not enough.”
KRQE News 13 asked Sen. Ingle what it would take to see change in the Legislative Retirement Plan? His response, “Twenty-two votes in the Senate and 36 in the House.”
Rep. Dines says he will urge his colleagues to enact changes to the pension plan at next year’s 60 day session. That thought is echoed by Speaker of the House Egolf. “I have no doubt that the issue (will be) at the top of the mind with a new administration and with the next legislature,” Speaker Egolf says. “We’re going to be getting into this and making sure that it’s on the path to being solved.”
“I’m sure that I’m not, on this issue, the most popular person in the Roundhouse,” Rep. Dines says. “But I think a lot of people who have gotten to know me up here understand that I feel this is a matter of fairness and principle and needs to be acted on.”