Guest column: Gluttony, Thy Name is the New Mexico State Legislators’ Pension Plan
The following is a guest column from Charles Sullivan. Sullivan is a retired attorney who has lived in NM for 47 years and is a long time supporter of the Rio Grande Foundation.
This November, New Mexico voters are being given the “opportunity” to amend their state constitution (Amendment 4) to authorize salaries for their legislators, replacing the long-standing per diem reimbursement system. If approved, legislators will begin receiving a salary of approximately $67,800 per year – a figure far higher than legislators in any of the surrounding five states. I am unaware of any current New Mexico legislator who has offered to give up his legislator retirement plan in return for a salary. You will soon see why.
The New Mexico legislature is the only one in the country that does not receive an annual salary. Instead, it receives a daily per diem based on the IRS travel reimbursement rates for Santa Fe. Through September 2026, the amount is $247.
The primary statutes controlling legislators’ retirement pay are contained in New Mexico Statutes at Large (NMSA) 10-11-43.1 to NMSA 10-11-43.5. It is an extraordinarily generous defined benefit plan. Unlike any other state legislator pension plan in the country, a legislator in New Mexico can retire after only 10 years of service and immediately start receiving a pension regardless of his age. It is not uncommon for ex-legislators in their 30s and 40s to start receiving lifetime pensions.
To show the generosity of the plan, I will use the following hypothetical. A 28- year- old man is elected to the New Mexico legislature and serves for 10 years from January 1, 2016 until December 31, 2025. He starts receiving his pension in 2026 when he is just 39 years old.
His life expectancy in 2026 is 38.55 years. Per statute, he has made the following plan contributions during his 10 years in the legislature: 2016,$600; 2017,$600; 2018,$600; 2019,$1000; 2020,$1000; 2021,$1000; 2022, $1000; 2023,$1000; 2024,$1000 and $1000 for 2025. The payments total $8800.
The formula to determine the retirement benefit after ten years of service is the per diem for Santa Fe in 2026 ($247) times (14%) times (90) times years of service (10). Calculation: $247 * .14*90*10 = $31,122 annual pension. When the annual pension is multiplied by the life expectancy of 38.55, the total comes to an astonishing. $1,199,753.10. That figure is 136 times the $8800 pension contribution amount made by the “hypothetical” legislator.
But wait. Cost of living increases are permitted in the pension two years after the pension begins. Here are the figures assuming a 3% cost of living increase beginning in year 3 and each year thereafter until the end of the 38.55-year actuarial period.
With an assumed cost of living increase of 3% per year beginning in year 3, the total comes to the extraordinary sum of two million dollars, one hundred eighty- three thousand, seven hundred twenty- five dollars after 38.55 years This is 248 times the original contribution of $8800. Mexican drug cartels would be envious of the numbers. Gluttony, thy name is the New Mexico state legislators’ pension plan.