New Mexico’s taxpayers didn’t need more lousy fiscal news, but they got it, courtesy the Associated Press. Yesterday, reporter Morgan Lee revealed that the state’s “two major public pension funds have missed targets for investment returns for a second straight year, likely pushing up unfunded liabilities that can extend the time it takes to meet obligations to public employees if benefits and contributions remain unchanged.”
The New Mexico Public Employees Retirement Association “achieved” a return on investments of “less than 1 percent for the fiscal year ending in June.” The Educational Retirement Board fared somewhat better, at 2.6 percent. Both are far cries from the funds’ long-term targets, which surpass 7 percent.
Sheesh. Last month, PERA’s boss gushed that due to recent reforms adopted by the legislature and Governor Martinez, the fund will “meet our goal of being 100% funded by 2043.” That certainly won’t be the case, if ROI remains so weak.
Yesterday, at a summit sponsored by the National Conference of State Legislatures, the Rockefeller Institute’s Don Boyd and Yimeng Yin Pension disclosed that pension underfunding, as a percent of state- and local-government taxes, is at a “near record”:
In New Mexico and elsewhere, more must be done to relieve taxpayers’ pension obligations. While alterations to existing systems are fraught with political peril, at the very least, new hires should be offered 401(k) plans. As an Oregon resident recently wrote in The Wall Street Journal, “Why government employees need a defined-benefit pension plan while the taxpayers who fund their benefits are required to survive on defined-contribution plans has always puzzled me. Government employees should be required to fund their own retirement plans with defined contributions like the rest of us. Maybe gaining an understanding of the real economy that supports them would be a corollary benefit.”