- Associated Press - Thursday, January 30, 2020

SANTA FE, N.M. (AP) - Legislators advanced a proposal to reform New Mexico’s public pension plan for state and local government workers with some dissent among Democrats in the legislative majority.

Public workers and retirees packed the Senate committee hearing on Thursday for deliberations on a bill aimed at reigning in $6.6 billion in unfunded liabilities at the pension fund overseen by the Public Employees Retirement Association.

Major provisions of the bill would tie future annual cost of living adjustments to investment returns instead of providing automatic 3% increases. It also increases pension contributions by employees and employers, with the exception of low-paid workers and state police and corrections officers.

Pension members over the age of 75 would be exempt from the changes.

Participants in the pension plan are divided over whether the solvency measures are necessary right now.

Three Republicans, including Senate minority leader Stuart Ingle of Portales, joined with two Democrats to advance the bill on a 5-2 vote.

The bill moves on to the Senate finance committee before a floor vote can take place. The initiative is supported by Democratic Gov. Michelle Lujan Grisham.

Democratic Sens. Liz Stefanics of Santa Fe and Antoinette Sedillo Lopez of Albuquerque voted against advancing the bill after unsuccessfully trying to remove a provision that will eliminate the cap on retirement income.

Retirement income is capped at 90% of final average salary. Fund managers say removing the cap would encourage people to retire later - and ultimately reduce overall pension fund payouts. Sedillo Lopez objected to boosting high-end retirement payouts at the same time that middle-income workers would be making financial sacrifices.

Wayne Probst, executive director of the Public Employees Retirement Association, warned that an economic downturn would severely undermine the financial health of the fund if reforms are not adopted.

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