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HOUSE BILL 96
57
TH LEGISLATURE
-
STATE
OF
NEW
MEXICO
-
FIRST SESSION
,
2025
INTRODUCED BY
Joseph L. Sanchez
AN ACT
RELATING TO PUBLIC EMPLOYEE PENSIONS; PROVIDING A TEMPORARY,
ADDITIONAL, NON-COMPOUNDING PAYMENT TO RETIRED MEMBERS UNDER
THE PUBLIC EMPLOYEES RETIREMENT ACT; MAKING AN APPROPRIATION.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. Section 10-11-118 NMSA 1978 (being Laws 2020,
Chapter 11, Section 61) is amended to read:
"10-11-118. COST-OF-LIVING ADJUSTMENTS--QUALIFIED PENSION
RECIPIENT--DECLINING INCREASE.--
A. As used in this section:
(1) "cost-of-living adjustment hurdle rate"
means the investment rate of return required to fund a cost-of-
living adjustment in excess of one-half percent, as determined
by the association's actuaries;
(2) "funded ratio" means the ratio of the
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actuarial value of the assets of the fund to the actuarial
accrued liability of the association for payments from the
fund, as determined by the association's actuaries;
(3) "preceding calendar year" means the full
calendar year preceding the July 1 on which pensions are being
adjusted; and
(4) "smoothed investment rate of return" means
a calculation made by spreading the difference between the
expected actuarial value in investment income and the actual
market value investment income over a smoothing period, as
determined by the association's actuaries.
B. A qualified pension recipient is eligible for a
cost-of-living pension adjustment. A qualified pension
recipient is:
(1) a normal retired member who has been
retired for at least two full calendar years from the effective
date of the latest retirement prior to July 1 of the year in
which the pension is being adjusted;
(2) a normal retired member who has attained
the age of sixty-five years and has been retired for at least
one full calendar year from the effective date of the member's
latest retirement prior to July 1 of the year in which the
pension is being adjusted;
(3) a disability retired member who has been
retired for at least one full calendar year from the effective
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date of the latest retirement prior to July 1 of the year in
which the pension is being adjusted;
(4) a survivor beneficiary who has received a
survivor pension for at least two full calendar years; or
(5) a survivor beneficiary of a deceased
retired member who otherwise would have been retired at least
two full calendar years from the effective date of the latest
retirement prior to July 1 of the year in which the pension is
being adjusted.
C. [Except as provided in Subsections F, G and H of
this section] During fiscal years [2021, 2022 and 2023 ] 2026
and 2027, a qualified pension recipient shall receive an
annual, non-compounding, additional payment. The amount of the
payment shall be determined each fiscal year by multiplying the
amount of annual pension payments, inclusive of all cost-of-
living adjustments prior to that fiscal year [2021], by two
percent.
D. Beginning May 1, 2023 and no later than each May
1 thereafter, the retirement board shall certify to the
association the:
(1) funded ratio as of June 30 of the
preceding calendar year; and
(2) smoothed investment rate of return as of
June 30 of the preceding calendar year.
E. Except as provided in Subsections F, G and H of
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this section, beginning July 1, 2023 and each July 1
thereafter, immediately following the retirement board's
certification of the funded ratio and smoothed investment rate
of return, the cost-of-living adjustment to a qualified pension
recipient payable pursuant to the Public Employees Retirement
Act shall be determined as an amount equal to the smoothed
investment rate of return on the actuarial value of assets on
June 30 of the preceding calendar year less the cost-of-living
adjustment hurdle rate, as determined by the association's
actuaries, multiplied by the funded ratio on June 30 of the
preceding calendar year or five-tenths percent, whichever is
greater, and subject to the following conditions:
(1) if the funded ratio of the fund is less
than one hundred percent on June 30 of the preceding calendar
year, the amount of the adjustment made pursuant to this
subsection shall not exceed three percent;
(2) if the funded ratio of the fund is equal
to or greater than one hundred percent on June 30 of the
preceding calendar year, the adjustment made pursuant to this
subsection shall not exceed five percent;
(3) notwithstanding the provisions of this
subsection, a qualified pension recipient shall receive a
minimum annual cost-of-living adjustment of five-tenths
percent; and
(4) the amount of increase shall be determined
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by multiplying the amount of pension, inclusive of all prior
adjustments, by the cost-of-living adjustment as determined by
this subsection.
F. For a normal retired member who worked for at
least twenty-five years under one or more applicable coverage
plans and whose annual pension benefit, after all previous
annual cost-of-living adjustments, is equal to an amount not
greater than twenty-five thousand dollars ($25,000), the
pension benefit shall be increased by two and one-half percent
each July 1. The amount of the increase shall be determined by
multiplying the amount of pension, inclusive of all prior
adjustments, by two and one-half percent.
G. For a disability retired member whose annual
pension benefit, after all previous annual cost-of-living
adjustments, is equal to an amount not greater than twenty-five
thousand dollars ($25,000), the pension benefit shall be
increased by two and one-half percent each July 1. The amount
of the increase shall be determined by multiplying the amount
of pension, inclusive of all prior adjustments, by two and one-
half percent.
H. For a normal retired member who has attained the
age of seventy-five years prior to July 1, 2020, the pension
benefit shall be increased by two and one-half percent each
July 1. The amount of the increase shall be determined by
multiplying the amount of pension, inclusive of all prior
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adjustments, by two and one-half percent.
I. A qualified pension recipient may decline an
increase in a pension by giving the association written notice
of the decision to decline the increase at least thirty days
prior to the date the increase would take effect."
SECTION 2. APPROPRIATION.--Sixty-six million dollars
($66,000,000) is appropriated from the general fund to the
public employees retirement association for expenditure in
fiscal year 2026 and subsequent fiscal years to provide
adequate funding to cover the cost of the temporary,
additional, non-compounding payments. Any unexpended or
unencumbered balance remaining at the end of a fiscal year
shall not revert to the general fund.
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