SB 30 — PERA TWO PERCENT COST OF LIVING ADJUSTMENTS

SENATE BILL 30 57TH LEGISLATURE -STATEOFNEWMEXICO-- STATEOFNEWMEXICO- FIRST SESSION, 2025 INTRODUCED BY Elizabeth "Liz" Stefanics and Alan T.

Trujillo and Joy Garratt and Cynthia Borrego 7This 9document ANmay ACTincorporate RELATINGamendments TOproposed PUBLICby EMPLOYEESa RETIREMENT;committee, but not yet adopted, as well as amendments that have been adopted during the current legislative session.

RESTORINGThe Adocument TWOis PERCENTa COST-OF-LIVINGtool ADJUSTMENTto FORshow CERTAINamendments RETIREDin MEMBERS;context and cannot be used for the purpose of adding amendments to legislation.

MAKING AN APPROPRIATION.ACT h RELATING TO PUBLIC EMPLOYEES RETIREMENT;

15g BEo ITSHPACºTEMPORARILY»SHPAC ENACTEDRESTORING BYA THETWO LEGISLATUREPERCENT OFCOST-OF-LIVING THEt STATEhr OFg NEWe MEXICO:i k ADJUSTMENT FOR CERTAIN RETIRED MEMBERS;

SECTIONMAKING 1.AN h r i s APPROPRIATION.

Sectionh 10-11-118, NMSAt, 1978e (beingu Lawsg 2020,e b l e te 17h ChapterBE 11,IT SectionENACTED 61)BY isTHE amendedLEGISLATURE toOF read:THE STATE OF NEW MEXICO:

w l n d 18d "10-11-118.i = = o h SECTION 1.

COST-OF-LIVINGSection ADJUSTMENTS--QUALIFIED10-11-118 PENSIONNMSA =1978 =(being 19Laws a2020, l RECIPIENT--DECLINING] INCREASE.--b ,d i a º e rChapter 2011, A.Section 61) is amended to read:

r i = r t e w d m a n o "10-11-118.

COST-OF-LIVING ADJUSTMENTS--QUALIFIED PENSION d m :

b e d s º o t n = .229438.4AIC February 10, 2025 (12:30pm) s k m e e a n e d r e l u [ A d RECIPIENT--DECLINING INCREASE.-- A.

a t m m 21 (1) "cost-of-living adjustment hurdle rate" d r e 22 means the investment rate of return required to fund a cost-of- c e s k 23 living adjustment in excess of one-half percent, as determined e a n b 24 by the association's actuaries;

u [ (2) "funded ratio" means the ratio of the .229438.4 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;

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 h market value investment income over a smoothing period, as g o t hr determined by the association's actuaries.

g e i k B.

A qualified pension recipient is eligible for a h r i s cost-of-living pension adjustment.

A qualified pension h , t, recipient is:

e u g e b l e e h (1) a normal retired member who has been n d d i = = o h retired for at least two full calendar years from the effective el t] 17b ,d i a º e date of the latest retirement prior to July 1 of the year in wr li n= r t e w d 18m a n o which the pension is being adjusted;

=d = 19 a l (2) a normal retired member who has attained i a e r 20 the age of sixty-five years and has been retired for at least a t m m: 21 one full calendar year from the effective date of the member's d r e 22 latest retirement prior to July 1 of the year in which the c e s k 23 pension is being adjusted;

b e d s º o t n = .229438.4AIC February 10, 2025 (12:30pm) s k m e - 2 - e a n be 24d (3)r e l u [ A d (2) a disabilitynormal retired member who has beenattained uthe [age of sixty-five years and has been retired for at least one full calendar year from the effective .229438.4 - 2 - 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 date of the latest retirement prior to July 1 of the year in which the pension is being adjusted;

h C.

Except as provided in Subsections F, G and H of u » r this section, during fiscal years 2021, 2022 and 2023, a t h g e l i qualified pension recipient shall receive an annual, non- h r i s compounding, additional payment.

The amount of the payment h , e h shall be determined by multiplying the amount of annual pension t u g e b l e e , gh payments, inclusive of all cost-of-living adjustments prior to n d d i = = o h fiscal year 2021, by two percent.

el t] 17b ,d i a º r D.

Beginning May 1, 2023 and no later than each May we lr n= t e w d 18m a n o 1 thereafter, the retirement board shall certify to the =d =m 19: a l association the:

ib ar e rt 20º (1)o fundedt ration as= of.229438.4AIC JuneFebruary 3010, of2025 the(12:30pm) as tk m me 21- preceding3 calendar- year;e a n e d r e l u [ A d association the:

and(1) dfunded rratio e 22 (2) smoothed investment rate of return as of c e s k 23 June 30 of the preceding calendar year.year;

eand a(2) nsmoothed binvestment 24rate E.of return as of June 30 of the preceding calendar year.

ExceptE. as provided in Subsections F [G and H] u [ through J of this section, beginning July 1, 2023 and each July .229438.4 - 3 - 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)Except ifas provided in Subsections F [G and H ] through J of this section, beginning July 1, 2023 and each July thereafter, immediately following the retirement board's certification of the funded ratio and smoothed investment rate of return, the fundcost-of-living isadjustment lessto thana onequalified hundredpension percentrecipient 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,year less the amountcost-of-living adjustment hurdle rate, as determined by the association's actuaries, multiplied by the funded ratio on June 30 of the adjustmenth madepreceding pursuantcalendar toyear thisor subsectionfive-tenths shallpercent, notwhichever exceedis threeu percent;» r greater, and subject to the following conditions:

(2)t h g e l i (1) if the funded ratio of the fund is equalless eh tr 17i tos or greater than one hundred percent on June 30 of the wpreceding lcalendar nh d, 18e precedingh calendar year, the amount of the adjustment made pursuant to this =t =u 19g ae b l e e , gh subsection shall not exceed fivethree percent;

n d d i a= e= ro 20h (3)(2) notwithstandingif the provisionsfunded ratio of thisthe afund tis mequal ml 21] subsection,b ,d i a qualifiedº pensionr recipientto shallor receivegreater athan done hundred percent on June 30 of the e r = t e 22w minimumd annualm cost-of-livinga adjustmentn ofo five-tenthspreceding ccalendar eyear, sthe kadjustment 23made percent;pursuant to this d m :

andb r e at nº bo 24t (4)n the= amount.229438.4AIC ofFebruary increase10, shall2025 be(12:30pm) determineds uk [m bye multiplying- the4 amount- ofe pension,a inclusiven ofe alld priorr .229438.4e -l 4u -[ adjustments,A byd thesubsection cost-of-livingshall adjustmentnot asexceed determinedfive bypercent; this subsection.

(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 by multiplying the amount of pension, inclusive of all prior adjustments, by the cost-of-living adjustment as determined by this subsection.

The amount of the increase shall be determined by h multiplying the amount of pension, inclusive of all prior u » r adjustments, by two and one-half percent.

t h g e l i G.

For a disability retired member whose annual h r i s pension benefit, after all previous annual cost-of-living h , e h adjustments, is equal to an amount not greater than twenty-five t u g e b l e e , gh thousand dollars ($25,000), the pension benefit shall be n d d i = = o h increased by two and one-half percent each July 1.