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Labor and Personnel Plan would extend pension funding schedule
Municipal pension systems took a big hit from last year’s dramatic decline in the stock market, suffering declines of at least 25 percent in pension assets.
Cities and towns now face the challenge of making up those loses and staying on schedule for eliminating their unfunded pension liability by 2030. (A provision in the fiscal 2010 state budget gave communities a two-year extension, from 2028 to 2030.)
Without some relief, cities and towns would see their pension schedules skyrocket in order to make up for the recent losses. With this in mind, the Public Employee Retirement Administration Commission, the state’s pension oversight agency, commissioned a group of pension funding experts to research the problem and make recommendations to prevent a local pension funding crisis.
The experts have recommended extending the funding schedule deadline by 10 years, to 2040. In order to qualify for the extension, however, municipalities would have to contribute what their funding schedules called for prior to last fall’s market meltdown. In essence, communities would be allowed to amortize the recent losses over an additional 10 years of the funding schedule.
This funding schedule extension and maintenance program is currently being reviewed by PERAC as well as by the Special Commission on the Contributory Retirement System. The plan would have to be approved by PERAC and would also require a legislative change to Chapter 32.
The MMA is advocating for PERAC approval and for the Legislature to act prior to the end of the formal session in late November.
Labor and Personnel Plan would extend pension funding schedule
Plan would extend pension funding schedule
Municipal pension systems took a big hit from last year’s dramatic decline in the stock market, suffering declines of at least 25 percent in pension assets.
Cities and towns now face the challenge of making up those loses and staying on schedule for eliminating their unfunded pension liability by 2030. (A provision in the fiscal 2010 state budget gave communities a two-year extension, from 2028 to 2030.)
Without some relief, cities and towns would see their pension schedules skyrocket in order to make up for the recent losses. With this in mind, the Public Employee Retirement Administration Commission, the state’s pension oversight agency, commissioned a group of pension funding experts to research the problem and make recommendations to prevent a local pension funding crisis.
The experts have recommended extending the funding schedule deadline by 10 years, to 2040. In order to qualify for the extension, however, municipalities would have to contribute what their funding schedules called for prior to last fall’s market meltdown. In essence, communities would be allowed to amortize the recent losses over an additional 10 years of the funding schedule.
This funding schedule extension and maintenance program is currently being reviewed by PERAC as well as by the Special Commission on the Contributory Retirement System. The plan would have to be approved by PERAC and would also require a legislative change to Chapter 32.
The MMA is advocating for PERAC approval and for the Legislature to act prior to the end of the formal session in late November.
Written by MMA Legislative Director David Baier
