By Bobby Harrison/NEMS Daily Journal
JACKSON – People in the Public Employee Retirement System would not receive a cost-of-living adjustment for three years under a proposal made by a study commission.
Freezing the cost of living adjustment, which retirees often receive as a 13th check, is the most controversial recommendation of the Public Employee Retirement System Study Commission formed by Gov. Haley Barbour.
“Mississippi has a retirement plan that is underfunded by more than $12 billion – a figure that has only worsened over the past decade, despite hikes in taxpayer and employee contributions,” said Barbour, who unveiled the plan Wednesday at a news conference from the media room in his Sillers Building office. “…Taxpayers are putting in about 50 percent more than they once were, but the system continues to fall farther behind. We must reverse this trend to protect our retirees’ and taxpayers’ future.”
Gulfport Mayor George Schloegel, who chaired the Commission, stressed it is up to the Legislature to enact the recommendations.
The recommendation was that the cost of living adjustment be frozen for three years for all current retirees and moving forward. New retirees would not receive the 3 percent annual increase for the first three years of retirement. In the future, the cost of living adjustment would be capped at 3 percent, but tied to the consumer price index – meaning if it increased 2 percent, then state retirees would receive only a 2 percent increase.
Other recommendations were for the Legislature to allow people in the system to personally make investments and have part of their retirement benefits be based on those earnings.
Lt. Gov. Phil Bryant, who also is governor-elect, said the Commission’s report “provides some helpful information… We must look at innovative ways to keep this system solvent while being mindful of the commitment we have made to current retirees and current employees by not eliminating the 13th check.”
Kathryn Stewart, a spokeswoman for Republican Treasurer Tate Reeves, who is the lieutenant governor-elect, said he would study the report and “will continue to be a strong proponent of the retirement system and protecting both the beneficiaries of the PERS system and the taxpayers.”
Almost 375,000 current and former public employees have a financial stake in the system.
The system, hit by a drop in investment earning and in public sector employees and by enhanced benefits passed in the 1990s, currently has 65 percent of the funds needed to pay its liabilities over the next 30 years. The industry recommends having 80 percent of the funds needed to pay those liabilities.
Lee County Chancery Clerk Bill Benson, who is chair of the PERS Board and also served on the governor’s Commission, praised the work of the Commission, but said he opposed many recommendations. He, as well as Sen. Hob Bryan, D-Amory, who was a non-voting member of the Commission, said that to make change now might not be necessary if the economy improves.