PERS legislative committee hears actuaries on funding, first-responder carve-outs and return-to-work; no funding vote

The Public Employees Retirement System of Mississippi legislative committee on Monday heard in-depth briefings from two outside actuarial firms on the system's funding outlook, discussed proposed first-responder carve-outs and return-to-work rules, and reviewed several funding scenarios the board may ask the Legislature to consider. No formal vote on additional funding or ADEC adoption was taken at the committee meeting.

The committee heard presentations from Ed Coble of CABMAC and Paul Wood of GRS, who explained long-term projections showing rising retiree benefit payments and the need for additional contributions or lump-sum funding to reduce the system's unfunded liability. Wood summarized his message to legislators as "pay now or pay a whole lot more later." Ray (staff member) and several board members discussed trade-offs among payroll-based funding, targeted cash infusions and the board's Actuarially Determined Employer Contribution (ADEC) recommendation.

Why this matters: PERS faces a multi-billion-dollar unfunded liability that, under current law and assumptions, keeps the funded ratio near the mid-50s over three decades unless contributions or other changes are adopted. Committee discussion focused on how additional funding would be sourced and the potential effects of creating a separate retirement arrangement for first responders.

Most important details - Actuaries: CABMAC and GRS presented projections based on the 2024 valuation, the new Tier 5 design from House Bill 1, and an assumed 7% long-term investment return. GRS noted the unfunded liability is roughly $26 billion under current assumptions and projected benefit payments could grow from about $3 billion today to over $5 billion by the mid-2040s without additional action. (Paul Wood, GRS; Ed Coble, CABMAC) - ADEC and contribution schedule: The board's ADEC recommendation from last year was 25.92% of payroll; the statutory employer contribution is currently scheduled to phase to 19.9% of payroll. Speakers said the ADEC figure can change year-to-year because of investment returns and actuarial changes; the committee discussed risks tied to the five-year smoothing method for investment gains/losses and how rolling off the recent large gain will affect projections. (Ed Coble) - Funding scenarios presented: GRS and CABMAC modeled multiple options: (a) maintain baseline contributions (19.9%) and rely on investment returns; (b) one-time lump sums ($500M, $1B, $2B, $4B) to improve funded status; (c) recurring supplemental infusions (examples included $50M/yr for 10 years, $200M/yr for 30 years); and (d) moving toward an actuarially determined contribution (ADC) over time (Wyoming example). Actuaries emphasized lump sums can materially reduce long-term costs but carry deployment/timing risk. (Paul Wood, GRS) - First-responder carve-outs: Committee members reported that some stakeholders have commissioned studies on creating a separate retirement plan or different benefit parameters for first responders. Staff said the group that requested the study did…