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PERS board readies legislative push, prioritizes funding and reopens Tier 5 debate
Summary
At a legislative committee meeting, the Public Employees Retirement System of Mississippi said funding PERS will be its top legislative priority; the board expects three independent actuarial reports before October and reopened discussion of a proposed Tier 5 plan, with members pressing for number-driven scenarios on COLA and contribution trade-offs.
The Public Employees Retirement System of Mississippi on Tuesday told board members that funding the pension system will be the top priority for the upcoming legislative session and that three independent actuarial reviews will be delivered before the October board meeting.
"I think the main focus for next session ... will be funding. I think that is probably the most important issue, to fund PERS," said Mister Higgins, the system director, as he opened the legislative committee discussion. Higgins said CABMAC, Chiron and GRS will provide independent assessments of the actuarial determined contribution (ADEC) in time for the board's October meeting.
Why it matters: PERS provides retirement benefits to state employees and retirees. Board members said accurate ADEC projections and clear policy positions will be essential as the legislature considers changes that affect long-term funding, benefit design and employer contribution rates.
Ed Coble, CABMAC's representative, told the board the ADEC in last year’s valuation topped 25% of payroll and that CABMAC’s ongoing recommendation had been about 27.4% of payroll for a 30-year funding horizon. "Those numbers will change with the new valuation," Coble said, and he confirmed the office can model stress tests and dollar-and-percentage combinations (including the $110,000,000 one-time infusion discussed last year) to show paths to various funding targets.
Board members focused much of the discussion on Tier 5, the board-approved proposal for a different tier of benefits for future hires. Higgins said the board previously approved a Tier 5 concept and that the legislature "stated its intent to develop a tier." Several trustees asked staff and the actuaries to produce specific scenarios that show how guaranteed COLA amounts, different multipliers and minimum ages affect costs and long-term cash flow.
Retiree representative Doctor McCoy urged a clear, timely board recommendation: "We need to develop a plan, even if it's just a consensus plan," he said, urging the board to act quickly on the five items from last year's package if the board still supports them.
The committee also discussed federal Secure 2 changes that affect deferred compensation accounts. Ms. Lee said Secure 2 requires allowing Roth (after-tax) catch-up contributions for age-50-plus catch-up rules and that state statute must authorize PERS to offer a Roth option for those accounts. "We just need authority," Ms. Lee said, noting the board will seek statute changes to align state law with federal requirements.
Several trustees raised process questions about the two independent actuarial assessments required by statute. Higgins said the independent firms will validate the assumptions the board has adopted and may recommend changes but will not unilaterally change board-adopted assumptions; any suggested assumption changes would be brought to the board for review.
Senator Blunt, who attended and identified himself as a legislator, told trustees they should present the board's best fiduciary view to lawmakers. "Tell the legislature what the board believes is in the best interest of the system and the retirees and the members," he said.
Next steps: Staff and the actuaries said they aim to deliver preliminary projections and stress-testing scenarios before the October meeting so trustees can consider numeric trade-offs (dollars, payroll percentage increases, and plan design options) before finalizing the board's legislative package.
