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PERS board debates state‑sponsored tier 5 hybrid; signals conditional support while tabling details
Summary
Actuaries showed a state‑sponsored DB/DB‑DC hybrid for new hires could reduce future unfunded liability growth and ease contribution‑rate risk. The board voted to table detailed adoption while also approving a motion expressing conditional support for the concept, emphasizing preservation of benefits for current members.
The Public Employees Retirement System of Mississippi board spent an extended session evaluating a potential state‑sponsored tier 5 DBDC hybrid plan for future employees and ultimately signaled conditional support for the concept while tabling final language.
Director Higgins summarized staff and actuary analysis and said he would recommend the board endorse a state proposal if the projected results showed improved funded status and a larger share of employer dollars directed toward paying down the unfunded liability. "If those results ... are estimated and projected to decrease the unfunded liability, pay off the unfunded liability sooner, and mitigate contribution rate risk," Higgins said, "then that is why I recommend that the board endorse that, should they do it."
Actuarial presenter Ed Coble outlined the sample hybrid: employee contributions would remain 9% of pay but split 4% to a DB component and 5% to a DC account; a proposed 1% multiplier on the DB side replaced the current 2% payout multiplier; final average salary under the hybrid would use 8 consecutive years rather than 4. Coble's projections showed that, under some funding scenarios, the hybrid could bring the unfunded actuarial accrued liability to zero sooner than the current plan and moderate future employer ADEC increases.
Board members raised procedural and policy questions: whether the board should proactively recommend a plan the legislature may draft, how to preserve guaranteed benefits for current employees and retirees, comparison with the board—s previously proposed tier 5 option, employer response and payroll/funding implications, and message timing to members and the public.
The legislative committee first voted to table detailed approval to allow time for further review and comparison with the board—s earlier tier 5 proposal. Separately, the board approved a motion stating that if the state as plan sponsor proposes a tier 5 DBDC hybrid model substantially like the staff presentation — and if it is projected to reduce the cost of future benefits, direct more employer contributions to pay down the unfunded liability and mitigate contribution rate risk — then the board would support the concept while continuing to protect existing members' and beneficiaries' accrued benefits. The recorded transcript indicates the motion passed; one board member announced an abstention.
Why it matters: a new tier for future employees is a generational change that could materially change how retirement benefits are accrued, who pays which costs and the timeline for paying down the system's unfunded liability. The board emphasized any endorsement must preserve commitments to current members and retirees.
Next steps: staff and actuaries will provide comparative materials (the board asked for a side‑by‑side comparison with last year—s board‑recommended tier 5), legal drafting will be coordinated with legislative sponsors, and the board will continue to refine funding policy language and messaging ahead of the legislative session.
