ERB Plan Design Change Proposal (updated 03/29/2013)
Governor Martinez has signed SB 115 - link to Governor's Press Release
SB 115, as passed
This ERB bill, as twice amended, takes a balanced approach to long-term sustainability: changes for current retirees; changes for current members; and changes for new members. These changes will get ERB to 100.7% funded in 2043.
The bill, as amended:
Raises contribution rate for all employees with salary of over $20,000:
- FY 2014 Employee Contribution Rate - 10.1%
- FY 2015 Employee Contribution Rate - 10.7%
- Employees with annual salary below $20,000 stay at 7.9%
*The employee contribution increases do not apply to members earning $20,000 or less annually, the increases only apply to members earning more than $20,000.
- Employer contribution rate will be 13.15% for all members
For new employees hired on or after July 1, 2013:
- Soft Minimum Retirement Age of 55; actuarial reduction if member retires with 30 years and is younger than age 55.
- COLA begins at age 67, rather than age 65
For current retirees:
Immediately reduces the COLA for all retirees until the plan is 100% funded. The COLA reduction is based on the median retirement benefit (approximately $18,000 for Fiscal Year 2012) of all retirees excluding disability retirements.
Retirees with benefits at or below the median AND with 25 or more years' service, will have a 10% COLA reduction; their average COLA will be 1.8%. All other retirees will have a 20% COLA reduction; their average COLA will be 1.6%.
Click here for more detailed information on the COLA adjustment.
These reductions will stay in place until ERB is more than 90% funded. Once the funding is greater than 90%, the COLA reductions will decrease. The retirees with benefits at or below the median AND with 25 or more years' service, will have a 5% COLA reduction; their average COLA will be 1.9%. All other retirees will have a 10% COLA reduction; their average COLA will be 1.8%.
Once ERB is 100% funded, the COLA reductions will cease and the average COLA for all ERB retirees will be 2%. This bill is consistent with ERB’s funding policy to ensure ERB's long-term sustainability.
Click Senate Bill 115 to see the entire bill.
Plan Design Input Archive