Both chambers of the Mississippi Legislature have passed a bill that will halt a 2% increase in the employer contribution to the $30 billion Mississippi Public Employees’ Retirement System that was set to take effect in July.
The Mississippi pension fund based in Jackson will instead receive a more modest 0.5% increase on July 1 of each year from 2024 through 2028.
The board of trustees had recommended and planned to increase the employer contribution gradually by 5% over a three-year period, beginning with the 2% increase in July.
Under the legislation, the board of trustees will now be required to back up future recommendations to change the employer contribution with at least two independent actuarial assessments. In addition to recommending changes to the employer contribution, the board will also be able to make recommendations for additional funding sources. All recommendations must be approved by the Legislature.
The bill, which passed in the Senate on April 26 in 34-14 vote and in the House on April 27 in a 107–1 vote, comes on the heels of a more severe proposal to replace the current board of trustees largely with political appointees. That proposal was killed by a Senate committee April 2.
The current legislation, however, does contain a morsel of good news for Mississippi’s largest pension fund. The bill calls for the creation of a new tier for future participants in the retirement system, a measure that is to be taken up in the 2025 regular legislative session.
Ray Higgins, Mississippi PERS executive director, said in a statement that while the new tier for new employees is needed and had been recommended by the board to lessen future liabilities and better sustain PERS, it is a short-term approach to the problem.
“It is also essential that the system receive adequate funding to meet the long-term needs of the plan,” he said.
“Eventually the system will need funding consistent with actuarial recommendations, which are already periodically verified by independent actuarial audit. The longer a delay in adequate funding, the more it may cost taxpayers,” he said.
Mississippi PERS’ actuarial funding ratio was around 56% as of June 30, 2023, leaving it with an unfunded liability of more than $25 billion, according to a letter Higgins sent to House Speaker Jason White on Jan. 25.
Higgins attributed the 44% unfunded liability to a variety of factors, including a decline in the active participant-to-retiree ratio and 25 years of “additional benefit enhancements placed into the law without additional funding.”
In the letter, Higgins urged White to consider the possibility “any new revenue streams or a dedicated revenue for PERS," similar to what many states have done with their surplus funds to make additional payments to their retirement systems.
“We are available to work with the Legislature for the limited remainder of this session and during the year for the betterment of PERS,” Higgins said in his latest statement. “PERS is certainly stable, but we must work together to keep it that way.”
A representative in Gov. Tate Reeves' office declined to say whether the governor will sign the legislation.
