Mississippi Gov. Tate Reeves signed into law a significant tax-reform bill that includes a provision for the creation of a new tier in the Mississippi Public Employees' Retirement System, Jackson, for government workers joining the system after March 1, 2026.
The provision was tucked into House Bill 1, or the Build Up Mississippi Act signed March 27, which will eventually eliminate the state income tax.
The new Tier 5 in Mississippi PERS calls for a plan with defined benefit and defined contribution components. It specifies that new employees will deposit a portion of their contributions into the defined contribution account, with employers electing to contribute to that account an amount up to the maximum pretax amount allowable under federal law.
The provision for the new Tier 5 was based on recommendations from the PERS board, which last year looked for ways to shore up the retirement system by increasing the employer contribution. Lawmakers rejected the board’s proposed increase of 5 percentage points over a three-year period, reducing it by half and over a longer period of time.
The board has also been looking for additional funding sources. In a letter to lawmakers last year, Mississippi PERS’ executive director, H. Ray Higgins, warned that the $34 billion pension fund had an unfunded liability of more than $25 billion and urged them to consider the possibility of “new revenue streams or a dedicated revenue for PERS.”
“PERS needs additional funding, as recommended by multiple actuaries, and a new benefit structure for future employees. House Bill 1 provides that new benefit structure, which will help better sustain the system long term,” Higgins said in a statement. “We look forward to working with the Legislature for the remainder of session on funding and the betterment of PERS.”
While the PERS board supports the creation of a new Tier 5, several organizations have attacked it, including the Mississippi Association of Chiefs of Police.
“After listening to our legislators and watching the way this piece of legislation was manipulated into the tax reform package, it has become very clear this tier 5 will not be good for the law enforcement profession nor any public employee,” the association said in a post on Facebook.
The group described the legislation as a “death warrant” for many future first responders, saying they would not receive benefits on which they could survive.
