The board of The Public Employees Retirement System is suggesting potential changes to how employees accrue retirement funds. Recommendations include doing away with an automatic annual 3% cost of living increase, and creating a new benefit structure for new employees that would be a choice between reduced benefits or a contribution hybrid.
The PERS system in 2022 reported a 61.3% funding ratio, which means it was short of covering everyone registered. According to a legislative Performance Evaluation and Expenditure Review, PERS funding policy metrics were at a red-light signal status last year, prompting the board to increase the employee contribution rate.
Executive Director Ray Higgins emphasizes that the suggested changes are "a work in progress."
“We always consider the financial sustainability of PERS, that's always paramount and in our short-term as well as long-term plans,” he said. “Now, I will emphasize to you, you know, there's no emergency or immediate need for changes tomorrow morning. So there's no need for alarm.”
Those who would be affected by the changes include state and local government employees, as well as teachers.
Kelly Riley is the executive director of the Mississippi Professional Educators organization, which represents over 10,000 teachers, administrators and staff. She says she's particularly concerned about the possibility of a hybrid system where employees would be responsible for more of their savings.
“A red flag to me for defined contribution plans has always been that teachers are teachers, they wear a lot of hats, they are counselors, they are nurses, but they are not investment advisers or financial specialists,” she said.
Any changes to the PERS plan would need to be approved by the Mississippi Legislature.
