The New Mexico Supreme Court will soon issue a decision about whether the state can cut cost-of-living increases for retired government workers to better manage its pension liabilities.

Justices heard from both sides this week. The case was initially brought by four retired educators who insist the state constitution protects their pensions from these types of reductions.

Sara Berger, the lawyer for the retirees, said she doesn’t believe retirees should have to shoulder the burden of the state’s financial woes.

She added that New Mexico law gives retired educators a vested property right in their pensions and they are legally entitled to the cost-of-living adjustments that were promised. That figure would have been 2 percent this year if the state hadn’t changed the law to allow these types of reductions.

Scott Fuqua, the assistant attorney general who represented the retirement system in the hearing, said the state constitution includes a provision that allows pension plans to be modified to preserve the solvency of the plan.

The retirees believe that provision only affects workers who aren’t vested in the plan before they retire.

The state Legislature and New Mexico governor agreed to pension changes this year to improve the solvency of the educational retirement program, which has a $6 billion pension liability. The new law also requires educators to pay more into the retirement system if they make more than $20,000 annually.

New hires would have to work until at least age 55 to receive benefits from the system.

The reduction in the cost-of-living adjustment will save the pension plan $2 million this year, according to the Sacramento Bee. The plan covers about 37,000 retirees and 61,000 current workers.

Whatever the decision, it will affect the benefits paid to nearly 70,000 current retirees in New Mexico’s two main retirement plans — one for educators and one for state and local government workers.

Instant Insights /

N.M. high court asked to cut COLA increases

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