New Mexico’s public pension system, one of the most troubled inthe nation, cut its unfunded liabilities gap by $1.6 billion fromlast year, its board of trustees announced.

The Public Employees Retirement Association of New Mexico, whichcovers 55,000 workers and 34,000 retirees, attributed the good newsto pension reforms approved by the state legislature and signedinto law in April. The changes included reducing benefits foreveryone covered under the system, including those alreadyretired.

The executive director of the fund, Wayne Propst, told theAlbuquerque Journal that reductions in cost of living adjustmentswere the main reason the amount of liabilities fell more than wasexpected. Those adjustments are the subject of a lawsuit being heard by the state supreme court.

The board said the system’s percentage of unfunded liabilitiesfor fiscal 2013 was 73 percent. Last year, it was 65 percent. Indollars, it fell from $6.2 billion to $4.6 billion.

New Mexico ranked fifth from the bottom in a ranking of pensionliability per capita, according to a September study by StateBudget Solutions. That study made the startling claim that statepension funds are underfunded by a total of $4.1 trillion.

Public pension funds have come under increasing pressure as anaging population and new actuarial standards have changedassumptions about their funding. In June, Moody’s releasedits own ranking of pension funds and its calculations were similarto those used by State Budget Solutions.

Across the nation, state legislatures have passed reforms toensure public pension funds remain solvent as the baby boomgeneration continues to gobble up benefits. In many cases, as inNew Mexico, retirees have filed lawsuits arguing that benefitsnegotiated during collective bargaining cannot be changedoutside that process.