State legislators face pension changes

Voters approved a measure last week that will establish a base salary for state legislators beginning in 2029.

The constitutional amendment sets the starting pay at the median household income for New Mexico. That figure is currently estimated at nearly $68,000 per year. Lawmakers may choose to accept or decline this new compensation.

The decision to take the salary has direct financial consequences for retirement benefits. Incumbents who decline the pay can avoid being classified as state employees. This status allows them to remain in the current Legislative Retirement Plan. That program offers benefits that differ sharply from plans available to other public workers.

Under the existing rules, a legislator with the minimum ten years of service qualifies for a pension of about $30,000 annually. Lawmakers with longer tenures can expect annual payouts ranging from $60,000 to more than $100,000. Unlike other public employees, legislators may begin collecting these funds at any age after leaving office. There is no minimum age requirement for them to start receiving benefits.

The structure of the current plan has drawn scrutiny in recent years. State lawmakers increased their own pension benefits by 27% in 2022. They raised them again by 50% in 2024. These increases occurred during the same periods when the legislature held its standard 30-day sessions. The current system requires only a $1,000 annual personal contribution from the member to qualify for taxpayer-funded compensation.

Rep. Dan Foley of Roswell illustrates the flexibility of the current system. He lost his seat in 2008 at age 39. He began receiving a lifetime pension at that time. The program also continues to pay benefits to former members even after felony convictions. Former Sen. Manny Aragon of Albuquerque collected $27,000 annually while serving a federal prison sentence from 2009 to 2013.

A bill introduced by Sen. Natalie Figueroa of Albuquerque seeks to change the rules for newly elected members. If approved, the measure would bar newcomers from entering the existing Legislative Retirement Plan. Instead, they would enroll in the pension plan that covers other state public employees. This shift would alter the cost and timing of their retirement benefits.

Under Figueroa's proposal, new legislators would contribute almost 11% of their salary to the pension fund. This is a steep increase from the $1,000 donation required of current members. Newcomers would qualify for pension payments at age 65 after five years of service. Alternatively, they could collect at any age if they complete 25 years of service. Incumbents without much seniority might choose the new salary to avoid the risk of losing a seat before vesting in the current, more generous plan.

The legislature is scheduled to begin its 60-day session on Jan. 19. Lawmakers have not yet set a date for hearings on Figueroa's bill. The constitutional amendment is silent on daily expense allowances for members in session. Current allowances stand at $209 per day in January and February, rising to $255 per day from March through September. These rates apply to all 112 legislators, regardless of their distance from the Capitol.