Is state pension fund funded?

MISSISSIPPI

Nationwide, many are on shaky ground

By GEOFF PENDER
glpender@sunherald.com

 

JACKSON --

"The Legislature has passed a couple of pieces of legislation. We increased the vesting (of new employees) from four to eight years, and the employer contribution was increased from 9.5 percent to 11.5 percent, and that is scheduled to go up to nearly 12.5 percent within the next couple of years. The real concern should be in those states who have not addressed their funding shortfall. I'm comfortable that what we have done is a proactive approach."

 

In terms of the way the health of state pensions is judged, Mississippi's appears OK, but some question the grading method - which is based on the number of years it would take the system to become fully funded, assuming an 8 percent return on investments. For Mississippi, that would now be less than 30 years, considered a middling grade. At one point several years back, the state was beyond 60 years, which was considered failing.

Reeves said PERS is well aware of the baby boom statistics. "Looking at actuarial studies, while we have to deal with that issue, it's not one that gives me great concern."

And as for PERS being heavily into the stock market, he said the system's investments are very diversified - mixed in domestic and international stocks. Reeves said PERS, like all investors, needs to take a long-term approach.

"Look at what happened after 9/11," He said. "The Dow was roughly 10,000, and went to about 7,500. But since 2002 it's gone from 7,500 to over 13,000. The reality is, six years later, the market has performed extremely well."

If the stock market and number of retirees drawing benefits were to hold steady or improve, PERS should fare well. But markets don't always hold steady, and demographic projections are the baby boom generation is about to swell the ranks of retirees drastically.

"Rest assured, this market after 2010 is going south," Sawyer said. "Demographics show it. That's when the baby boomers reach their peak in spending. Spending drives our economy. When that spending stops, the market stops."

"PERS is very important to thousands of Mississippians and we need to make sure it is stable. I am dedicated to that. We've heard all the horror stories of what could be coming up, and I think we need to do everything we can to prevent that from happening."
Democratic candidate Rep. Jamie Franks Jr.

"We have a major crisis about to hit, and I don't hear any politicians talking about what they plan to do. I think we need to start looking at our elected officials and asking, 'Are you on top of this?' They will either have to take money from the taxpayers, or pay out less."

Bob Sawyer, local financial expert

 

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