PERS Part 3: Is PERS Slip SLRPing Away?

 

The Mississippi Legislature has a golden parachute most state workers can only imagine.

The Supplemental Legislative Retirement Plan was created in 1989 by the Legislature to provide additional benefits to legislators and the lieutenant governor (who presides over the state Senate).  The plan isn’t available for other state employees and gives legislators and the lieutenant governor benefits 1.5 times better than state employees.

Enrollment in SLRP is mandatory for legislators with no opt-out clause.  While Mississippi is the only state with a supplemental pension fund for its legislators, seven states provide no pension benefits for legislators, most notably Alabama and Louisiana.

Better known by its nickname SL(U)RP, the system is icing on the cake for legislators who are already part of the state’s defined benefit pension system known as the Public Employees’ Retirement System of Mississippi or PERS.

PERS administrators also run the SLRP system in addition to PERS, some holdover municipal pension systems and the state trooper retirement fund.

The way the plan works is, like PERS, both taxpayers and the legislator provide contributions.  Like PERS, taxpayers pick up a bigger chunk of the contributions to the fund. Members contribute 3 percent of their salary to SLRP, while taxpayers kick in 7.4 percent.  The contribution rate for legislators hasn’t changed since the program’s inception, while the taxpayers’ contribution was last increased in 2012.  Taxpayers contributed $513,000 for SLRP in 2018, while legislator contributions added up to only $207,000.

The SLRP is in good financial shape with $18 million in assets as of June 30, 3018.  While PERS and the pension fund for state troopers languish with funding ratios of 62.5 percent and 67.2 percent respectively, the SLRP chug-a-lugs along with a funding ratio of 84.7 percent.

In 2018, contributions to SLRP added up to $720,00, while in 2017, the figure was $734,000.  The plan made $1.412 million in investment income in 2018 after earning $2.264 million in 2017.  SLRP paid out $1.41 million in pension benefits in 2018, up slightly from 2017 when $1.397 million were paid out to retirees and beneficiaries.

As for demographics, 174 active participants are supporting 207 retirees and beneficiaries. In 2010, 175 members were supporting 142 retirees.  The demographic headwinds that face PERS (increasing numbers of retirees and a decreasing to flat number of active participants) aren’t as big a factor with SLRP since the number of contributing members is constant.

PERS has a $16.6 billion pension liability, while the state trooper fund is $173.3 million.  The SLRP liability is only at $3.3 million.

In 2002, the Legislature made SLRP an even better perk.  They inserted language into the law that allowed legislators with 33.5 years of PERS service to earn retirement benefits in excess of 100 percent of their average salaries, an advantage not enjoyed by the rest of PERS members.

It’s past time for the Legislature to eliminate this sweetheart deal, especially in light of their unwillingness to fix the structural issues with PERS since they fear the wrath of retirees at the voting booth.  The SLRP needs to be phased out because it puts the legislators ahead of teachers, police and fire fighters when it comes to retirement benefits.

There also needs to be discussion on whether legislators merit retirement pay at all.  Many who move on to a statewide elected office or an executive director position at a state agency will receive credit for their time in the Legislature and retire at the rate of pay of their last job (the last four rule).  In addition, they will receive their SLRP benefits.

Shutting down the Supplemental Legislative Retirement Plan would end a practice that many consider to be unfair to state, municipal and county workers who do not receive similar perks and whose retirement is threatened due to the Legislature’s constant inaction on reform.

 

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