HELENA – The pension system for public employees in Montana is facing a larger shortfall due to market losses and other factors, according to a new report that will be presented to the Montana Public Employees’ Retirement Board later this week.
Analysts hired by the board, which governs the Montana Public Employees Retirement Administration, said in their annual look at the pension system that the amount it projects to fall short of the benefits it has promised, known as the unfunded liability, has grown about 20 percent over the past year to $1.6 billion.
The annual actuarial report looked at the status of the pensions systems covering Montana public employees at the June 30 close of the state’s fiscal year.
The analysts reported that investments fared well over the past year, growing about 19 percent. But that wasn’t enough to make up for past losses that are factored in over time, along with other issues.
A recent report on the other large pension system that covers teachers found its shortfall also rose significantly, for many of the same reasons.
That report said it would take an immediate infusion of $633 million or a combination of other actions over time to prevent the state’s teacher pension system from running out of money by 2055, administrators said Monday. Another option would be to increase future school system contributions by about 20 percent, decrease benefits, or an approach that combines all three actions in some way.
The teachers’ retirement system faced a slightly larger projected shortfall of nearly $1.8 billion.
The report on the public employee pensions, covering the likes of state government workers, sheriff’s deputies, firefighters and others, does not say exactly how much would need to be put into those systems to fully fund the pensions.
State legislators are analyzing the pension issue in advance of the 2013 legislative session, but so far no easy solutions have been found.
Increasing employer contributions would mean that state and local government would need to pay more money each year into the pension systems, a tough pill to swallow during tight budget times. Investment advisers have said it is highly unlikely that market gains will be enough to fix the problem. And any attempt to cut benefits for current employees, who view the pension as a contract right, is expected to end up in the courts.