HELENA, Mont. (AP) — The legislative fix for Montana's public employees' retirement system could still inadvertently be gutted by a mistake in the new law after a retirement board decided Thursday it could only partially help.
The Public Employees Retirement Board adjusted its rules so the problem might be prevented if the courts rule quickly on a threatened lawsuit from retirees.
The problem stems from triggers in the law that went into place July 1. In January, those triggers could inadvertently eradicate the planned increases to the amount employees and employers pay into the system — money needed to fix projected shortfalls.
The new law also includes a cut the annual inflationary increases given to retirees, thus reducing the amount of money the system pays out.
But retirees argue the law unconstitutionally cuts their annual inflationary increases. If they win, it could gut the other piece of the legislative fix that would boost contributions to the system — and potentially leave the system no better off than before lawmakers intervened.
The retirees told the board Thursday they will be suing, although they are still sorting out details.
Some lawmakers, who also met again Thursday on the issue, had asked the board to issue rules that could guarantee that at least the portion of the fix that increases contributions could remain in place.
But the retirement board said it could only partially help. They argued the law clearly says the inflationary benefit is being cut, which needs to be considered when actuaries measure the system's soundness.
That actuarial test is expected to show the system balances well below 25 years, automatically removing the contribution increases.
Lawmakers argued their intent was to keep those contribution increases in place. A separate fix for the Teachers Retirement System does not have the same problem.
The board said it cannot ignore the law. Instead it decided to prepare a contingency actuarial analysis that assumes the retirees win their lawsuit.
If a judge orders a temporary stay in the coming months, the contingency plan could be used to keep the increased contributions in place.
The governor's office released a short statement saying it is "pleased that we're moving forward."
Many Republicans were originally opposed to fixing the system, which costs more money, and the plan barely cleared several legislative hurdles. Some Republicans had hoped to end the system and replace it with a less lucrative retirement system more similar to what is found in the public sector.
Democrats argue they could have a very difficult time getting lawmakers to fix the system again in 2015.
"That is what I am considering here, my fiduciary responsibility to ensure the survival of this system," said board member Sheena Wilson.