The head of the Public Employees Retirement System of Mississippi says the $20.7-billion retirement trust fund is constitutionally protected but she doubts the benefits of retirees and public sector workers enrolled in the plan have the same protections.
“However, this could be debated,” said Pat Robertson, PERS executive director.
She cited a 1986 amendment to the Mississippi Constitution in noting the protections for the fund itself.
Robertson said the interpretation is that the members have a contractual right to their benefits. “That being said, the courts would have to decide that,” she said.
A staff analysis by the office of Mississippi Attorney General Jim Hood states that Mississippi recognizes that contractual rights begin when an individual accepts a position knowing that he will receive a benefit after a certain number of years. “The pension is a benefit of employment. The benefit cannot be taken away,” the analysis notes.
However, the extent of protection for current workers could be open to question, according to John Quinn, an Atlanta attorney and regional counsel for the Mississippi Alliance of State Employees/Communications Workers of America, which represents about 2,500 public sector workers in the state.
Taking away benefits already earned could be legally difficult, he said, but curtailing an entire package of benefits a worker has not fully earned could probably be done.
For instance, Quinn said, a worker who has 10 years on the job could be awarded a level of benefits proportionate to 10 years of service but receive a reduced level of benefits for the remaining 20 years of service necessary for PERS retirement. “I think the real problem is if you try to retroactively take something away,” he said. “If you have had 10 years of enhancements (on the benefits side) but on an going-forward basis we are going to reduce the benefits, that’s another issue.”
He said his organization would nonetheless have a problem with current employees getting a mid-career pull back on benefits. The years already spent on the job were predicated on receiving the full promised benefits at retirement, Quinn said.
Robertson and Quinn addressed the legal protections of the retirement benefits after Gov. Haley Barbour appointed a 12-member study commission to study the legality of modifying the benefit structure for current and future state employees.
The key, said Quinn, is that “nothing that is vested can be taken away. They’d have a fight on their hands if they did that,” he said, referring to the governor’s distaste for the package of PERS benefits enhancements the Legislature approved in 1999 without designating a funding source for them.
The governor has called the decade-old enhancements the result of “wrong-headed” policy making and described the current level of taxpayer-funded benefits as “unsustainable.”
“I think we would be very troubled if they attempt to, first, take anything away from current retirees,” Quinn said. “I think that would be subject to legal challenge.”
On the other hand, a rollback of retirement benefits to new hires would pose no legal issues, Quinn said.
Brenda Scott, president of the Mississippi Alliance of State Employees/Communications Workers of America, said she fears legislators may decide to flip-flop the funding ratios, lowering the employer contribution to 9 percent and raising the employee share to the 12.93 percent employer level.
The union need not worry, according to a Feb. 22, 2010 opinion from Attorney General Hood. “Such an increase (to the employee share) would constitute an impermissible impairment of a contractual obligation,” he said.