PERS pension concerns remain volatile for state lawmakers in 2026 as markets rumble

• Columnist Sid Salter asks, “How serious is the Legislature about public pension reforms?”

Across the U.S., public pension unfunded liabilities generally decreased, falling about 9 percent from $1.62 trillion in 2024 to $1.48 trillion in 2025. That’s the good news. The unwelcome news is that a recession or other severe economic downturn could raise state and local public pension debt to as much as $2.74 trillion by 2026.

Mississippi’s Public Employees Retirement System, or PERS, has an unfunded liability of roughly $26 billion. PERS is the public pension defined-benefit system that provides retirement benefits to some 360,000 current and former public employees in the state, including elementary and secondary school teachers and administrators, university and community college faculty, staff and administrators, and other state employees.

There are 145,836 active PERS members (workers still employed). As of the last report, the average PERS pension benefit $27,541 per year. According to the National Institute on Retirement Security, 28% of those funds came from employer contributions, 17% from employee contributions, and 55% from investment earnings.

The PERS policy debate confronting government at all levels in Mississippi isn’t new. It was during the “Great Recession” that then-Gov. Haley Barbour and then-Treasurer Tate Reeves first publicly raised concerns about PERS in the wake of a critical study citing unfunded liabilities. Still, state legislators ignored discussions of PERS reform. Barbour and Reeves pointed out that the Mississippi Legislature raised state employee retirement benefits without providing a funding mechanism.

There was a reason legislators have historically balked at PERS discussions. Lawmakers didn’t want the increased scrutiny that any discussion of PERS reform would have on the Legislature’s enhanced retirement benefits.

Since 1989, Mississippi’s 174 legislators and the lieutenant governor have enjoyed a preferential state retirement system that is 1.5 times more generous than that provided to “regular” state employees such as schoolteachers or highway workers. Lawmakers are eligible for two pensions that, on average, can add up to 165 percent of their salaries.

The special legislative system – called the Supplemental Legislative Retirement Plan (SLRP) – allowed legislators to pay into the Public Employees’ Retirement System (PERS) at a rate 50 percent higher than for regular employees.

How serious is the Legislature about public pension reforms? Legislators adopted House Bill 1 last session, which terminated the Supplemental Legislative Retirement Plan (SLRP) for employees hired after July 1, 2025. That move signaled the Legislature’s resolve to bolster the state’s pension system for all workers.

Just as existing state employees saw their PERS system benefits left untouched by the change of law, state legislators saw their system untouched. But beginning July, lawmakers and state employees alike will be subject to the new Tier 5 structure in PERS. 

As communicated to state employees by PERS Executive Director Ray Higgins last year, “House Bill 1 was recently signed into law. This bill contained several provisions, some of which pertained to the Public Employees’ Retirement System of Mississippi (PERS). The bill included what is commonly referred to as Tier 5, which means a new benefit structure for future employees.

“This bill made no changes to the benefits of current members or retirees of PERS and should help by better sustaining the system long term and supporting their promised benefits. The new benefit provisions apply only to PERS-covered employees hired on or after March 1, 2026. The Mississippi Highway Safety Patrol Retirement System was not included in the bill.

“The bill also contained modifications to the Optional Retirement Plan (ORP), which only affects Institutions of Higher Learning, and closed the Supplemental Legislative Retirement Plan (SLRP). The closing of SLRP means that all newly elected members of the State Legislature and the President of the Senate (Lieutenant Governor) elected after March 1, 2026, will no longer be eligible for membership in SLRP and will only be members of the new PERS Tier 5,” Higgins wrote.

As with most public pensions, concerns remain that Mississippi lawmakers took bold steps in 2025 to address structural issues in PERS.

Still, as Dan Doonan, executive director of the National Institute on Retirement Security, wrote in Forbes in November: “A growing body of research indicates that many Americans will not be able to sustain their standard of living once they leave the workforce.”