HELENA — Gov. Steve Bullock said Friday he is confident the pension system will remain much improved despite an error that could inadvertently nullify part of a new law aimed at fixing it.
The problem stems from triggers in the law that could reverse planned increases to the amount employees and employers pay into the system in just six months. The trigger is dependent on the outcome and timing of a planned lawsuit from retirees upset about cuts to their benefits.
Many expect the retirees will win their lawsuit and the state will have to continue paying them 3 percent annual inflationary increases. At the same time, actuarial reports could prematurely show the system solvent in less than 25 years and trigger the January reversal of contribution increases that went into place just this month.
Bullock said Friday that, regardless, the system will remain improved. He points out that extra money going into the system from the state's coal tax remains untouched, as does another increase on employer contributions that is phased in over a decade.
The fix for the Teachers Retirement System didn't include the trigger mistake.
"No matter what, we are the first state in the country that has made our pension fix, and it is sustainable without raising taxes," Bullock said.
Bullock pointed out the investment returns also are improving, which will help buoy the system. He said the concern over the inadvertent trigger is a "sideshow."
"By and large, we are on the path we need to be on. It is exciting that Democrats and Republicans came together to make that happen," Bullock said. "I think everyone is confident that the system is a whole lot better than it was before."
Bullock's office said they expect the system will still balance in close to 30 years, as required, even if the increased contributions are nixed and the retiree benefits restored.
Bullock travelled to New York earlier this week to meet with the rating agencies that determine the state's creditworthiness. The state retains a top credit rating with the agencies, thanks in part to projected budget surpluses.
"They were actually excited that Montana took the initiative to fix our pension system," Bullock said. "We have a real good story to tell."