SANTA FE, N.M. (AP) — An advocacy group for retired public employees assailed core provisions of a pension reform proposal in defiance of recommendations by the governor, at a legislative hearing Wednesday.

Miguel Gómez, executive director of Retired Public Employees of New Mexico that represents more than 40,000 people, criticized a so-called profit-sharing proposal to tie future cost-of-living increases on retirement payouts to investment returns for the $16 billion retirement fund overseen by the Public Employees Retirement Association. That provision is designed to align changes in pension benefits more closely with combined pension savings.

Unfunded liabilities at the fund exceed $6 billion and have prompted downgrades in credit ratings for the state and cities including Albuquerque that can lead to higher borrowing costs. Leading legislators and administrators of the pension fund have warned that an economic downturn could quickly undermine the fund's ability to meet future pension obligations.

Gómez told a panel of legislators that immediate, comprehensive solvency reforms are not necessary and that the pension fund can sustain unfunded obligations far into the future. He warned lawmakers of a possible political backlash.

“You're waking up a sleeping giant of retirees in the state of New Mexico,” said Gómez, calling for an independent study on pension solvency.

On Tuesday, first-year Democratic Gov. Michelle Lujan Grisham endorsed a sweeping legislative proposal aimed at eliminating unfunded pension liabilities within 25 years at the Public Employees Retirement Association.

That plan takes guidance from months of study and deliberations by a pension solvency task force appointed by the governor, along with some concerns raised by retirees. The Legislature gathers in January for its 30-day legislative session.

The governor-backed proposal would stem the accelerating withdrawal of pension-fund assets by suspending cost-of-living adjustments until mid-2023 for most retirees. Pensioners instead would receive a 2% annual bonus payment on top of the same benefit each year. Later, cost-of-living adjustments would loosely track the performance of pension investments.

In an effort to accommodate pension-fund members, Lujan Grisham exempted disabled, low-income and retirees over the age of 74 from major retirement changes.

That did not satisfy Gómez, who said firefighters and police officers who retire early at age 50 would be more exposed over time to inflation and reduced retirement payments.

“Those folks are going to be hurt dramatically,” Gómez said.

Pension committee chairman and Democratic Sen. George Munoz of Gallup warned that a failure to enact reforms could lead to greater unfunded liabilities that might only be resolved with higher taxes.

"If we have a downturn in the economy, these funds are going to go broke and that's the big picture we have to look at," he said.

Under the proposal from the governor's office, annual pension contributions would increase by an additional 4% of salary, split evenly between employees and taxpayers.

Separately on Wednesday, the executive director of the statewide retirement fund for educational workers outlined a legislative proposal to more quickly pay down unfunded liabilities of $7.9 billion overseen by the Educational Retirement Board.

That would be accomplished through a series of appropriations from the state general fund and another account, starting with $50 million in July 2020. Educational Retirement Board Executive Director Jan Goodwin says that taxpayer investment can help public schools and universities avoid higher borrowing costs and that educators already pay more toward their retirement than state and local government employees.