Retirement insights from a Colorado PERA perspective

Legislation & Governance

Bill to Make Up Missed $225M Payment to PERA Moving Through Legislature

A close-up inside view of gold dome of Colorado State Capitol Building.
Photo credit: SeanXu/Getty Images

Update (May 11, 2022): This bill has passed. Click here for the latest


A bill that would make up the state’s missed 2020 payment of $225 million to PERA has begun making its way through the state legislature.

The Pension Review Commission, a legislative interim committee that is charged to study and develop proposed legislation concerning pension plans in the state, made a recommendation for this bill to be introduced in the 2022 legislative session. It was introduced early in the session, but did not move forward until the state budget had been finalized.

The House Finance Committee on Monday voted 9-1 to move the bill, HB22-1029, forward to the House Appropriations Committee for further consideration.

Lawmakers enacted legislation to forego the $225 million payment to PERA in 2020 during the early stages of the COVID-19 pandemic, when the General Assembly cut billions of dollars from the state budget. The state automatically resumed payments in 2021 — additional legislation would be required for the state to forego any future payments — but did not make up 2020’s payment.

HB22-1029 calls for the state to make a payment totaling $303.57 million — $225 million plus estimated investment gains, had the money been invested — on July 1, 2022.

The bill originally called for the payment to come from the state’s general fund until the actual funding source had been identified. The bill’s sponsors added an amendment to instead use money from a cash fund the state set up in 2021 solely for future payments to PERA. That fund currently has a balance of $380 million, which legislative staff has recommended distributing to PERA sooner rather than later.

The House Appropriations Committee is expected to consider HB22-1029 later this week and if approved, it will head to the House floor for discussion and vote before moving to the Senate. PERA On The Issues will continue to monitor legislative activity on this bill.

The $225 million direct distribution to PERA is part of a package of reforms enacted under Senate Bill 200 in 2018 and is meant to put PERA on a path to full funding. Also included in Senate Bill 200 was the Automatic Adjustment Provision, which will trigger increases in employee and employer contributions to PERA and reductions to annual increases for benefit recipients in July 2022.

Bill sponsor Rep. Shannon Bird referenced Senate Bill 200 and the state’s commitment to PERA when urging her fellow committee members to vote in favor of the bill.

“Our economy has rebounded and economic activity in Colorado is now exceeding even pre-pandemic levels,” Bird said. “In light of our greatly improved financial position, we now have the opportunity to make things right and hold ourselves accountable for our responsibilities under Senate Bill 200. Because when we suspended our payment in 2020, PERA lost $225 million and it also lost all investment returns those dollars would have brought in.”

The legislature has until May 11 to finish its work on any pending legislation and adjourn the current session.

For the latest on this and other PERA-related bills, click here.

Automatic adjustment provisionAn automatic change to PERA contributions (employer, employee, state direct distribution) or the Annual Increase based on funding levels.

Comments

  1. Shannon crouse says:

    Our 2022 benefits should go up significantly since we have not kept pace with the cost of living at all in the last years and certainly it will be devistating this year

  2. Coco says:

    Reduction of benefits? Have seen the nearly 10% inflation rate? Social Security has a 10% benefit increase this year. What about Pera??

  3. Coco says:

    How about you accept my comment instead of refusing it!
    Reduction of benefits? Have seen the nearly 10% inflation rate? Social Security has a 10% benefit increase this year. What about Pera??

  4. Cococitos says:

    How about you accept my comment instead of refusing it!
    Reduction of benefits? Have seen the nearly 10% inflation rate? Social Security has a 10% benefit increase this year. What about Pera??

    • PERA On The Issues says:

      Hi Coco, your comments posted just fine.

      The amount of PERA’s Annual Increase (AI) is set in statute and can adjust up or down based on PERA’s funding progress, along with member and employer contributions. The AI for most eligible benefit recipients, paid out in July of this year, will be 1 percent. We recognize that the changes to the Annual Increase and contribution amounts have been difficult for everyone, but they help ensure current and future retirees can continue to count on PERA to provide a source of income in retirement they can’t outlive. You can learn more about the Annual Increase here: https://www.copera.org/annual-benefit-increases

      • Paul says:

        Dear PERA Reps, I really wish you would begin your replies to comments about a “COLA” by informing people that PERA does not provide a COLA, and then go on to explain what the Annual Increase really is and how it differs from traditional Cost of Living Adjustment formulas used by Social Security recipients and other retirement plans. Failing to acknowledge we don’t have a COLA only perpetuates the COLA myth among members.

      • Linda says:

        Perhaps I misunderstood, but I thought the increase was 1.25 percent not 1 percent

      • Barry Thorpe says:

        Boooo. Insufficient and misleading answer. The benefit for state employees is never fixed. Any shortfall can always (and should) be fixed by adjusting tax revenues. Charging the people for the cost of the services rendered.
        The red herring of ‘ fully funded’ is simply a ruse. The pension is fully funded as soon as revenues for it are increased. To fully fund PERA , you charge the recipients of the services. You don’t take away money from the service providers. I’m really tired of hearing this lame excuse for reneging on our 3.5% Annual Increase. Colorado is flush with money and could easily back fill PERA and honor contracts made prior to 2010.

      • Fred Boettcher says:

        Insert “broken promises” and delete “changes.”

    • Barry Thorpe says:

      I noticed they took off my comment as well.
      The 2010 reduction in guaranteed 3.5% Annual Increase was a shameful, and costly move to all retirees who were in that particular qualifying group. Today, 12 years later, I would imagine nearly half of that cohort has passed away, and collects no benefit. Those still living are far below any reasonable definition of “cost of living”. That change could / should have been made going forward, but NEVER should have been retro-active to people who retired under those specifically stated conditions.
      The irony is, and continues to be, “we want to be able to fully fund PERA”, when they defaulted on obligation to provide the annual increase. If you were a member of that group who retired with the contracted 3.5%, you have already been unfunded, now nearing 45+K PERA owes me that remains unpaid, even as our numbers grow smaller by attrition every year since the taking.

  5. Christopher Richards says:

    Wording here is a bit ambiguous, which is quite worrisome when you consider PERA’s record of breaking promises to us retirees.

    So, as proposed, will the payback to PERA via the PERA Fund trigger a reduction or elimination of the 2022 COLA? Is this just ANOTHER ploy, another slight-of-hand way of taking it out of the pockets of PERA retirees? If the funds are paid back in this manner (never should have been withheld in the first place), and that results in a reduction or elimination of our COLA, then whose benefit is this for… Certainly not the retirees.

    I’d love to know I’m barking up the wrong tree, but it doesn’t seem likely given the history. Pssst, I want my 3.5% COLA restored as was promised when I retired, along with the same restoration of investment returns being addressed for the PERA Fund. We had a contract, the State of Colorado broke it… where’s the justice in that?

    • Cathy Emig says:

      To put this in perspetive. We are headed to a .5 percent cola instead of the 3.5 percent cola that we should be getting. Here is what that reduced cola is costing current retirees:
      3%. Assume your current pension is $60,000. In 20 years a 3% cola would cause your pesion to be $108,366.67. That is just enough to keep up with inflation.
      At the current cola, if you plan to live another 25 to 30 years after retirement, you will need to work long enough to get your pension to about one and a half times the amount you need to live on. Then when you retire, save some of the extra money you have in the first years of retirement and use it when your pension looses its purchasing power due to the cola being far below the inflation rate.

    • PERA On The Issues says:

      Hi Christopher, thanks for the feedback.
      The intent of this bill is to restore the missed direct distribution payment to PERA in 2020. The cash fund referenced here was established in 2021 for the sole purpose of making future payments to PERA. The Annual Increase amount for most benefit recipients in July 2022 will be 1% and will not be affected by this proposal. Learn more about the Annual Increase and Automatic Adjustment Provision here: https://www.copera.org/annual-benefit-increases

      • Christopher Richards says:

        Colorado is currently so flush with cash that TABOR is mandating $400 per person tax rebates this year. How can the state on one hand say there’s such a huge overage, and on the other, say there isn’t enough to pay the full COLA to PERA retirees, much the less make up for the past reductions? Why isn’t Colorado first taking care of it’s ethical obligations before declaring an overage and distributing rebates?

      • Paul says:

        Dear PERA Reps, I really wish you would begin your replies to comments about a “COLA” by informing people that PERA does not provide a COLA, and then go on to explain what the Annual Increase is and how it differs from traditional Cost of Living Adjustment formulas used by Social Security recipients and other retirement plans. Failing to acknowledge we don’t have a COLA only perpetuates the COLA myth among members.

      • John says:

        Pretty difficult to determine what posts are right and what are wrong? Sounds like our annual increases/COLA will be less than inflation, which is hard to understand. Will 22-1029 change our future increases? Most of our elected leaders are masters of misdirection. Maybe PERA should respond to the above comments.

        • PERA On The Issues says:

          Hi John, the amount of PERA’s Annual Increase (AI) is set in statute and can adjust up or down with the Automatic Adjustment Provision (AAP), which also adjusts employee and employer contributions based on PERA’s funding progress. While this bill isn’t specifically tied to the AI, contributions to PERA are one of the factors in the annual AAP calculation, which determines if additional adjustments are needed to the AI and member/employer contributions to keep PERA on track.

      • Glenn says:

        Unbelievable I knew PERA was going to pull this!!!! You are saying that we are only going to get 1% even if the State puts in the money they had stolen from PERA. When the State of Colorado stole the money. PERA told us even though they had a great year in the stock market that we would only get 1% because the shortfall from the state. I am so sick an tired of being lied to !!!!!!!!!!!

  6. Lois Gross says:

    When I became a PERA member, it was supposed to be a better investment than Social Security. Instead PERA is not keeping up,with COLA, I lost significant payments from SS because I paid into PERA, and I get no survivor’s benefits from my husband’s SS. Mi lose every possible way.

  7. Ron says:

    Who was the one legislator who voted against the $225 million funding to PERA?

    • Ducan says:

      Benevidez voted no to referring the amended bill to the appropriations committee

      • Paul says:

        I wrote to her to ask if it was true she voted against it and if so why, but she failed to reply. That practice of legislators ignoring PERA members is all too common. With that said, I will continue to write to them and hopefully enough other members will start to do the same so that at some point they will take an interest in our circumstances.

  8. Jack Cass says:

    How about a raise for retirees? The 1% we get every 2 or 3 years hasn’t kept up with inflation. Any idiot can see that. Went from 3.5% guaranteed yearly raise to little or nothing and now with this Polis/Biden inflation we’re getting screwed with not so much as a kiss.

  9. Ken says:

    The only reason this House bill is moving forward is that the money is coming out of an already funded account set aside for PERA. The money is not coming out of the general fund as originally requested.

  10. Dawn Paluch says:

    Are all the constituents in PERA getting the same treatment? Are the judges, police, teachers and all stakeholders in the same boat ? Very troubling that we’re getting older and having to rely on our PERA pensions which are not keeping up with inflation. We could end up needing welfare at this rate…troubling…

  11. Dave Lovell says:

    Once again this bill is stalled and hasn’t been scheduled for a hearing in the House Appropriations Committee. It sat for weeks without a hearing in the House Finance Committee. The Legislature adjourns on May 11th and the bill still has to go from the House to the Senate. Is the legislative plan to see it die due to adjournment? What is PERA doing to ensure this bill makes it through the legislative process? We need more frequent updates!

  12. JA says:

    How about a decent raise? In case you have not noticed Polis/Biden policy has led to inflation running at 10%. Why not go out on a limb and do something right for a change?

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