Editor’s note: Gov. Jared Polis signed this bill into law on June 7, 2022.
With just hours left in the legislative session, Colorado lawmakers gave final approval to a bill that will make up the state’s missed 2020 payment of $225 million to PERA.
The bill, HB22-1029, now heads to Gov. Jared Polis for his signature.
Lawmakers enacted legislation to forego the $225 million direct distribution 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.
Pending the governor’s signature on the bill, PERA will receive $380 million from the state. That amounts to a restoration of the missed $225 million direct distribution plus a prepayment of a portion of future direct distributions to PERA.
PERA will also receive 2022’s direct distribution of $225 million on July 1.
The $380 million will come from a cash fund the legislature set up in 2021 solely for future payments to PERA.
The bill was one of four PERA-related bills that lawmakers passed this session. For details on the other bills, click here.
Thanks to PERA lobbyists for their work on this issue. The issue remains, however, that Pera retirees worked many years under an assumption and promise of certain benefits at the end of their career. Sad to say this is not the case.
Agreed, we had a seemingly binding CONTRACT. Not only broken, but broken multiple times. Balancing an arbitrary fully funded target date on the backs of current retirees is just plain wrong. How about making the first 35K exempt, so those who are now going under directly because of the broken contract can pay for modest housing, groceries, utilities, fuel, insurance and health care.
Yay, could be huge investing on down markets currently!
Again the illustrious legislators of Colorado do not do the right thing, or care about PERA retirees! Our COLA will be affected because of the non repayment of revenue lost from their non-payment of funds from 2020! Shame on you for not doing what’s right when you fail to meet your monetary obligations and again place the issue on the back of citizens!
Doyle, it passed. PERA retires are getting the money that the State originally promised to pay, plus interest for paying late.
Okay, no interest, but it’s a lot better than nothing.
I am sorry that you can’t get over that, unfortunately, things have changed over time. The world is a lot different than what it was in the late 70’s and early 80’s. Different in good and bad ways. There are those that complain that the 3% annual benefit increases were stopped. I feel that the automatic 3% benefit increases and the matchmaker program should have never been implemented. Without those changes, I feel that our benefits may have run out. I think that those of us receiving our benefits should be happy with what we are getting and that we made it to retirement.
70’s and 80″s… huh? I think it is you who is living in the past. I retired in 2005, with a CONTRACT for a 3.5% annual COLA, I budgeted accordingly and responsibly for a modest lifestyle going forward with a single income household. That was the deal I was offered, it wasn’t me (or other retirees) who proposed that deal, it was instead the PERA board of directors with the approval of the Colorado State legislature. Had there been ANY mention of the even the most remote possibility of this contract being broken, I would have planned accordingly and worked additional years, or would have taken another job after retiring. Those of you who think this position is unreasonable or unrealistic should trying “walking a mile” in the shoes of a single income retiree with several disabilities and a rapidly eroding financial situation.
Agree ! Perhaps changes needed to be made going forward from 2010, but you never take back the money owed from people who retired under a particular set of conditions. PERA could easily have implemented changes without taking from legitimate contract conditions already in place.
You can give up your benefits! I choose to hold people accountable!
In my humble opinion, I happen to agree with that statement. I am just glad that PERA remains alive, even with the negative effect of having lost the automatic annual 3% pension increase. I feel have paid attention to the several retirement programs that went under, and left members living under the bridge.
I agree completely with Mark T…and STOP the whining
The previous conversation included a make up for investment losses for the missing 225 million. This article seems to avoid that topic… did it happen?
The omission says it all. The bill does not provide for reimbursement of unrealized investment gains during a year of positive returns in the market, though those gains might have been wiped out this year. Perhaps PERAs returns will be better overall now that they’ll be investing the make-up contribution when stocks and bonds are doing poorly.
Hi Christopher, the bill as approved does not specifically include estimated investment gains but does prepay a portion of future direct distributions, to be paid to PERA and invested earlier than otherwise.
Sadly, the repayment of the lost interest of 79 million is gone forever. That’s bad enough, what’s worse is the state is charging interest on the repayment/partial prepayment. 27.5 million will be deducted from the states obligation in 2023 and again in 2024. This demand /amendment came straight from the Governors office, or no deal. Be sure to pickup the phone and call to thank him.
Wish the government would get the Social Security issue straightened out. I worked in the private sector for many years before obtaining state employment. I am entitled to $600.00 plus a month from Social Security but am getting less than half that a month because I am being penalized for working for the State of Colorado! So very unfair.
My spouse died two years ago. Since I have a pension from PERA Icant receive any of his social security money.
Exactly. What a shame.
time to run for Congress
Would like to see a list of legislators who voted against this bill.
You can see the bill’s vote history here: https://leg.colorado.gov/bills/hb22-1029. Today’s (Wednesday) vote to approve the bill was unanimous.
Seems like the ol’ shell game. Why else make it so complicated and confusing? This year’s is reduced and next year’s is all but eliminated? How does that make up for anything?
I think that there are a number of Pera Retirees that feel a sense of entitlement and are unable to accept that change occurs. Pera retirement is by far a better pension system than the majority of people will have the opportunity to participate in. I read these posted comments and I walk away feeling that there is a lack of gratitude and perpetual complaining. Things could be so much worse.
Agree. But PERA should include a statement at the bottom of the retirement tables that states “These numbers are current estimates. The actual benefit level depends on long term investment market outcomes and the resulting PERA funding level”. Maybe they state that somewhere now, but they didn’t used to. For many people it won’t matter if they include that statement because they do not bother to educate themselves, even after retirement. When I went to my pre-retirement planning event that PERA set-up, I was shocked by the questions of people about to retire “what’s this PERA thing?”. Clueless after 30+ years of working.
You’re correct. The annual calculation is an assumption. In the past, PERA made some financial decisions that weakened their Defined Benefit plan. They acknowledged these weaknesses and have taken steps to resolve these deficiencies. Continually complaining about changes that have to be accomplished is counter productive. Most of the people I’ve met who do not have a retirement plan like PERA have expressed that they wish they had a pension like ours. I wish they did as well.
As far as I know, it’s the State Legislature and PERA Board that made the poor decisions that hurt PERA, not PERA itself. PERA has to follow the laws that the State Legislature passes. Bad actuarial assumptions are the other thing that affected the funding level, which come from a consultant. I believe that those assumptions are Board approved. PERA has to do what they say as well.
Gratitude works both ways. It’s not “complaining”, when one points out the simple fact that a contract was breached by an employer to employees AFTER all conditions were met. That’s business. Try reducing your mortgage payment, and explain it to the lender by saying you’re goal is to reach full funding.
The word entitlement doesn’t mean what you think it means in this case. When a person earns the reward by working, they ARE entitled to compensation that was offered contractually. Nobody’s asking for one penny more than their contract stated. If fiduciary changes were necessary, they should have been introduced in stages to avoid breach of contract to those who had already performed their end of the contractual agreement. That’s just sound, legal, operation.
So…. It’s business, not gratitude. PERA and CO failed to fund debts and fulfill the conditions of the contracts they made.
In spite of some shortcomings, I am thankful for the actions taken. Let’s stop the grumbling and get on with positive progress.
PERA you forgot to mention the bill also reduces the States $225 million contribution by at least $155 million but no more than $190 million for the following two years, based upon investment income earned. The PERA expected rate of return is 7.25%. I don’t understand how we are going to meet full funding thresholds. Please explain how this will work. If the 7.25% rate of return isn’t met will this affect COLAs and employee distributions?
Hi Gayle, thanks for the question. PERA will receive a total of $605 million over the next couple of months from the State: the regular $225 million direct distribution and $380 million from HB22-1029. This $380 million includes a pre-payment of future direct distributions and allows PERA to invest the money sooner than we would have been able to otherwise. The direct distribution from the State is just a portion of the total dollars PERA receives every year to fund benefits (https://secure.copera.org/staticcontent/snapshot/index.html#financials), and the Automatic Adjustment Provision (AAP) keeps us on-track to meet our funding goal. Learn more about how the AAP works here: https://www.copera.org/files/5f5d940f7/autoadjustment+6-21.pdf
Show me math on how this works. Still sounds like PERA will be using investment returns to off-set any reduction to the States original commitment of $225 million per year. Math example please, not the formula.
PERA, the 2022 contribution will only be $198+ million, instead of $225M. Above, you said $225M. Why was it reduced per SB22-214? Thank you.
Hi Mark, 2022’s direct distribution will be $225 million, as set in statute. SB22-214, which you reference, is a budget-balancing bill that backfills the PERA cash fund the legislature established in 2021. That’s the same fund from which HB22-1029 will direct $380 million to PERA.
Thank you for explaining!
I am grateful that the Denver representatives did the right thing about PERA and the long term goal of returning to full funding status.
A lot of private sector careers offer a vastly higher salary income than a public employee could ever dream of.
Please explain this new language added to the bill. It appears the state will only pay between $35M – $70M for the 7/1/2023 payment. And, it says “all future direct distributions to PERA will be reduced by 7.25% or PERA’s annual return.”
How is it the legislature can re-write the rules for their shared responsibility, but retirees still endure continual reductions to the AI? I guess what’s written in law doesn’t matter because the legislature can always re-write the rules to screw over retirees!
The bill also reduces the $225 million July 1, 2023, direct distribution to PERA that is scheduled under current law by at least $155 million but no more than $190 million, depending upon the amount of investment income earned by PERA on the additional July 1, 2022, $380 million direct distribution so that the July 1, 2023, direct distribution will be between $35 million and $70 million. Finally, the bill reduces the $225 million direct distribution to PERA that is scheduled under current law by the lesser of an amount equal to 7.25% multiplied by $380 million or an amount equal to PERA’s annual rate of return on investments as reported in PERA’s 2022 annual report multiplied by $380 million; except that there is no reduction if the rate of return is zero or less.
this “deal” didn’t come from the legislature. HB1029 passed committee 9-1 in favor with full 225 payback + lost interest paid back. The bill was amended under direct pressure from Governors office.
Thank you for the response JM. So, you are saying the Governor is solely responsible for this new language? Please share how you got this information so all PERA members have this information.
Hi Mark, the bill as approved does not reduce the amount of all future direct distributions, but the $380 million does include a pre-payment of a portion of future direct distributions (hence the reduction in the July 1, 2023 direct distribution and a possible reduction of the July 1, 2024 direct distribution). You can read the full text here: https://leg.colorado.gov/sites/default/files/documents/2022A/bills/2022a_1029_rer.pdf
why is the original bill being posted by PERA on the Issues? What finally passed looks nothing like what was originally written and presented to fiance committee. Here is the final rotten version https://leg.colorado.gov/bills/hb22-1029
Lost – 79 million dollars in earnings on the original skipped payment.
Lost- the future earnings on the entire 380 million dollar repayment/pre-payment, not once but 2 years in a row. A slap in the face to every PERA member and retiree
Agreed JM! And, why is the annual $225M Direct Distribution further reduced in years 2023 and 2024 by a percentage based on the $380M payment on 7/1/2022 ($225M late payment; and $155M pre-payment)? The state failed to make the $225M payment to PERA for 2 years (was due on 7/1/2020). Now, the legislature will use the 7/1/2022 $380M payment, instead of the $155M prepayment to calculate further reductions to the $225M Direct Distribution in years 2023 and 2024. Why did the legislature include the 2-year past due payment (i.e., $225M from 7/1/2020) to calculate a reduction to the 2023 and 2024 Direct Distribution? Any reduction to the 2023 and 2024 Direct Distribution should only be based on the $155M that will be “pre-paid” on 7/1/2022. This is just another way the “shared responsibility” is not shared at all. Most of the burden for reductions to future Direct Distributions will be born by current retirees via the AI…until the AI reaches a rock-bottom rate of 0.50% annually. I asked the PERA Executive Director how long it would take before the AI would be increased by 0.25% and he said this wouldn’t happen for at least 7-8 years! So, PERA retirees can expect further reductions to the 1.00% 7/1/2022 AI, but no increases for nearly a decade! And, keep in mind that the most the AI can increase is 0.25% in any one year. This is just not right.
PERA please respond to my questions in this post. PERA is supposed to be the advocate for PERA members, but it appears all changes made to PERA continue to reduce the benefits promised when I retired. Thank you in advance for your responses.
Assuming the governor signs the bill to make it law, I believe many of the retirees would request that the PERA board would consider a one-time increase in the COLA due to the historically high inflation we are facing. The upcoming percentage increase is vastly lower than the inflation rate. Remember COLA stands for Cost-of-Living Adjustment.
Hi Larry, the General Assembly sets the amount of PERA’s Annual Increase (AI), which adjusts up or down based on PERA’s funding progress, along with member and employer contributions. 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
Changes = you mean, broken promises supported by pera.