Retirement insights from a Colorado PERA perspective

Legislation & Governance

Comparing current PERA legislative proposals

plan comparison

Both Governor Hickenlooper’s plan and the PERA Board’s recommendation to return PERA to long-term sustainability have received attention in the news recently, even though legislation has not been introduced yet this year at the Colorado General Assembly.

While there are differences between the Governor’s proposal and that of the Board, the two plans share the goal of achieving full funding within a 30-year period. However, each proposal achieves that goal using different funding and savings mechanisms.

  • Both proposals would increase contributions. The Board’s proposal includes contribution increases from current members and working retirees, new and future members, and employers. The Governor’s proposal does not increase contributions from employers.
  • Both proposals would limit annual increases. The Board’s proposal would lower annual increases to a cap of 1.5 percent, while the Governor’s proposal would lower the cap to 1.25 percent. Both proposals would also increase future hires’ age and service requirements for retirement benefits.
  • Both proposals would also improve the alignment of contributions with benefits and include automatic adjustment provisions to keep PERA on a path to full funding within 30 years.

Review a comparison chart of the two proposals.

Since the Board’s legislative recommendation was released in September 2017, PERA has received a number of questions about the necessity of a proposal, given the strength of the U.S. stock market. During the Board’s most recent assessment of the economic and demographic conditions that influence the plan’s funded status (performed in November 2016), the Board heard from investment and actuarial experts and subsequently lowered the rate of return assumption due to a less optimistic view of the future. This change to an important economic assumption, alongside the adoption of new mortality tables, extended the timeframe in which the trusts were projected to reach full funding beyond the 30-year goal set forth in the Board’s funding policy adopted in March 2015 and revised January 19, 2018.

We will continue to monitor the legislative landscape at the State Capitol and inform PERA on the Issues readers of any PERA-related legislation that is introduced.


  1. Mr. John Edward Hawk says:

    I believe it is very important, in the interest of transparency, that PERA board inform its members about how much each one half percent reduction in COLA will improve PERA, s funding.
    I also think it is most important that PERA outline for its members what a 1,2,3,4 and 5 per cent increase in employee contributions from each check would look like. I sincerely doubt that employers will take responsibility for any increase in their contributions to PERA, thus the full increase to stabilize PERA will end up coming from employees. We need to crunch the numbers to make an intelligent decision.
    I wonder if anyone at PERA has looked at how much the subsidy for healthcare costs PERA each year? Would it be better to put this amount into the retirement fund to stabilize it faster and thereby reduce big paycheck contribution rates? Those employees retiring before age 65 could stay with their district health plans longer or shop for an independent plan. I am thinking outside the box on these ideas.
    I predict most employers will balk at paying any more for PERA. They might say no more salary increases if required to contribute more or say choose salary improvement, but the employees pick up the increase in funding PERA. There needs to be a discussion on the ideas I have outlined.

    • Colorado PERA says:

      Mr. Hawk,

      The PERA Board performed a number of number of scenarios using an actuarial computer model and determined that based on the foundation of shared responsibility among the members, retirees, and PERA employers, that the Annual Increase/COLA should be suspended for two years and capped at 1.5 percent after that.

      In the Board’s legislative recommendation, 17 percent of the costs for returning PERA to a 30-year amortization period are borne by retirees, 28 percent by employers, and the remaining 55 percent are being paid for by current and future members. The Board made every effort to protect the annual increase and achieve the goal of full funding in 30 years. PERA would be at significant risk if the annual increase was not suspended and reduced as the Board proposed.

      The PERA Health Care Trust Fund and the DPS Health Care Trust Fund are used to pay the health care subsidies for PERACare participants. They are valued separately from the pension division trust funds which are used to pay retirement benefits. These health care trusts also have low funded ratios and the PERA Health Care Trust Fund has a longer than desired amortization period. Reducing the amount that goes into these trusts and diverting that amount to the pension trusts was not considered as a reasonable approach to reducing the time it will take to achieve full funding.

      We anticipate that there will be a lot of discussion on how to reduce PERA’s risk profile as the legislative session progresses.

      • Jerre West says:

        PERA continues to go back on their promises to retirees. In the real world, ERISA prevents you from reducing benefits unless an employee works at least 1 hour. Voluntary contributions were obtained as a fraud in my opinion.

    • Billie says:

      Your ideas are certainly worth discussion by those who really make the decisions for PERA. You may be right on with the Health Care ideas you put forth. However those retirees with serious health problems might not approve of that idea. On the other hand if we had an efficient single payer health care plan in the U. S., those retirees with serious problems would be covered and the money that would have gone into health insurance would be wells spent in the PERA retirement fund.

      I would like to add this. Preventative medicine is much cheaper than health insurance and anyone who does his or her best to eat right (organic as much as possible), exercise, get plenty of good sleep and interact with family and friends as much as possible, is going to feel much better as well as not having to make so many Dr. appointments or take some kind of medicine that has all kinds of detrimental side effects. This applies to retirees as well as those still employed.

    • kim says:

      Thank you

  2. Jim Hecke says:

    PERA’s 401K results for 2017 have recently been made available to investors. The per cent of profits tended
    to be quite high. Therefore, I would think PERA”s return would be similar. Granted, PERA is usually quite late
    in announcing the previous years results. However, a good 2017 result would be beneficial in legislative
    negotiations and PERA would be remiss in not using it.

    • Colorado PERA says:

      Mr. Hecke,

      While the U.S. stock market did well in 2017, the long-term forecast for the global financial markets is not as optimistic. Because PERA’s investment portfolio has assets that are not valued on a daily basis (like the investment options in the 401(k) and 457 plans), it takes time before the valuations for real estate and private equity are audited and received by PERA. The complete, audited investment results for 2017 will be available in late June.

  3. Cherie r says:

    I wonder if our governor and those who were in favor of little to no annual increases would be willing to lower their incomes, give up spousal or a second income, and continue to pay more for healthcare that includes fewer benefits. I seriously doubt it. Slashing annual increases basically in half from the 3% it was until 2012 means a retiree will most likely realize an increase of $0 and in actuality find their income decreased by taxes and health “benefits”. I worked under PERA for 32 years thinking I would be better off in retirement than if I’d worked under Social Security only to find that was an illusion. As a single retiree with no other source of income I find myself facing the very real possibility of having to try to find employment at an age that makes it highly unlikely an employer would hire me. During my employment there was a period of 7 years when there were no annual increases which affected my benefits and now we’re being asked to give more back to the State who didn’t hold up their end. Contrary to believing PERA retirees are important contributors to life in Colorado, I believe a large number will be left in poverty, unable to afford healthcare, and/or will find themselves working long past the time they need to be. I realize that my opinion doesn’t matter and will not have an impact on the proposed changes.

  4. Brian Martens says:

    On the comparison chart with the PERA plan and the Governors plan it did not stipulate when the New HAS goes into effect from 3 to 5 years. Will it effect current vested employees,getting ready to retire in May?

  5. T Nesler says:

    Used to be, state employees were repeatedly told they were a given agencies’ most important asset. Guess those days of appreciation and beng valued are over. Work longer, pay in more while your employers do not, and cap COLA regardless of the financial and economical environment. Gonna have difficulty attracting new talent but it should be no wonder why productivity goes down, complaints and grievances go up. Despite the ironies, I will put my faith in PERA and always oppose the obvious attempts of WS and various state legislators to “take control” of our pension fund.

  6. Barry Thorpe says:

    Outrageous to reduce annual increases for those fully vested. Shame to the State to have increases that don’t match or exceed CPI. In Any year that inflation is greater than the increase, it’s no longer an “increase” but a cut.
    Insurance increases alone have swallowed up the contracted increases since 2008. This is no less than Breach of Contract as PERA guaranteed a 3.5% annual increase when I became fully vested in 2005. Shameful taking of money already earned as deferred compensation. Corruption. Nothing Less.
    I hope young talented teachers will continue to steer clear of Colorado. Promises and Contracts mean nothing. There is not now, or has there ever been a reason to have a 30 year full/funding mandate. Legislators failed to fund schools throughout the decades of the 70s,80s&90s, then reneged on clear contractual language in retiree “planning” documents that clearly state.” You will receive an annual increase of 3.5 %” PERAs own retirement planning pamphlet language. Recession in ‘08 was a real, yet manageable downturn, but can’t be used to justify continued taking of earned benefits. The return on investment has hit record highs in the last few years, and pensions are now being converted to defined contributions. It’s time to revamp the system for cure and future hires as needed, but there can be no justification for taking of earned benefits after all published criterywere met.

  7. Laura Page says:

    With either plan, since the annual increase is not tied to the inflation rate, retirees’ purchasing power will decrease in almost every subsequent year. In the last 50 years, inflation has been under 1.25% only twice. During that same period, it’s been as high as 13.91%.

  8. Jann Todd says:

    Hickenlooper wants us to run out of money to live on. I find it ludicrous that you even propose no raises. I bet the CEO and other big shots get big raises and are already making 100 times what I am. PERA keeps raising the health insurance premiums by about $40-50 a month. So in 2 years I’ll be living on $100 less than I am today while taxes and everything goes up because of the democrats. How can we even eat on that kind of income loss.

  9. E Giddings says:

    It became difficult for former Governor Ritter to run for re-election after the last major PERA reform legislation was enacted. Governor Ritter’s popularity polls fell to almost 30%. With more than 550,000 PERA members, will this be the outcome for current elected officials? Maybe a one-year bipartisan Legislative review committee should be established before any major changes are enacted.

    • Christina M. Evans says:

      Boy I like that idea. What a concept; taking the time to gain perspective, weigh options and work together. We deserve that type of thoughtfulness and commitment. Heaven knows we all gave those qualities to our students/staff/co-workers through the years. Thanks for your thoughts.

  10. Michele L Dolphin says:

    For those of us who opted out of the 401k after retiring, why not give us the option of reinvesting as a way of replacing the income we will lose after these new changes take place? Also, what are the results of the research on allowing those of us who receive Social Security to become eligible for 100% of our Social Security instead of a 50% amount . Consider it a payback for the years PERA workers did not get a cost of living increase.

  11. Mike Harris says:

    The governor’s recommendations to change PERA along with the PERA’s recommendations are pure BS. All employees and retirees have paid their share there is plenty of money coming into the system. SB1 just a short seven years ago was supposed to fix the shortfall in Pera, retirement age was increased, employee contributions were increased and retirees took a major hit. There was no shared sacrifice under SB1 and now the politicians are back at it how to get their hands on the money and screw retirees my vote is no further major changes to Pera in the future a few minor tweaks may be necessary but nothing like SB1 again

    • I J Joseph says:

      PERA’s annual report notes that of PERA members, 38% are working and contribute, 20% are retired, and 42% have funds still in PERA although they do not presently contribute and are not retired. That is a ratio of 1.9 contributing memebrs for each retiree, a ratio lower than exists for Social Security. Unless that ratio changes for the better, we will perpetually go through this scenario of squeezing more from a shrinking number of contributors and a growing number of retirees. I have yet to see PERA or any elected official acknowledge the challenges presented by those numbers. If PERA has analyzed this issue, it would be good to hear what the Board has to say.

      • Colorado PERA says:

        Dear I J,

        One of the demographic assumptions the Board reviews periodically is membership growth. The Board also receives population information from the State Demographer. PERA is unlike Social Security in that member and employer contributions are invested for the future payment of benefits. This pre-funding of retirement benefits is based on a number of economic and demographic assumptions that are reviewed by the Board. Please see the 2016 Actuarial Valuation for more details:

  12. Fred Boettcher says:

    Can you imagine the National fury if congress suggested ending cost of living increase for social security? It seems to me that the same is being proposed for PERA. I hope there will be statewide fury over this.

  13. Elizabeth Brannan says:

    I thought I was moving close to retirement. With both of the proposed changes I’m instead looking at how long I can continue to work. I can’t afford to live on what my retirement will be if the annual increases are less than inflation. The job I took so many years ago and stayed with because of the promise of a good retirement turned out to be a trap and nothing but broken promises. I would have been better off taking a private sector job with no retirement but much better pay, sadly now it is too late.

  14. D. Bergin says:

    PERA board approves big pay increase for CEO

    “The leader of Colorado’s $45 billion state employee pension system will receive as much as $647,754 in total compensation next year after trustees voted Wednesday to offer CEO Greg Smith a 20 percent pay raise and big-dollar bonuses as part of a three-year contract extension.”

    By JOHN FRANK | | The Denver Post
    PUBLISHED: August 26, 2015 at 2:06 pm | UPDATED: June 27, 2016 at 10:43 am

    I haven’t gotten a raise in over five years. My health insurance costs have increased. Union dues increased (so I left the union). Data collection and analysis and administration’s observations and evaluations has robbed me of my planning and grading time. The teaching profession has been insulted, degraded and dragged through the mud by the media . AND now, I get to contribute more to PERA. Lucky Me!

    Don’t Miss:
    Colorado PERA CEO gets another big raise ‘for simply showing up,’ says state treasurer

    “Over the protests of Colorado’s state treasurer, the head of the state’s retirement system received a 3 percent salary increase on Tuesday – his second raise in just over a year – bringing his salary to nearly $406,000 in 2017.

    Greg Smith, chief executive of the Colorado Public Employees’ Retirement Association, also will receive an incentive payment of 20 percent for leading the $47 billion, 300-employee retirement system, which amounts to nearly $79,000. Smith’s current salary is $394,000.”

    By: peter marcus December 21, 2016 Updated: December 22, 2016 at 6:14 am

    • Colorado PERA says:

      D. Bergin,

      You may not have heard that PERA’s Executive Director/CEO passed away in December. However, the reasoning behind the compensation package established by the Board of Trustees for the executive director is to offer a competitive salary with incentive and retention potential using third-party data for pay in comparative fields.

      The executive director is evaluated based on rigorous metrics associated with the 23 initiatives
      set forth in the Board’s Strategic Plan as well as five key areas: Communications with Key
      Constituents, Operations/Management, Asset Management, Legislative Issues, and Board

      PERA’s cost to operate the retirement plan for more than 580,000 current and former public employees in Colorado is extremely low. Details on that are here:

      We believe that even if the Board’s recommended changes are implemented by the Colorado Legislature, PERA would remain an attractive and valuable retirement benefit.

  15. Deborah Gard says:

    I think an important talking point is how much the State of Colorado owes PERA and what the legislature/governor proposes to do about that. PERA needs to put that information more front and center in its lobbying efforts.

  16. Rolf P says:

    I’m so pleased to get my periodic copy of “PERA ON THE ISSUES”. I don’t know what I’d do without it. It serves as a reminder for me to go to the pharmacy and refill the prescription for my antidepressant medication. I suppose without the subscription I probably wouldn’t need the meds!

  17. Jan Baulsir says:

    Is there any discussion regarding when the State of Colorado would start paying their share? I read that the state has not paid into PERA for years, resulting in the unfunded status.

  18. Rob Gray says:

    It’s good that the PERA Board’s proposal includes a reduction in the annual increase (COLA) for PERA retirees. If the COLA weren’t reduced, the burden falls even greater on current and future active employees, and employers, to make PERA’s funding stronger for the long term.
    Most of the burden of Senate Bill 1’s changes in 2010 will fall on current and future active employees. For current retirees, meanwhile, since 1997 the COLAs from PERA have totaled 63 percent while inflation has totaled 52 percent.

    A new employee hired many years ago, in 1972, entered a PERA plan which promised him or her a 55 percent of HAS benefit for working 25 years and retiring at age 60. Because of many benefit improvements during his/her career, he or she would have retired in 1997 with a 62.5 percent of HAS benefit. That’s using a 3 year HAS, not the 5 year HAS in effect when hired. Yet new hires in 2017 can look forward to a much smaller benefit at their age 60 with 25 years service: 49.8 percent of HAS (54.6 percent of HAS for School and DPS members). And the legislation proposed for 2018 would change their HAS from the highest 3 years salary to highest 5 years, and increase employees’ contributions to PERA.
    The bottom line is, the Board’s proposed legislation for 2018 is fair. It’s shared sacrifice, it’s necessary, and I hope retirees as well as active members support it.

  19. Stan Hesting says:

    Retiring in 2009 I already served a two-year time before I could receive a cola. it seems that freezing it again for retired pera members is double jeopardy. Inscting the wait time before a cola increase on the same people twice does not seem fair.
    The cola to be added in our compensation in July has already been earned by 2017 pera investment earnings before any legislation this year. therefore it should not be taken away. If it does happen it certainly should not happen this year .

  20. W. Steve Eslary, M.A. says:

    While Colorado PERA is not in as bad of shape as some states there is a glaring commonality that never gets mentioned. The legislature annual deposit to each states pension fund, although critical to resolving many of these problems, is not being paid each year. I feel that until this sensitive issue is resolved and back deposits made there should not be any additional actions to change the current program and no bill should be submitted this year. I followed the 2010 bill thoroughly and it was advertised to be the end of this nightmare. Look up the missed deposits of PERA to the Legislature and you will be shocked. PERA retirees need to be made aware of each year that the Legislature goes on record diverting retiree pension funds for other uses. Check the past 20 years and calculate the impact. This is exactly what has happened to Social Security. Really folks, the 2010 legislation was a pitiful disgrace. Too many people rolled over and passively let it happen. Now look where we are and I assure you that more legislation will be requested in the future. It will never end. Research the other states and you will be appalled at what is happening in America. This is one of many indications of the deterioration of our American Society. Let me leave you with one critical thought for all Colorado retirees. Remember when you signed up for retirement and you selected Category 3? Category 3 says that whoever you select will receive your pension at the same level that you were paid for life. You are paying for that privilege by giving hundreds of extra dollars a month! If you are married and you care about your family’s future, those who will be beneficiaries after you and I are gone will be leaving a spouse with a mess to deal with. The strength of your survivors pension will not be there because the fundamentals have eroded and continue to erode. So my position is to have no legislation this year, an election year, and think this over very carefully. If a legislation package is submitted research the issue proactively and ask the critical questions and do the best you can for your family. That did not happen in 2010. I was there. With respect and admiration for the hardworking Colorado retirees in all professions who have done there best for Colorado throughout the years, I salute you. Steve Eslary.

  21. Rick Schur says:

    Why do the retirees have to take an immediate hit on both proposals? The govenor’s proposal would be an additional insult to retirees, a reduction from an annual increase of 1.5% to 1.25% after a two year freeze is an insult to my past profession. When I worked as a teacher in Pagosa Spring for 25 years I was rarely offered an increase in my salary but remained in my position instead of leaving for industry because of the great kids, coworkers and the promise of a livable retirement, but because of PERA’s poor management and high executive compensation people like myself will get a much undesirving slap in the face. Thank you Govenor I guess I’ll not vote democrat this year!

  22. Mary says:

    I believe this world is coming to It’s end when we see, hear all that is happening.
    It is said, and by a powerful loving God. The first will be last and the last will be first. To me it is sad and hard to see these things happening. But I do believe there is something greater to look forward to. A time when all these crooked systems will end. And we’ll never have to deal with dishonesty ever again. My peace is found on the sure words of the one who knows all things. Peace comes when we look for a better tomorrow. Not in man who steals, cheats and kills our world, but by those who’s love for people is geniune and everlasting. Love conquers all that hate loses. Rest in the assurance of vengeance is mine says the Lord I will repay. Peace is contentment in all things. And real love is loaded with power. Cling to what is a sure thing.

  • Share

  • Print