After five years of shared sacrifice, PERA is making progress toward becoming fully funded. That’s according to a new report PERA released as required by Senate Bill 10-001.
Known as SB 1, this landmark legislation was a response to the Great Recession that required sacrifice from members, retirees, and employers alike in order to return PERA to long-term sustainability.
The report shows that PERA has saved about $15 billion to date in unfunded liability as a result of SB 1 changes. Over 90 percent of that savings is a result of the reduction of the Annual Increase. But even with the reduction, PERA benefit recipients have kept up with inflation over the last five years.
For PERA’s two largest member divisions, the State and School Divisions, the actuarial funded ratios, or the ratios between PERA’s assets and promised benefits, are slightly ahead of the original projections made when SB 1 went into effect five years ago.
Take a look at a brief fact sheet explaining how SB 1 has allowed PERA to continue delivering the benefits earned by Colorado’s public workforce, making Colorado stronger for everyone.
Annual increaseAn adjustment to PERA retirees’ monthly benefit payments, paid in July each year. The Annual Increase amount is set in statute and can adjust up or down based on PERA’s funding progress. It is not tied to inflation.Unfunded liabilityThe difference between the projected amount of money needed to pay benefits earned to date and the amount of money currently available to pay those benefits.
Regarding the proposed new calculation formula for WEP to take effect after 2016, I’m confused as to how it effects those already drawing SS under the existing calculation.
Does it mean only those who begin drawing SS after the 2017 start date will have the new formula used or will it be retroactive to those already drawing SS prior to 2017?
Here’s the statement…
…A new formula could be applied to benefits of all retired worker and disabled worker beneficiaries newly eligible for benefits after December 2016…
It seems to me that the sentence means those already drawing SS under today’s WEP formula will remain unchanged but those drawing SS after December 2016 will use the new modified WEP calculation. Is that correct?
Ed,
Yes, the Social Security Advisory Board proposal/recommendation would apply to the WEP calculation for new retirees. This is because there is now 35 years of data available since the implementation of the WEP.
In 2017, Congress will have access to 35 years of data on earnings from covered and non-covered employment since WEP was implemented in 1983. A new formula could be applied to benefits of all retired worker and disabled worker beneficiaries newly eligible for benefits after December 2016.
However, there is federal legislation that would apply to existing retirees. See more about this legislation here:
https://peraontheissues.com/index.php/2015/04/27/proposed-federal-legislation-could-eliminate-windfall-elimination-provision/
We encourage you to contact your Congressional representative on this issue.
Thank you