Late Wednesday evening, May 9, the Colorado General Assembly voted to approve Senate Bill 18-200, sending legislation that will return PERA to full funding over 30 years to the Governor for his signature.
All stakeholders—PERA members, retirees and employers—will be impacted by the legislation. It will reset PERA’s path to financial resilience, making the retirement fund stronger and more stable.
Having already been approved by both the Senate and the House, the legislation passed out of conference committee Wednesday evening and, later on the 9th, was again approved by both chambers. Some of the key provisions of the bill in its final form include:
• PERA receiving an annual direct distribution from the state budget of $225 million.
• Increasing employer contributions by 0.25 percent beginning July 1, 2019 (except Local Government employers).
• A phased-in increase of employee contributions for most members by an additional 2 percent, reaching a total of 10 percent of pay by 2021.
• Suspending the Annual Increase (AI, or Cost of Living Adjustment) for 2018 and 2019.
• Capping the Annual Increase at 1.5 percent and increasing the waiting period from one to three years.
• Increasing the age and service requirements for new hires as of January 1, 2020 to:
° Any age with 35 years of service
° Age 64 with 30 years of service
° Age 65 with five years of service
° Age 55 with 25 years of service for state troopers
° Age 65 with five years of service for state troopers
• Increasing from three to five the number of years used to calculate Highest Average Salary (HAS) for non-vested members as of January 1, 2020.
• Implementing an Automatic Adjustment Provision for contributions, Annual Increase and the state’s direct distribution that will keep PERA on a path to full funding in 30 years.
• For new members hired on or after January 1, 2019, expanded access to the PERA Defined Contribution (DC) Plan for the Local Government Division, and for classified college and university employees.
PERA on the Issues will continue to publish additional information about the legislation and its impacts on current retirees, members and employers. More details about Senate Bill 200 in its final form are available here.
Automatic adjustment provisionA provision of Colorado law that automatically changes PERA contributions (from employers, employees, and the state) and annual benefit increases based on PERA’s funding progress.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.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.Defined contributionA type of individual retirement plan in which an employee saves a portion of each paycheck (along with a potential employer match) and invests that money. The employee’s retirement benefit is based on their account balance at retirement. A 401(k) is a type of defined contribution plan.
It’s amazing that you can try to make this sound positive.
Dear Mr. Snell,
Ensuring the trusts are on track to be fully funded in 30 years is beneficial to current and future members, retirees, PERA employers, and Colorado taxpayers.
Which side steps the sweetheart deals for judicial and State Troopers, as well as the over-and-again breach of trust with existing retirees… shame on ALL of you on the PERA Board for selling us out!
Dear PERA trustees,
With this stop for increases for two years, I estimate that the direct costs to me and my family will be an estimated amount of approximately over $800 per year just for the lack of yearly increase for two years multiplies by a lifetime benefit for twenty years adds up to at least $16,000+++. In addition this figure only accounts for the loss to my family just due to the discontinued two year increase which is postponed. It does not account for the lack of a continued yearly cost of living adjustment loss. Not good news for current recipients, is it?
So past employees get screwed again. I took out a second loan on my home to buy additional years of service and was guaranteed a 3% cost of living every year. When I retired that changed to 2.5% and one year was eliminated and the time frame changed from Jan to July. Now the cost of living goes from 2.5% tp 1.5% and the next 2 years are deferred. All of this and the Ex Dir of Pera gets an astronomical increase in salary and bonus. No wonder the judges get special treatment.
Dear Ms. Pitcock,
The PERA Board has a fiduciary duty to ensure the trusts are on track to being fully funded. This was not the case at the end of 2016 when the investment rate of return was lowered and new mortality tables were adopted by the Board. The longer than 30-year amortization periods required the Board to recommend legislation as outlined in the Board’s Funding Policy: https://www.copera.org/sites/default/files/documents/fundingpolicy2015.pdf
In the version of the legislation sent to the Governor, the cost sharing is as follows: Retirees, 19%; Current and Future Members, 57%; Employers, 8%; Direct Distribution, 16%.
PERA employees are PERA members and will be subject to the changes in SB 200.
Nonsense, as a retiree I have a CONTRACT, you have breached it over and again.
Agreed, the PERA board seems to be in it for self-serving reasons, they have sold us out yet AGAIN to Republican special interests.
Did a job on the retirees again with the COLA. I hope you are very proud of yourselves
Dear Mr. Killip,
In the version of the legislation sent to the Governor, the cost sharing is as follows: Retirees, 19%; Current and Future Members, 57%; Employers, 8%; Direct Distribution, 16%.
The PERA Board sought legislation to ensure that any changes recommended to the Legislature were workable and returned PERA to full funding in 30 years.
So do hourly employees who donate to PERA pension and do not become permanent employees
still receive the money they donated back? And I understand with interest.
Also do consultants (mainly retirees who come back as consultants do not have to pay
into PERA????
That is so unfair.
Dear G Apodaca,
All employees who work for a PERA employer contribute to PERA – it does not matter if they are part-time or full-time. Member contributions are deposited in a member account and earn interest and would be used to pay a future benefit or may be refunded or rolled over.
State law limits the amount of time a PERA retiree may return to work for a PERA employer and this would include consultants who are PERA retirees. Contributions made by the retiree and their employer do not increase the retiree benefit and are used to offset unfunded liabilities.
This legislation seems a lot like putting lipstick on a pig. There is no mention about how much of the $225 million goes to each of the divisions within PERA. Can anyone in PERA clarify or comment on this. I also hope that this wakes up a lot of our Republican PERA members and that they will remember that it was mostly our Democrats in the legislature who were most supportive and deserve member support in November. Clear that Republicans want to dismantle PERA.
Dear Mr. Morris,
The $225 million direct distribution would go all division trusts except Local Government. Each division trust (except Local Government) would receive an amount proportionate to its payroll. The Local Government trust fund is better funded, so no additional employer contributions were included in SB 200. There will be an increase in the member contribution by 2 percent for all members, however.
Was an automatic adjustment included in the bill?
Dear Ms. Franco,
Yes. The version of SB 200 sent to the Governor contains the automatic adjustment provision that would keep PERA on track to be fully funded in 30 years. The mechanism would adjust member and employer contributions, the annual increase, and the allocation from the State budget to keep PERA on a path to full funding in 30 years.
I am very disappointed. As a retiree, I counted on PERA to protect my income in the future. By changing the annual increase provisions (waiving 2018 and 2019, capping annual increases at 1.5%, and increasing the wait to 3 years) my retirement income is no longer protected from inflation. These changes do not even partially cover the increases in healthcare premiums. ECON 101 tells us that with unemployment below 4%, inflation will follow. Poor decisions made on behalf of retirees!
Thank you for shepherding this bill into law (assuming the Governor’s signature). I know there have been many negative comments posted, but I for one appreciate the PERA staff and know they are doing a good job for us. I do understand the negativity associated with the COLA /AI freeze especially for current retirees who continue to see it diminish over time while just about everything else increases in cost. It’s not easy for many to make ends meet and I hope we will be understanding with one another’s situation. I feel blessed everyday to have PERA retirement and I hope this bill fixes the problem(s) for many years to come! Thank you
Thank you for your kind comments, Janet.
It with be a stress on recruiting and retaining our already stressed teaching staff in Colorado. With the state, fed and 10% coming off of our state’s teacher pay that is already well below the national average expect major backlashing from our public school system
A sad day for retirees! The changes since I’ve retired will cost me hundreds of thousands of dollars.
I have seen PERA go from having too much money to now having to make major changes to keep afloat. I have seen a 3% adjustment go to an index to none for the next two years. At least they have not requested me to pay back to keep getting a retirement payment.
Is the 3rd bullet a typo – increasing employee contributions to 10% for most employees ?
Dear Mr. Ybarra,
No it’s not a typo. The member contribution rate for members will begin increasing July 1, 2019, over a three-year period so that it reaches 10% for most members.
So we will be spending more from our checks, that are already woefully inadequate? Most of us haven’t seen a raise in pay in years, but insurance and now PERA contributions are going to take a larger chunk of our checks.
While I appreciate the time spent, it seems as if our walkout was ignored and we are not valued. I’m already working 2 jobs to make ends meet. I can’t do three!
Dear Ms. Fox,
The increase in member contributions will go into your member account and earn interest. The first phased-in amount of 0.75% is scheduled to begin July 1, 2019.
A heart felt THANKS, to all the legislators and members of the PERA board and its staff, for all their efforts and dedication to this cause of re-fitting PERA to become solvent and fully funded in approximately 30yrs. This was truly a monumental task that came right down to the wire. And those who did the heavy lifting in committee meetings trying to iron out the wrinkles and get the votes necessary for victory, deserve acknowledgement of their efforts. And so again thanks, from this old retiree on a fixed pension.
Dear Mr. Harris,
Thank you for your recognition of the work done to ensure retirement security for the entire PERA membership.
As two PERA retirees, my husband and I agree with Mr. Harris. Thank you for your efforts! We are blessed.
A sad day for state employees who have invested years of service to Colorado.
Our elected officials have consistently increased state revenues at the expense of classified employees, beginning in the 1980’s. In past decades, we earned eight hours of sick leave monthly. We earned a competitive step / grade increase in pay annually, and continued to increase earnings at the established 2.5% and 5% each time the pay range increased. PERA retirees received a 3% (later reduced to to 2%) annual COLA, beginning one year after retirement. And, PERA was fully funded.
Look at where the state is now, vis-a-vis state employees:
-For decades, we have received 6.66 hours of sick leave, in an era where PTO is the norm and preferred leave system in most governments. Our legislators rejected PTO years ago as “too costly” to implement.
-At the turn of this century, the deliberately unfunded “pay for performance” system was enacted. Thanks to this “little to no pay, regardless of performance” system (call it what it is), employee tenure is at a historic low, pay compression is the norm, and the state has become an undesirable, revolving door employer. Our poorly run state has saved BILLIONS of dollars over the past two decades with this system, yet claims “fiscal note” concerns when doing right by state employees is at issue. Absolutely shameful!
-In the 1990’s, PERA was deemed “over-funded”, so the state reduced their contributions (not ours). Now that we all see the need for reform due to market volatility and the state reducing their contributions, who is called upon with this propaganda called “shared responsibility?” The answer: state employees and retirees are again the scapegoat! With an annual cost of living increase of nearly 3% (not including the inflated housing costs along the front range), a COLA of 1.5% will certainly hurt those who served this state and dissuade anyone from working for the state to retirement, as if our past and current legislators and governors have not done enough harm to those who have, or are expected to take care of the State of Colorado.
I do not recommend the State of Colorado as an employer to anyone as a result of these continued, and probable future abuses. DO NOT EXPECT GOOD RETURNS WHEN YOU MAKE POOR INVESTMENTS. I know this applies to retirement, and to future service to the State of Colorado.
James Duncan, President
Fraternal Order of Police, Lodge 28, Colorado State Employees
Dear Mr. Duncan,
Thank you for sharing your thoughts. We believe that the PERA retirement plan will continue to be an attractive feature of public employment in Colorado. With the changes in SB 200, the PERA trusts are back on track to be fully funded in 30 years which will ensure the retirement security of more than 580,000 public employees in Colorado.
Thanks for your effort on this legislation. It’s painful for everyone but better than going broke. Why was there a direct contribution from the state instead of an increased employer contribution? I suspect it may have to do with the dire finances of school districts. Also after David Sirota’s Westword article about external fund managers getting fees of 4% or more, I think it is past due to cut the cord with these vultures. Warren Buffet just won a million dollar bet with a hedge fund manager that an S&P 500 index fund would outperform the manager’s fund over 10 years. As you know fees on index funds are often less than 0.1%.
Dear Mr. McCulloch,
The direct distribution is a less cumbersome way to remit contributions to PERA.
Regarding PERA’s private equity investments, you may wish to review this post: https://peraontheissues.com/index.php/2018/05/02/asset-class-private-equity/
Be sure to see the details on the fees here: https://peraontheissues.com/wp-content/uploads/2018/05/PERA-Investment-Fees-Fact-Sheet.pdf
Thank you for your comments.
Why doesn’t COPERA just switch to Total Index funds from Vanguard or Fidelity? It seems we could cut way down on the number of employees needed at COPERA and probably even get better returns, not to mention the savings on expensive fees. Pennsylvania is already requiring their state pension to use Total Index funds instead of more expensive options: https://www.wsj.com/articles/pennsylvania-pensions-asked-to-switch-to-index-investing-cut-illiquid-funds-11545345717
Pennsylvania is already requiring their state pension to use Total Index funds instead of more expensive options: https://www.wsj.com/articles/pennsylvania-pensions-asked-to-switch-to-index-investing-cut-illiquid-funds-11545345717
Dear Mr. Johnson,
For more information on why PERA uses both active and passive investment approaches see this PERA on the Issues post: https://www.peraontheissues.com/index.php/2016/08/16/active-passive-management-brief-summary/
In addition to using a blend of active and passive investment management, PERA saves an estimated $45 million a year by using an internal investment team. https://www.peraontheissues.com/wp-content/uploads/2018/08/LessisMoreFinal_6_25.pdf
Finally, please see the first post in the Retirement Roundup authored by Jack Bogle on the pros and cons of index (passive) investment management: https://www.peraontheissues.com/index.php/2018/12/12/retirement-roundup-this-investing-expert-says-theres-a-big-problem-with-index-funds/
What does it mean…”waiting period”? Capping the Annual Increase at 1.5 percent and increasing the waiting period from one to three years.
It means PERA lied to you. I started attending meetings over 12 years ago and would ask about the funding problems I was reading about PERA. Every PERA member assured me there was not a problem. I begged them to tell me now before I retired. They lied and said PERA was in great financial shape. Now they are taking money that was promised, and planned on, from retirees. I cringe when I see people here thanking them. They (PERA) asked our legislature to bail them out. Also, why do State Troopers get a better deal than teachers in the same system? When are teacher actually going to stand up for themselves? Enough is enough!!!
Mark,
State Troopers contribute more to PERA than do other members and that allows them to have earlier eligibility for retirement.
We regret that you feel PERA has not been honest with you. We have been communicating with stakeholders over the last 18 months that retirees are living longer and that changes in the global economy have increased PERA’s risk of being able to sustain another major economic shock.
The recommendations by the Board largely contained in SB 200 ensure that PERA will be sustainable and on track to being fully funded in 30 years.
In the version of the legislation sent to the Governor, the cost sharing is as follows: Retirees, 19%; Current and Future Members, 57%; Employers, 8%; Direct Distribution, 16%.
‘We regret that you feel PERA has not been honest with you”…….
In advance of my retirement in 2005, the question was asked, “is the annual increase subject to change ?” PERA answered “No”. I attended and asked this at least 3 times, and certainly would not have retired if affirmative answer had even been a possibility.
In light of both the 2010 and 2017 takings, it is disingenuous at best to characterize the statement made by Mark (above) as a “feeling”. PERA and the Colorado legislature have been, and continue to be dishonest in at least 3 areas:
1.The downturn in the economy used to justify the first taking of vested benefits has been drastically reversed, and there is, and was NO compelling reason to breach the contracts of the fully vested who served prior to the recession.
2.Full funding is not a necessary state of being, and the time period of 30 years is completely arbitrary. The services provided by the Public employees are a direct benefit to the taxpayers, so even in the ( highly unlikely) event that PERA could not meet its obligations to pay the deferred compensation of these public servants, the responsibility lies on the beneficiaries of those services. Yes, costs go up and the services rendered by Public Employees need to be paid for by the public who contracts for these services.
3.The retiree class that had earned the contracted 3.5% ABI is getting smaller over these last 8 years, due to the age and mortality of those individuals. There is NO fiduciary scenario under which the money owed to this particular segment was to ever increase. In fact it can only decrease, and is today, a fraction of what it was at the time the 3.5% contract was breached.
Changes in the global economy occur in BOTH directions, but it is unprecedented to make fiduciary changes with a backward reach to violate contracts made prior to a downturn. PERA owes to its members a strict fiduciary responsibility to comply with the definition of ” fully vested”. Either a person has reached the eligibility of a given, contractual agreement or they have not. I (and I assume ‘Mark’ above) completed my part of the contract, PERA has not, and therefore, Mark is correct in pointing out the dishonesty. It’s not a feeling, it’s a simple fact.
Bravo, reflects my own thoughts (also a 2005 retiree), your words are absolutely and indisputably accurate. The PERA board has (in my opinion illegally) sold us down the river over and again.
Dear Mr. Thorpe,
After the global financial crisis of 2008 and the passage of Colorado SB10-001, the issue of whether the COLA could be changed was tested in the Colorado Courts. The Colorado Supreme Court determined that the reduction in the COLA was legal. The Court stated that there is no contract right to the specific COLA formula in place at the time of retirement or when becoming eligible to retire. In making its decision, one of the factors the Court looked at was that the COLA formula had been changed numerous times during the working career of a retiree. In summary, the COLA was first enacted in 1969, and for decades had both a base (non-compounded) and supplemental (one-time) component. From 1970 to March 1, 1994, the non-compounded COLA usually ranged from 1.5 percent to 3 percent. In March 1994, the General Assembly changed the COLA to the lesser of 3.5 percent compounded annually, or the Consumer Price Index percentage for the prior year. It wasn’t until 2000 that the General Assembly changed the COLA to make it a compounding 3.5 percent. It is important to note that from 1970 through March 1994 the COLA changed several times and each COLA was non-compounding. From 1994 forward, the General Assembly changed the COLA to be compounding. The changes in both SB10-001 and SB18-200 continue to retain the compounding nature of the COLA.
PERA believes that the reduction in the COLA from 2.0 percent to 1.5 percent is legal in light of the decision by the Colorado Supreme Court in 2014. All the recommendations by the PERA Board to the General Assembly for this legislative session were made with the legality of the changes in mind.
The PERA Board also understood the impact the COLA change would have on the purchasing power of retirees and did not take this issue lightly. With all the changes that were recommended, the Board insured there would be shared responsibility amongst all constituent groups. The Board owes the same fiduciary duty to retirees as it does to the member who was hired yesterday and plans to be in the system for the next several decades. The Board maintained throughout the process that in order to reduce the risk profile for our members and beneficiaries, a 30 year amortization period was critical. A longer amortization period increases the economic risk and threatens the long term sustainability of the system. SB18-200 achieves that goal and reduces the economic risk for our 587,000 participants.
SB18-200 touches all PERA stakeholders, with financial costs that impact current members, retirees, public employers, and public employees yet to be hired. In your note, you indicate that employers should bear the responsibility for the unfunded liability. SB18-200 includes contributions directly from the state of Colorado in the amount of $225 Million annually and increases employer contributions by .25 percent. Although one may argue about the amount of contribution by the employers, the fact is that the state of Colorado and our employers will share in this responsibility to ultimately eliminate the unfunded liability.
SB18-200 retains the hybrid defined benefit plan structure that provides reliable retirement income that cannot be outlived. The bill does not impact the base benefit of retirees or vested members in the system and continues to provide a very competitive benefit package. Most importantly, the reforms of SB18-200 pave a path of sustainability for the 587,000 participants and their families.
Dear Mr. McGannon,
The waiting period refers to the time that no Annual Increase will be paid. For current retirees, the Annual Increase will not be paid for two years in 2018 and 2019, and then it will be 1.5% in 2020.
Because SB 10-001 called for a one-year wait for receipt of the Annual Increase, the waiting period for receipt of the first increase for current members will now be three years.
I’ll reply here because the PERA reply left no option (above) for a response.
PERA and Colorado have plans to take during hard times but have never even mentioned a policy of increases during the boom times ?
The Supreme court went against the lower court ruling, by the way, that said it was a contract. To eliminate (or suspend) a benefit which is named “annual benefit increase” is simply absurd on its face. It becomes neither: Annual, nor a Benefit, nor an Increase. It even fails the moniker of “Cost of Living Adjustment”.
Hey ,we all have no choice but to live with the injustice, but please don’t insult us with a justification that defies reason. The State could afford to (and should) rescind the part of the bills that force the fully vested retirees to cover 19% of the burden going forward. “Retirement” means the END of contribution to the State, or it means nothing at all. The short lived economic downturn has reversed and there is no compelling reason to continue the violation of benefits duly earned.
Let us hope for, and actively participate in. the replacement of legislators who’ve shown themselves to be enemies of Public Servants.
I am so sad for those already retired and trying to make ends meet. I for one only see less to spend on gas for my car, food to eat, less TV stations and the list goes on. I feel my choice to work at CSU was wrong and I will pay for that till I die.
How about giving us the choice between paying into Pera or paying into Social Security.
Dear Mr. Herrera,
The State of Colorado made the decision many decades ago to offer a retirement plan (PERA) in lieu of Social Security. (PERA was created several years before Social Security.) PERA serves as a pension plan and as a replacement for Social Security.
An evaluation of the PERA plan and other types of retirement plan designs was conducted by an external consultant pursuant to legislation. The study found that PERA provided a better benefit at a lower cost.
Read the PERA on the Issues article on the GRS Study here: https://peraontheissues.com/index.php/2016/08/10/independent-analysis-pera-wins-gold/
I would like to see a press release/chart with details about the “Automatic Adjustment Provision.” As we all know, the devil is in the details.
I, too, would like to thank the PERA staff, Secure PERA, Colo. Education Assoc’ian’s efforts to provide reasonable reforms. Next step, change the Federal WEP/GOP (Windfall-Offset) provisions. Senator Gardner, in a response letter to me, declines to support such remedial legislation. Such action would help those of us who have performed additional work, outside of teaching, to receive our fair share of SS.
Dear Steve,
Thank you for your comments. We are working on developing additional information on SB 200. A fact sheet and a PERA on the Issues article on the automatic adjustment provision are items on our list.
Shame on Governor Hickenlooper for pushing this bill through at the 11th hour on the last day of the legislature. He calls this a fair deal. Where was the fair deal when the state did not pay into PERA for the last few years.
I hope all retirees contact the Governor’s office to make sure he doesn’t sign this legislation.
I would hope that PERA’S attitude in the passage of SB 200 is one of humility and not one of arrogance. PERA needs to do everything it can to prevent the auto adjust from happening. I recently read some articles about PERA’S investments. David Sirota has pointed out in a series of articles for Westword, PERA is fraught with problems, including large payouts to Wall Street. Is there any truth to his claims? According to PERA’s actuaries, the government has underfunded its share of the pension by $4.5 billion since 2003. I would like to know what dollars that this is referring to? Is this the 225 million that the state will be paying in? How much did PERA lose by not having this money invested? Would the 225 million makeup the 4.5 billion shortfall over the next thirty years? Looks like a bargain for the State of Colorado. I can understand why others feel that they have been lied to because of past statements from PERA. I was assured as a retiree or a vested member that benefits could not be reduced but that they could be increased by the legislature. Also was informed that PERA didn’t need to be 100% funded to pay out benefits, but the target rate was around 75 to 80%. If I had it on tape I would love to play it to you. I went to many meetings at Cow Palace in Lamar and heard that message many times.
Dear Mr. Clevenger,
Thank you for your comments. For more information on PERA’s private equity investments, you may wish to review this article and fact sheet: https://peraontheissues.com/index.php/2018/05/02/asset-class-private-equity/
https://peraontheissues.com/wp-content/uploads/2018/05/PERA-Investment-Fees-Fact-Sheet.pdf
The bottom line is that PERA is a very efficient institutional investor and currently pays $1.2 billion in benefits every quarter while the fund has generated $60 billion in investment income over the last 35 years.
The sources of PERA’s underfunding are outlined in this article and the tables within: https://peraontheissues.com/index.php/2017/12/26/sources-of-peras-unfunded-liabilities/
The $4.5 billion figure is the difference between what employers have paid by law and the amount necessary to fund benefit payments which is calculated by PERA’s actuaries.
In 2015, the PERA Board of Trustees adopted a funding policy that outlines their goals. This policy may be viewed here: https://www.copera.org/sites/default/files/documents/fundingpolicy2015.pdf
PERA, Please respond directly to Mr. Thorpe’s comment. Thank You.
I’m very pleased that the PERA Board is finally owning up to its responsibilities. Wish Republican Gov. Bill Owens had. However, 30 years is too long of a period to be in debt. I would like to see more sacrifice from current retirees in the form of more progressive benefit reductions because not all careers are equal. I think having current/future employees (not yet retired) pick up a huge burden instead is a bit unfair, though I realize maybe there are some contractual hurdles (worth fighting in court?). But, I’ll take this solution for sure – over no solution. Thank you.
Now, let’s shine a light on local government pension debt NOW, before it’s too late. Local governments are kicking the can down the road! Too often local/county/agency governments try to pass “general taxes” for capital projects without telling the public it’s to help cover retirement debts. So, we end up with the cost of a capital project that isn’t badly needed – that’s really debt swapping. We need honest dialogue.
Thank you for your 2018 candor.
I appreciate the work that’s gone into making PERA sustainable. There could and should have been more done in the early 2000s. Let us hope there is not another big recession with a Republican legislature and Governor. There would be much more damage to all members of PERA to right past errors.
A few other thoughts:
It is hard to think of the benefits of retirement when one is in the work force trying to pay bills. 10% is a BIG chunk of a paycheck.
I wonder why there is not a cap on PERA benefits similar to Social Security? According to the 2016, 112 retirees have a benefit of $150,000 or higher. Imagine how that will increase over the years with the higher salaries for administrators and college coaches.
Have you compared benefits of Social Security with equal number of years in PERA? PERA is MUCH better.
Hello Monica,
Thank you for your comments. PERA, created by the Colorado General Assembly in 1931, predates the federal Social Security plan. PERA serves as a Social Security replacement AND as a pension plan – two of the three legs of the proverbial retirement stool (the other leg being private savings).
The IRS caps the amount of salary that is included in the PERA benefit calculation – in 2018 it was $275,000 for members hired on or after January 1, 1996. Contributions are paid by the PERA member and their employer to prefund a PERA benefit.
You are correct that fewer than 2 percent (or 1,994) of PERA benefit recipients receive more than $100,000 in an annual PERA retirement benefit. Generally, these benefit recipients had high salaries and worked for decades.
Details on benefit payments may be found on pages 226 and 227 in the 2017 Comprehensive Annual Financial Report: https://www.copera.org/sites/default/files/documents/5-20-17.pdf