Editor’s note: On Monday, Nov. 15, the Legislative Council voted to approve the bill, clearing the way for it to be introduced during the regular legislative session, which is set to begin on Jan. 12. PERA On The Issues will continue to monitor the bill and will provide updates regarding its status during the session.
The Colorado General Assembly’s Pension Review Commission on Tuesday voted to recommend a bill for the 2022 legislative session that would make up the legislature’s missed $225 million direct distribution payment to PERA from July 2020.
Lawmakers enacted legislation to forego the annual $225 million payment to PERA during the height of the COVID-19 pandemic, when the General Assembly cut billions of dollars from the state budget. The state resumed payments in July 2021 but did not make up 2020’s payment.
The Pension Review Commission’s draft 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.
Lawmakers recommended using money from the state’s general fund to make the payment, though committee members also suggested using money from a new cash fund the legislature established during the 2021 legislative session. That fund, which currently has a balance of $380 million, is meant specifically for future payments to PERA.
The draft bill will head next to the Legislative Council before it could be introduced in the 2022 legislative session.
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 help PERA pay down its unfunded liability. 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.
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.Automatic adjustment provisionAn automatic change to PERA contributions (employer, employee, state direct distribution) or the Annual Increase based on funding levels.
Good, they made the commitment, they should honor it.
Good to see the legislature take up the issue. It’s passage will demonstrate the state’s commitment to do its part to reduce the unfunded liability.
This is wonderful to hear. After nearly 50 years as a PERA member, I have learned to believe it when you see it. Let us all keep in mind that 2020 isn’t the only year in my 50 years of exposure to the goings on at the capital that the legislature has failed to make the required allotment. For that reason I am both pleased and surprised that they are talking about doing the right thing this time.
Definitely a positive first step. Please send updates.
“..Also included in Senate Bill 200 was the Automatic Adjustment Provision (AAP), which will trigger increases in employee and employer contributions to PERA and reductions to annual increases for benefit recipients in July 2022.”
Remind us again why, in this period of unprecedented (in recent times at least) inflation, PERA is reducing annual increases to benefit recipients? Is this connected to missing Direct Distribution that the Legislature may act on- and if passed does the AAP still need to occur?
I agree with others that having the Legislative Council take a look at fulfilling the Direct Distribution is a great step forward.
Hi Bruce, we know modifications to contributions and annual increases are difficult for everyone, but modifying the annual increase amount is a necessary step to keep PERA on track to reach full funding by the 2047 date targeted by the pension reform legislation passed by the General Assembly in 2018 while also ensuring PERA can continue to provide lifetime monthly benefits to current and future retirees.
Thanks for the reply. I assume this is to satisfy the unfunded liability. I would only hope that there is some latitude for acknowledgement of the real-life conditions of the economy (such as inflation) as far as the future of PERA contributions and benefit payments are concerned, besides addressing accounting standards that sometimes are more theoretical than practical in nature. I worked in local government budgeting for many years so can somewhat appreciate the issues that you are trying to solve.
Hi, Bruce,
PERA’s typical response to your question about the reduction to annual increases to retirees is their usual INSULT. The reason we aren’t getting it is because PERA is greedy, wanting to line their CEO’s pockets, and despite getting the money the state SHOULD pay them, they continue to persist in believing the backs of retirees–the group LEAST able to handle inflation and lowered COLAs–should help to fund the unfunded liability. BS!! By the time the fund reaches full funding, I’ll be dead, and all my retirement years will have been spent helping “future generations” to be funded on what I was PROMISED DURING MY ENTIRE CAREER WITH PERA. I’m so sick of them using this answer I want to vomit every time they repeat it.
Hi Bruce,
I totally agree with you! I was promised that PERA would take care of me in retirement and that idea began for me in 1979. I just retired and nothing that I was told at the beginning is indeed the truth. PERA got my money to invest across all these years and now is not paying the cost of living increases in my new retirement years???? That makes me think I have wasted all these years believing in lies! This is how a 40 year career is rewarded? BS Makes me furious and more disappointed than I can say!
Good news about the payment if it gets passed.
What will the July 2022 increase be for retirees? Have heard that Social Security recipients are scheduled to get more than 5% in 2022.
The July 2022 annual increase paid to most eligible benefit recipients will be 1%. We have more information on July 2022 changes in this document: https://www.copera.org/sites/default/files/documents/autoadjustment_4.pdf
I am hoping that PERA will consider a one time increase to match social security’s COLA increase due to the unprecedented inflation.
https://www.coloradopolitics.com/columnists/sondermann-the-bottomless-mess-of-colorado-pera/article_63c4703a-df5b-11eb-b4a6-c39b57e265c2.html
i agree. We are getting further behind with our bills with the cost of everything going up except our annual increase
How soon you forgot you’re only getting 1.5% COLA in 2022 when inflation’s running at 5.4%. Thank the legislature for the constant “reworking” of your promised retirement. It’s all about optics folks, maybe they’ll pass the legislation and give us what they already owe us. Was it mentioned they’re proposing new legislation to tweak PERA due to its funding shortfall? The market’s been going through the roof the last ten years, everybody’s making money except PERA. How’s that even possible?
Exactly. I have the same questions.
They made 17.5% on investments and think we should lose 5%. It stinks. https://www.coloradopolitics.com/columnists/sondermann-the-bottomless-mess-of-colorado-pera/article_63c4703a-df5b-11eb-b4a6-c39b57e265c2.html
Sorry, but PERA says the 2022 COLA is 1%, not 1.5%. RIPOFF!!
Well said!!
Not 1.5%–down to 1%, basically throwing crap in our faces. Yes, at this point I’d have been better off under Social Security and NEVER under PERA, (SS which I can’t get due to WEP and having not quite enough quarters to qualify for anything). I’m sorry I ever went to work for PERA-which at the time I thought was a good decision, now I know it turned into a ripoff in retirement.
One percent ?
They made 17.5% on investments and think we should lose 5%. It stinks. https://www.coloradopolitics.com/columnists/sondermann-the-bottomless-mess-of-colorado-pera/article_63c4703a-df5b-11eb-b4a6-c39b57e265c2.html
Agreed. Since the PERA fund made 17.5 % during the past year. The amount the State kept should be reimbursed plus 17.5%.
It would be nice to receive what we have missed.
Based on many comments, it seems like the pension is your only source of retirement income. People should have been and be currently taking advantage of 401k and IRA plans all along the way. If you haven’t been doing so and are now retired or are still working and not doing so, that’s a YOU problem, not a PERA problem.
Not sure if that “M” is for Marie Antoinette but your last comment pertaining to retirees sure was insulting and more than a little bit ironic. You are someone purportedly smart enough to build your own diversified retirement portfolio but apparently unaware that PERA has a fiduciary responsibility to its members. Otherwise, you would understand the when the state withholds funds from the PERA fund, that is not a “YOU” problem it is a PERA problem because it threatens the longterm viability of the fund. Furthermore, your criticism of member retiree comments based on your assessment of their economic standing and investment IQ, is insulting to all retirees who earned their defined benefits and want to use this forum to applaud, complain or understand legislative and PERA actions that may impact the strength of the PERA fund and consequently their retirement benefits. If you have nothing supportive to say about retirees trying their best to express their concerns and inquire about their interests through this forum, may I suggest you keep your insults to yourself and enjoy all of your cake by yourself in your palace tower.
Had PERA explained that we were supposed to be augmenting due to their inability to pay us what we were promised years in the future, more people would have done so. I’m making a guess, but assume that a majority of Social Security recipients have little in savings to supplement their SS, but they’re getting a 5% COLA (which isn’t even keeping up with the current inflation). PERA retirees are also penalized by SS by reducing any SS benefits that they earned, if they’re collecting PERA. But, we all know the government isn’t ever held responsible for poorly managing our money, so it’s always a gamble, for sure.
Will the governor sign the bill if it passes? I think that is the big question now!
Well isn’t that just peachy! PERA gets their money back but us little pensioners at the bottom of the food chain get a cut in our AI! I seem to remember when I retired in 2005 that I was promised three and a half percent increase a year. That didn’t last long… Can anyone tell me how many years we went without an annual increase at all? Now we’re supposed to be grateful for 1%. Pardon me if I don’t swoon but that’s like $30 a month for me which gets swallowed up at tax time! I am very grateful for my defined benefit pension but don’t try to sugarcoat it when really we are not getting enough of an increase every year to cover the inflation rate. a large number of us cannot even tap into our social security that we have paid over the years before or during, even after we started collecting our PERA benefit. At this rate, by the time I’m 83 years old, I will be living below the poverty level!
Hi Doreen- I’m not any part of PERA (other than a retiree member drawing PERA benefits). I hear you (I wrote something above in this chain of comments). I also worked in governmental budgeting for many years, so can somewhat understand what PERA is trying to do- but I don’t necessarily agree with it, and agree with others that it is not addressing reality in the current fiscal environment – whether that be caused by COVID or something else.
My understanding is that PERA is trying to address an “unfunded liability”. A liability is an accounting term for an expense that has yet to incur, even though (in many cases) the revenue to fund the expense has already been received. However, in this case it’s “unfunded”, and so the expectation is that the expense may take place prior to the revenue being received. I have lost a lot of contact with accounting and budgeting, so I’m not the person to be explaining it- but my understanding is that accounting standards now require PERa and other public pensions to assume the worst case of all working members retiring at the same time, and report that in their annual audit. Not surprisingly, it makes their audit look very negative- but it’s addressing a theoretical position that isn’t likely to occur.
Again, I know only enough to be dangerous- but I wish that we could get something in lay-persons’ speak from PERA that explained this in detail. The result is that benefit increases area reduced, and contributions are increased both from individual members that are working and the employers that they work for. In order to pay the additional contributions, taxes are increased (as much as TABOR might allow), so we get hit with that as well. And most of us have no idea why it’s happening, and have no interest or even capability to understand complex accounting through an audit.
By the time PERA’s unfunded liability is met, I’ll be dead, so I’ve had maybe 1-2 years at most of any COLA, but even that certainly was NOT the 3-1/2 percent of years gone by that was promised. Ridiculous that current retirees are having to help fund this liability when they should be getting what they worked their entire lives for and were promised.
Thank you Doreen and Marti for your comments.
It’s reassuring to see that I’m not the only one feeling duped. Although grateful to have a pension, it’s far short of what I was promised.
Enjoy it while it lasts!
Spot on!
More “Automatic Adjustment Provisions” How much more are employees supposed to contribute??
I posted this above in a reply to Doreen. I really wish that we could get some simplistic and useful discussion going on this issue.
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I’m not any part of PERA (other than a retiree member drawing PERA benefits). I hear you (I wrote something above in this chain of comments). I also worked in governmental budgeting for many years, so can somewhat understand what PERA is trying to do- but I don’t necessarily agree with it, and agree with others that it is not addressing reality in the current fiscal environment – whether that be caused by COVID or something else.
My understanding is that PERA is trying to address an “unfunded liability”. A liability is an accounting term for an expense that has yet to incur, even though (in many cases) the revenue to fund the expense has already been received. However, in this case it’s “unfunded”, and so the expectation is that the expense may take place prior to the revenue being received. I have lost a lot of contact with accounting and budgeting, so I’m not the person to be explaining it- but my understanding is that accounting standards now require PERA and other public pensions to assume the worst case of all working members retiring at the same time, and report that in their annual audit. Not surprisingly, it makes their audit look very negative- but it’s addressing a theoretical position that isn’t likely to occur. But I suppose it could.
Again, I know only enough to be dangerous- but I wish that we could get something in lay-persons’ speak from PERA that explained this in detail. The result is that benefit increases area reduced, and contributions are increased both from individual members that are working and the employers that they work for. In order to pay the additional contributions, taxes are increased (as much as TABOR might allow), so we get hit with that as well. And most of us have no idea why it’s happening, and have no interest or even capability to understand complex accounting through an audit.
Could we see an end to WEP?! I retired with decades in PERA with a promise of 3.5% COLA. That ended…but my social security (based upon contributions working public sector at a much higher rate than that of a public servant) will now be reduced because of my public service. How does that make ethical OR financial sense?! I’d make more SS if I’d never worked and simply served as a housewife for >10 yrs.
Unfortunately, both WEP and GPO are federal provisions. There was some movement on eliminating both last year, pushed primarily by the teachers Union in Texas, but it lost momentum. I haven’t heard much about it since.
Thank you Doreen and Marti for your comments.
It’s reassuring to see that I’m not the only one feeling duped. Although grateful to have a pension, it’s far short of what I was promised.
Enjoy it while it lasts!
Temper your happiness. Remember, we’re talking about politicians……where lip service, lies, pandering, and speaking out of both sides of mouth reign supreme. I’ll wait until the money is actually in the bank.
“……where lip service, lies, pandering, and speaking out of both sides of mouth reign supreme.” Yes we are talking about politicians, and almost to the level of the teacher’s unions. You are correct its a “YOU” problem.
Based on many comments, it seems like the pension is your only source of retirement income. People should have been and be currently taking advantage of 401k and IRA plans all along the way. If you haven’t been doing so and are now retired or are still working and not doing so, that’s a YOU problem, not a PERA problem.
B.S.!!! If and how much 401K and other income PERA retires have, is beside the point and none of your damned business! The point is PERA is not delivering what they promised when we were in the work force making contributions……..
Not b.s. 2 separate issues. Yes, PERA of course needs to deliver on promises. However, people also need to be proactive regarding their retirement and not put all their expectations of retirement income eggs into the pera basket. I stand by my comments.
M.
When you spend your words in this forum insulting retirees investment IQ’s it appears as a distraction from the topic ,or as J said, B.S. even if you did not intend it that way. Forgive my patronizing comments but I’m giving myself a Mulligan on this one since your comments directed to retirees, who did not invest the way you did, are so patronizing and insulting toward many retirees who relied on what they were led to believe were pension promises in place when they retired (Annual Increases were routinely referred to as COLA’s by HR Departments throughout the state and by PERA reps. People writing in this forum still refer to them as COLAs. Who knew the AI really wasn’t a COLAs. Over the course of the last 11 years there have been multiple legislative actions. Most were recommended or acquiesced to by PERA as well as politicians from both parties. These actions diminished and suspended (skipped) Annual Increases in order to secure the long term viability of the fund. These ACTS occurred in concert with the legislature witholding funds which in turn has an adverse impact on the viability of the fund and then makes their practice of diminishing annual increases LOOK that much more necessary. So from my perspective, these are legitimate beefs retirees have with the legislature and PERA regardless of whether they/we were able to take other steps to secure our individual retirement security as you have. So good for the legislature for growing a conscience for the moment and deciding to look into possibly funding, at least part of, what they should have funded in the past.
M. keep growing and enjoying that diversified retirement portfolio you want everyone to have but please spend fewer words slamming retirees who weren’t blessed with the seed money or investment wisdom you had and spend more words speaking to power about funding PERA appropriately and enacting legislation to provide a true COLA formula that will enable retirees to maintain the same purchasing power of their defined benefit year in and year out.
You’re right about taking responsibility for my own future and not counting on Uncle Sam. I’m having to dip into my other resources a lot sooner thanks to reneging on the original deal. Why can’t I do with the people I owe?
Why does this take an act of Congress? PERA can’t work if only half of the parties involved hold up their end. The money was owed to the fund so pay it back! It sounds like it’s available. Do the right thing already!!
It’s my understanding that our pension is now behind where we would have been if we had just received the CPI as the COLA. And the new scheme can cut or cancel the AI without regard to the CPI or the performance of our investments. The state has again failed to hold up it’s end of our employment/pension bargain. Its wrong. We deserve better.
A possible positive for PERA retirees subject to WEP, or Windfall Elimination Provision, on their Social Security benefit … as the PERA benefit atrophies as a result of high inflation and low/no Annual Increases, and the state legislature reneges on their contributions, the WEP can be recalculated to increase your Social Security monthly benefit.
So the Annual Increase is somehow tied to the “unfunded liability” of the pension. So, the state decided not to provide their promised contribution therefore increasing the unfunded liability…therefore triggering an adjustment to the AI. Then, the promised “payback” the following year didn’t occur…so another hit to the “unfunded liability” and another hit to the AI which is set to max out at a huge 2.5%. Did I get that right?
Why do we need HP 22-1029 when the legislation in 2018 already mandated that the state of Colorado give PERA 25 million annually. We need a new law to enforce an existing law?????