Colorado PERA’s Board of Trustees met virtually on Friday, November 20. The Board elected a new Chairman and Vice-Chairman and voted to maintain the 3% interest rate for member accounts, among other agenda items.
PERA Board Officer Elections
Colorado PERA’s Board of Trustees elected Marcus Pennell to be the Board’s next Chairman. Pennell, a physics teacher in Jefferson County Public Schools, is currently the Board’s Vice Chairman.
The outgoing Chairman, Timothy M. O’Brien, has been a PERA Board member since 2011. O’Brien has been the Denver City Auditor since 2015 and was the Colorado State Auditor from 1984 to 1995.
The Board elected David Hall Vice Chairman, filling the seat vacated by Pennell. Hall is a Sergeant with the Colorado State Patrol.
Pennell and Hall assume their new leadership roles in January 2021.
Member Interest Rate
For many PERA retirees, account balances don’t play a significant role in their retirements. For example, account balances do not determine the amount of most PERA monthly benefits. In fact, most retirees receive the balance of their account through benefit payments about five years into retirement.
But account balances do play a more important role for some PERA members. For these members, the interest added to their account increases the value of being a PERA member. At the meeting, the Board voted to maintain the 3% interest rate that member accounts earn.
The following scenarios show how the interest rate on member accounts can affect PERA members:
- Refunds | Some PERA members choose to refund their account when they leave employment in lieu of a monthly benefit in retirement. Members who refund their account receive their contributions plus interest. In some cases, they also receive a match.
- Retiring with less than 5 years of service | PERA members who do not have five years of service credit are still eligible to receive a monthly benefit in retirement. However, this benefit is not calculated using the familiar formula that includes service credit, age, and highest average salary. Instead, the money purchase calculation determines the amount. This calculation does use a member’s account balance along with life expectancy at the time of retirement.
- Moving to a job outside of PERA | Not every PERA member remains in public employment for their entire career. Those who leave before retirement age can leave their account at PERA and still receive a monthly benefit when they become eligible later in life. One potential downside: the purchasing power of a static highest average salary decreases over time—the result of inflation. To help offset this phenomenon, PERA calculates what the benefit is using the money purchase calculation, described above. The retiree receives the larger of the two calculations.
- Survivor benefits | Survivor benefits provide income for qualified survivors if a PERA member dies before retirement. If a member dies but does not have any qualified survivors, the account balance goes to the named beneficiaries the member chose.
Other Agenda Items
During the meeting, the Board adopted new mission and vision statements, which are covered in another PERA On The Issues story. They also reviewed and adopted updated actuarial assumptions, which will be covered in a future PERA On The Issues newsletter.