Earlier in June, PERA Interim Executive Director Ron Baker sent a letter to Colorado’s Congressional delegation asking that they withhold support from potential legislation that could undermine public pension recovery efforts and recent pension reforms in Colorado and around the country.
Over the past eight years, Rep. Devin Nunes (R-CA) has introduced legislation known as the Public Employee Pension Transparency Act (“PEPTA”). Rep. Nunes recently asked each member of Congress through a “Dear Colleague” letter to co-sponsor similar PEPTA legislation this session.
In his letter, Baker outlines a number of reasons why PEPTA is concerning for public pension plans in general and for Colorado PERA specifically.
- The legislation would require public employee plans, including PERA, to report their pension liabilities and assets using an assumption that their investments will only earn the U.S. Treasury bonds interest rate. PERA’s $49 billion trust fund is a diversified portfolio of stocks, bonds, real estate, private equity and other assets. Historically, these investments have earned a rate in excess of the legislation’s artificial benchmark. Any states and local governments associated with public plans that did not comply with this requirement would be stripped of their ability to issue federally tax-exempt bonds.
- PEPTA is based on an assumption that many state and local retirement plans are headed toward insolvency and don’t share meaningful information about their financial condition. Each year, PERA produces a Comprehensive Annual Financial Report, a voluminous data source available online. Further, PERA reports to three (soon to be four) legislative oversight committees during the interim session and the regular legislative session.
The letter also notes that PEPTA would not lower taxpayer costs, increase transparency, expand accountability, or improve understanding of state and local government retirement plans.
PERA staff will continue to monitor the progress of PEPTA and other federal legislation that could impact public pension plans or PERA members. PERA’s letter to Colorado’s Congressional Delegation is available here.
Thanks for the dope about Rep. Nunes, which PERA members will probably recognize as the “Trumpeter” from the House Intelligence (oxymoron) Committee that leaks classified information about the Russsia Investigation if he thinks it serves his president… Sure hope his constituents in California see he has failed to co-sponsor the Fairness in Social Security Act (2017-18) which would rectify the unfair offset of Social Security due to CALPERS benefits (the same way it harms Colorado’s PERA recipients, but then again only three Colorado Representatives, i.e., Perlmutter, Polis, & Tipton have signed on, so what does that say about the rest of our congressional delegation?).
While I understand not liking the benchmark ROI in the proposal, but why do Public Pensions always do everything they can to avoid disclosing information. You can report using the benchmark and supplement with actual ROI figures in the report.
We still don’t know how much Colorado has paid in management fees to wallstreet hedge fund managers. We are just told that they are reasonable and within market norms. Tell us the numbers.
PERA is very transparent. It’s unreasonable to expect them to disclose every transaction. Especially when the privacy of its members is at stake. Devin Nunes will wallow in a lavish Congressional pension, while trying to strip State and local workers of the benefits they have earned. Tell Devin Nunes that when Congress get some the same health and retirement benefits as our soldiers, sailors and marines – then maybe state and local employees could take him seriously. Congress won’t even ban insider trading among themselves. But, they want to apply arbitrary limitations to our success?
Please see this fact sheet for more details on the fees paid by PERA to investment managers: https://peraontheissues.com/wp-content/uploads/2018/05/PERA-Investment-Fees-Fact-Sheet.pdf
In 2017, PERA paid $172.8 million in investment fees (on a portfolio of $48.9 billion). See pages 132 and 133 of the 2017 Comprehensive Annual Financial Report for more details: https://www.copera.org/sites/default/files/documents/5-20-17.pdf
A summary of the CAFR is available here: https://www.copera.org/sites/default/files/documents/cafrhighlights6-18.pdf
The 2018 version of PEPTA is not yet available, but on reading the 2016 version it becomes clear that the end result of PEPTA would not be more accuracy and openness in pension reporting but more misrepresentation and confusion.
PEPTA, in the name of transparency, and clear and meaningful disclosure, and full and honest reporting, would coerce state and local government sponsors of public employee pension plans, regardless of the health of their plans, to provide to the federal government a special annual report in which their pension plans would be presented in a uniformly negative light, based on a flawed methodology unrepresentative of reality.
Such an annual report would present to the public an inaccurate, misleading, and confusing picture of state and local pension plan health – the opposite of PEPTA’s ostensible goals.
Transparency, and clear and meaningful disclosure, and full and honest reporting published widely and regularly, should be what we strive for with our state and local pension plans.
PEPTA, however, is fundamentally flawed, and is therefore not the vehicle that can bring this about.