Retirement insights from a Colorado PERA perspective

Inside Colorado PERA

If PERA had a signal light, its divisions would be orange. What does that mean?

PERA Signal Light

The Colorado PERA Board of Trustees is constantly monitoring the performance of the PERA fund and the long-term health and sustainability of each of PERA’s divisions (State, School, Local Government, Judicial, and DPS).

One of the key aspects of performance that the Board considers is the risk profile for each division trust, essentially the likelihood that something negative could happen that would threaten any division’s sustainability and PERA’s ability to pay benefits over the long term.

To better communicate the fund’s risk profile in a straightforward way, the Colorado General Assembly’s Legislative Audit Committee directed the Office of the State Auditor to contract with an actuarial firm to develop a methodology to simplify the understanding of PERA’s financial  status. The result of this study was the creation of a signal light color framework to report on PERA’s financial status. See prior articles on the results of this study and others specified in 2014 legislation here and here.

Using a signal light color framework, the tool indicates how long it will take each PERA division to reach full funding, where dark green status means that a division would be funded by 2041 (30 years from 2011) and dark red status means that a division would run out of money within 20 years, with additional signal-light like categories in between to indicate a spectrum of risk.

Last year, most of the PERA divisions were in the yellow category, meaning that PERA should enhance its monitoring of the fund. In 2016, as part of their oversight of PERA, the PERA Board conducted a review of the plan’s core assumptions and made changes. Two significant changes included recognizing that PERA retirees are living longer and therefore receiving benefits for a longer period of time, and evaluating the current investment market and the fund’s expected investment return moving forward. This led to the adoption of new mortality tables to better reflect the life expectancies of PERA members and retirees and a more conservative long-term investment assumption of 7.25 percent.

After incorporating the Board’s assumption changes made in 2016 as well as 2016 investment returns for the PERA fund, PERA’s actuarial consultants have determined that each of PERA’s five divisions have reached orange status. This is critical because it indicates that the divisions would each need more than 50 years to return to full funding. Orange status is an indicator that the Board should develop a corrective action plan to reduce the amount of time it will take PERA to be fully funded.

It’s important to note that, while the risk profile of PERA’s divisions is too high, this does not mean that PERA is running out of money. PERA continues to pay benefits to its retirees and will keep doing so. The orange status indicates that the divisions are solvent today and will remain so in the future.

Nonetheless, in order to reduce the amount of time needed to reach full funding and help protect PERA against the possibility of a major economic downturn in the future, the Board is considering steps to reduce the risk profile over time.

As part of this work, PERA conducted a statewide outreach tour in the spring, holding meetings across Colorado. Visit the PERAtour website to watch a video explaining the Board’s recent actions and PERA’s funded status, learn what PERA heard from those who attended meetings, or share your thoughts.

Moving forward, the Board will synthesize what was heard during the outreach tour and review input from stakeholders. There will be future opportunities to provide feedback about those options before the Board makes any recommendations to the Colorado General Assembly in advance of the 2018 legislative session.


  1. Barry Northrop says:

    “The orange status indicates that the divisions are solvent today and will remain so in the future.” Pure doublespeak. We are one routine market correction away from red yet all is well?

  2. Bruce Potter says:

    Retirees and those within 15 years don’t have time to adjust to reductions in benefits, only those younger than 40-45 will be able to save more outside of PERA to make up for reductions. PERA should help educate younger members of the realities of a DB, it can’t do it all so save more on your own and plan for smaller benefits from PERA.

  3. Robert A. Coleman says:

    It seems like PERA has been pushing how healthy the retirement plan is for quite some time. However, all of the sudden we’re being told that we’re in danger of possibly running out of long term funding. It seems to me that this should have been forecast sooner. Are we truly one of Colorados best investments ,or not?

  4. David says:

    As many of us surmised, once again the burden of any PERA adjustments will likely be on the shoulders of us retirees. Of course we can least afford to take more hits, but are the eadiest target. Hopefully, I an wrong, but hang on, here it comes again!

    • Colorado PERA says:

      The PERA Board’s legislative proposal in 2010 was based on shared sacrifice among members, retirees, and employers. While retirees were immediately impacted by the reduction in the annual increase, members are required to contribute more, may have to work longer, and will be subject to the same annual increase provisions that impacted retirees. It is anticipated that the Board’s approach to a legislative recommendation later this year will also have a shared sacrifice approach.

  5. David Kaye says:

    When can we expect to see an equitable corrective action plan for review and comment?

    • Colorado PERA says:

      Mr. Kaye,

      Currently, PERA is in the comment collection phase and staff will be sharing with the PERA Board of Trustees all input received from members, retirees, and other stakeholders for consideration in September. To provide input or to learn more, please see the PERAtour website at

  6. Tom Sherwood says:

    What does “fully funded” mean? I would like a definition that anyone can related to, not some financial double talk.

    • Colorado PERA says:

      Fully funded means: The status when a plan can pay all its liabilities, which is the amount owed to current retirees and owed to future retirees.

  7. Boyd Pickens says:

    My feeling about PERA and it’s future is based on what I see currently in our society: people who do not have the money will take it from those who have money, regardless of any rule or regulation. I feel that it is imperative for PERA to take bold strides into the green area. inthe near future, so the general voting population understands our good intentions and efforts. Getting to the green will be difficult and involves sacrifice but has to be done now; otherwise they will take everything from us guaranteed .

  8. G M Santo says:


    1.) Start requiring employers to make contributions at an actuarial sound rate (at least for the state fund), at a rate comparable to other similarly large and geographically near states;

    2.) Legislate the time-frame for assessing full funding status back to the forty years that was used before it was changed to 30 years (or even better change it to a more reasonable 50 years, since the state of Colorado has a pretty good chance of being around that long, while the alleged longer-living beneficiaries will not!);

    3.) Go ahead and increase the retirement age for future hires, except for State Patrol officers or other dangerous state field positions (but don’t allow workers who transfer into those positions from other divisions for less than a decade to retire early based on non-patrol/field earnings);

    4.) Start informing PERA members what the legislature funds INSTEAD of paying benefits that were already promised (start with the $5 million paid to Hollywood for filming a movie set in Wyoming!).

    • Larry Williams says:

      5) Restrict the amount of salary increase an individual can have within the last 5 years of employment. I know that some high level administrators received large salary increases during their last years in order to boost their retirement payments. You have to stop the upper administrators from self dealing themselves better benefits than the rank and file.
      6) Make sure that state legislative oversight costs are not a burden on the retirement system. Publish administrative overhead costs annually.

  9. Harry Singleton says:

    Well done!

  10. Ira Joseph says:

    The number that concerns me the most is the ratio of contributing employees to retirees. According to the annual financial report that ratio is 1.8:1, and it seems to hold consistently in all of PERA’s divisions. That is simply an unsustainable ratio. In contrast, Social Security is still above 2:1.

    Also, consider that 43% of PERA members are inactive, but their contributed funds are still with PERA. Some may be ineligible to retire now, but it seems the ratio of 1.8:1 is destined to decline further. If there are fewer members paying in, it seems inevitable that reirees will once again be the ones who will pay the price for any legislative “corrective action.”

    I am just astounded that the PERA Board for many years paid no attention to the precipitous decline in the number of members actually contributing to PERA. This is not a simple issue of retirees living longer. It is sabotage of PERA, and it actually began with Governor Owens.

  11. Helga says:

    Singleton, the Koch Brothers, and other Republicans would love to have additional ammunition for their goal of PERA’s demise. Therefore, it’s critical that PERA formulate a means for getting funded status back into the yellow category. Although no one wants to sacrifice, it may once again be necessary. I have full confidence in PERA’s CEO and Board to act in the best interests of retirees and employees (current and future).

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