New research released last week by the National Institute on Retirement Security (NIRS) in partnership with NRTA, AARP’s Educator Community, provides a snapshot of the economic impact of pensions in Colorado, outlining the importance of a defined benefit plan to attract and retain teachers, and the economic impact of spending by PERA retirees. This updated research builds on the NIRS Pensionomics report published in 2016.
Highlights include:
- Pensions in Colorado provide $6.3 billion in economic output from retirees’ spending in the state.
- Public retirees spending their retirement income in Colorado support 41,719 jobs.
- An additional $1.2 billion in federal, state, and local taxes are generated by public employee retiree benefits.
- $1 in employer contributions to public retirement plans in the state generates $6.82 in economic output.
- Pensions play a fundamental role in retaining high-quality, experienced teachers in Colorado classrooms.
Download the Colorado-specific fact sheet here.
See other state fact sheets here.
Review the NIRS Pensionomics data on Colorado here.
Previous PERA on the Issues posts:
Retiree spending boosts Colorado’s economy, sustains jobs
The Economic Impact of Colorado PERA
Defined benefitAlso known as a pension, this is a type of pooled retirement plan in which the plan promises to pay a lifetime benefit to the employee at retirement. The plan manages investments on behalf of members, and the retirement benefit is based on factors such as age at retirement, years of employment and salary history.
My husband and I are both teachers and PERA was a big part of our decision making process when considering our move here. Negative changes would definitely push us out of this state because the cost of living is so high that a decent retirement plan is the only thing Colorado has to offer to teachers.
I retired in 2004 and PERA told me that I would get a 3.5 percent cost of living raise for the rest of my retirement years. I believe that PERA has breached it’s contract with the employees. I have a friend who retired from the City of Chicago and they tried to reduce their cost of living raise and it went to court and the employees won in judgement. I have no trust in the PERA board now to manage our money!
Dear Mr. Jones,
Thank you for your comment. The Colorado Supreme Court ruled in Justus v. State of Colorado that the Annual Increase or COLA could be adjusted.
For more information on the role of the PERA Board of Trustees, please see this PERA on the Issues post: https://peraontheissues.com/index.php/2018/02/07/understanding-the-role-of-trustees/
Is it PERA’S position that the bill as it reads now is that retirees will have a maximum COLA of 1.25% and it can be adjusted down to .5%? Do you agree with that? If not will you oppose the bill on that account? If it would go to .5% what needs to happen for it to auto adjust up? From the appearance of things we will have no COLA protection! This is a lot more than shared sacrifice.
Dear Mr. Clevenger,
The PERA Board of Trustees has not yet taken a position on SB 18-200. The Board is scheduled to meet on April 26 and may at that time weigh in on the current version of the bill. As SB 200 exists today, the share of the costs are as follows: Retirees – 28%, Current and Future Members – 33%, Employers 7%, and the State of Colorado through the proposed Direct Distribution – 32%.
There are several questions that you didn’t address. You didn’t address the auto adjust up. If it is put at .5% for many years how much will the retirees share be then? Your silence on this injustice is not right. In regards to the Colorado State Supreme Court decision that doesn’t change the facts on the information you assured us of. Why doesn’t PERA admit that this information influenced our decisions in retirement?
The least PERA could do now is to take a position that will help retirees now and in the future.
How will the auto adjust work? Will the fund have to be 110% before it goes up by .25%?
Mr. Clevenger,
As SB 200 currently stands (and this could change), the automatic adjustment feature would allow employer and member contributions and the annual increase to adjust so that the plan reaches full funding within a 30-year time frame. It is not based on funded status, but rather the yearly reduction in the amortization period (the time it will take to reach full funding).
In SB 200, the mechanism would work like this: Starting in 2020, if contributions from members and employers are less than required to keep the plan on track to being fully funded, member and employer contributions can increase by up to .5% and the annual increase would be reduced by up to .25%. The annual increase cannot be lower than .5%.
If member and employer contributions are more than required to keep the plan on track to being fully funded, member and employer contributions would be reduced by up to .5% and the annual increase would be increased by up to .25%.
Again, this all could change as the bill moves through the legislative process.
Thanks for your comments. Is it correct that the COLA can’t exceed 1.25%?
Enclosed below is a letter I wrote to all Colorado State Representatives. I urge all retirees to put forth the effort to write their State Representatives.
Hi Herbert,
Thanks for the email. I appreciate the feedback on SB200. It is in a ‘back and forth’ stage with lots of negotiations going on with the senate.
Keep in touch.
Regards, Paul
Colorado State Representative Paul Rosenthal
Cell: 720.529.9787
Office: 303.866.2910
On Tue, Apr 24, 2018 at 4:00 PM, Herbert Clevenger wrote:
Paul Rosenthal,
The bill has been amended and is a much better bill now. My concern is that the COLA is now 1.25% and with the auto adjust can be lowered to .5%. With Medicare part B along with your supplement plan and part D a retired couple costs are $800 plus a month. This is just premium costs and not out of pocket for medicine, dental and vision. A retirees medical cost are a lot more than what is shown in the CPI. As the bill reads now we will have little to nothing for helping us with increased costs. Remember also that our social security is being reduced from the windfall elimination provision. Remember we had a freeze in 2010 and a cut from 3.5% to 2% as well. I believe this is placing too much on retirees. We don’t have any way to prepare for these type of cuts. Not being able to work and with this current COLA proposal places us in a difficult situation. I’m not sure if I understand how the auto adjust works with the proposed COLA. It goes down but what must happen to have it go up by .25%? A 1.25% maximum is too low and allowing it to go to .5% is also too low. I ask you to reconsider the bill as it reads by amending the bill so it will help lighten the hardship it now places on retirees.
Herbert Clevenger
Mr. Clevenger,
Yes, as SB 200 currently exists, the cap on the COLA would be 1.25%. Again, this could all change as the bill moves through the legislative process.
It doesn’t seem right to lower our pensions for the upcoming years when the stock market is going great, prices are going up, and I spend my retirement salary here in Colorado at grocery stores, malls, cinemas, restaurants etc. I believe good money management is important but making the treachers and other state retirees pay the bill seems
unfair. I love PERA, why won’t you love me back?
It does seem to me that PERA has done next to nothing to stick up for current retirees.
Dear Mr. Boettcher,
The PERA Board, acting as fiduciaries, recommended legislative changes to reduce the time it will take the trusts to reach full funding. Reducing the risk associated with a longer than 30-year time frame is in the best interests of retirees, members, and employers.
I posted something to this effect a month ago: if legislature reduces cola (and adds this so called auto adjust) we will never see current level cola again, much less the original promise of 3%. Once a promise is revoked it will never be made again.
So as crazy as things are, do I start looking for a job? Or am I going to continue to receive my monthly pension, I do not want to be stuck with no money coming in. I get very little as it is from my pension, because my medical went up so high this year, is this going to continue to go higher every year? I thought as a retired person things would be better, and now talking about running out of money for pensions? I am very disappointed in Pera, we gave our years and now, this is what we get?
Dear Ms. Chambers,
The PERA trusts are not projected to run out of money. The reason for the Board seeking legislation this year is to reduce the risk of another economic downturn on the sustainability of the fund. The Board’s recommendations that resulted in SB 200 are projected to return the trusts to full funding in 30 or fewer years. Because the Board took action that has resulted in legislation, PERA members and retirees can feel more secure in knowing the PERA retirement benefit is secure.
We understand that health care costs are rising at rates that outpace inflation. This is true not just for PERA retirees, but for the entire country. PERA is aware of this and we remain actively engaged with our insurance carrier partners and community organizations in efforts to achieve value in health care via better quality and lower cost. Please be assured that PERA will continue to work with all of these partners to do what we can to improve cost and quality for our retirees.
It doesn’t seem right to lower our pensions for the upcoming years when the stock market is going great, prices are going up, and I spend my retirement salary here in Colorado at grocery stores, malls, cinemas, restaurants etc. I believe good money management is important but making the treachers and other state retirees pay the bill seems
unfair. I love PERA, why won’t you love me back?
Dear Mr. Warner,
PERA loves our members and retirees and that’s why the Board sought legislation to ensure that current, future, and former public employees in Colorado would have a strong and resilient retirement plan they could count on for generations to come.