Retirement insights from a Colorado PERA perspective

Inside Colorado PERA

PERA’s Best Practices – Governing a $44 Billion Fund

The PERA Board's Governance Manual

PERA’s Trustees have a duty to act as fiduciaries for members by law when fulfilling their responsibilities. The complex nature of managing a $44 billion investment fund and administering benefits for over 500,000 members means the Trustees must establish rules of governance to ensure that each decision is made in the best interests of PERA’s members and benefit recipients. The PERA Board of Trustees adopted a Governance Manual to provide a sound framework for the Board’s mandate to set policy and oversee the programs and operations of PERA.

The National Conference on Public Employee Retirement Systems (NCPERS) and the Government Finance Officers Association (GFOA), two leading associations in the public pension field, both encourage having a governance manual. The GFOA asserts that “a good governance structure establishes the framework for effective plan administration.”

An article from the Network for Sustainable Financial Markets regarding pension fund governance cites a study showing that “good governance is associated with increased returns.” The study found that pension funds that are better governed outperformed poorly governed funds by 2.4 percent during a period preceding 2003.

PERA’s Governance Manual was first developed in 2001 and is updated on a regular basis as changes in governance standards change. At the time, PERA was one of the first public retirement systems to adopt an overarching, comprehensive governing document. The PERA Board is a policy board, meaning that decisions about the everyday operations of PERA are delegated to the professional staff at PERA – whether it is the investment of the trust fund dollars, or the administration and provision of benefits – under the policy guidelines set forth by the Board of Trustees.

The manual includes charters for the Board, committees of the Board, officers of the Board, and the Executive Director. The charters describe the roles and responsibilities of these decision-making bodies that are involved in the governance and management of PERA. By incorporating various requirements from PERA’s governing statutes and rules, the Board is sure to comply with its fiduciary duties required by law.

The manual also includes governance polices adopted by the Board regarding communications, education, ethical conduct, and performance evaluation. These policies provide specific guidance to the Board and senior management on how they are to undertake their duties, and set out the expectations of the Board concerning its own conduct and that of individual Trustees.

If you would like to learn more about the policies that guide the operation of and decision-making for PERA, we invite you to explore the Governance Manual. Additional policies and documents that assist the PERA Board and staff in fulfilling their duties may be found in the Colorado PERA Statement of Investment Policy, the Colorado PERA Defined Benefit Pension Plan Funding Policy, the Total Compensation Philosophy Statement, and the Board’s Statement on Divestment.

Colorado PERA provides retirement and other benefits to more than 547,000 current and former teachers, State Troopers, corrections officers, snow plow drivers, and other public employees who provide valuable service to all of Colorado. PERA is a vital and stable contributor to Colorado’s economy, distributing $3.7 billion in 2015 to retirees who live in Colorado. PERA is one of Colorado’s best investments.

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