Retirement insights from a Colorado PERA perspective

Inside Colorado PERA

Policies and practice shape oversight and involvement of Trustees in PERA investments

The PERA Board's Governance Manual

PERA Trustees play an important role in the administrative oversight of PERA, including the investment and management of its $49 billion portfolio. PERA invests on behalf of its membership with the sole purpose of generating returns on member and employer contributions. These returns are then used to pay retirement benefits.

While only the Colorado General Assembly has the authority to make changes to the PERA benefit and contribution structure, the Board has oversight of PERA’s investment program. Specifically, Trustees have the responsibility to set the strategic asset allocation of the PERA funds, which guides PERA’s investment decisions. Trustees also have a responsibility to exercise oversight of staff’s implementation of their strategic asset allocation to ensure that investments are serving the best interests of PERA members and retirees.

The fiduciary duty of each Trustee along with the Board’s Governance Manual provide a framework and starting point for these investment functions. The Trustees have established specific rules of governance to ensure that their decisions and oversight meet that responsibility to members and benefit recipients.

As the Governance Manual explains, the Board’s role includes:

  • Approving and reviewing statements of investment policy and philosophy;
  • Ensuring strategies are in place to achieve investment goals and objectives; and
  • Approving internal or external investment management, new investment mandates, and necessary corporate governance or shareholder rights actions.

It is worth noting that no Trustee has any role or say in making specific investment decisions or selecting specific investments. The Board has delegated investment decision making (in the context of their strategic asset allocation) to PERA staff.

The Board’s Statement of Investment Policy further outlines how the PERA portfolio is managed. The objective of the investment program is to maximize long-term returns while at the same time mitigating risk.

Operationally, the Board has a standing Investment Committee that is charged with the following duties as specified in the Governance Manual:

  • Recommend to the Board written statement(s) of investment policy and philosophy for the trusts, and any amendments thereto;
  • Recommend to the Board strategies to achieve the investment goals and objectives of PERA for the trusts;
  • Recommend to the Board new investment mandates;
  • Recommend to the Board the use of internal or external management for the investment mandates; and
  • Advise the Board on any other investment matters and make recommendations for Board action when necessary.

At least annually, the Investment Committee reviews PERA’s compliance with the written statements of investment policy as well as the internal and external investment management strategies and the cost effectiveness of the investment program.

In assisting them in these actions, the Trustees have access to world-class consulting firms as well as the expertise of a professional staff. Trustees are required to obtain the necessary education while in service to the PERA membership. These educational requirements are contained in the Governance Manual as the Board Education Policy and may be found on pages 28-1 – 28-5.

Earlier in October, PERA released a statement designed to clarify the role of Trustees related to the investment program.

For more information on how the Board works and a case study on how the long-term investment rate of return is set, see Understanding the role of Trustees.

FiduciaryA person who manages money on someone else’s behalf and who has a sworn responsibility to manage those funds in the best interest of the client. Asset allocationAn investor’s mix of stocks, bonds, and other investments. PERA’s strategic asset allocation is set by the PERA Board of Trustees.

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