Retirement insights from a Colorado PERA perspective

Issues & Perspectives

Public Pension Plan Educators Get Educated

Though many members of Colorado PERA are professional educators, teaching in schools across the state, PERA has its own team of educators. Many PERA employees work with employers, members, and retirees to help them understand the ins and outs of PERA’s retirement plan.

Each year, the National Pension Education Association holds a conference for exactly these kinds of educators – representatives from public retirement plans across the country who work to inform and educate public employees and their employers about retirement plan benefits.

The conference provides participants, including Colorado PERA, the opportunity to identify common challenges, share information and best practices, and collectively build off their strengths to improve retirement security for public workers across the country.

Public retirement systems attending the conference also have an opportunity to highlight their own strategic initiatives or recent changes within their systems. This roll call sparks networking and informal learning among plans that reinforces how different public pension plans face similar challenges. Often what can seem like an outlying issue for one system may impact other plans in future years.

Additionally, the conference provides more formal learning opportunities, such as concurrent sessions led by different retirement systems. Topics this year included:

Each session offered strategies adaptable to other systems for communicating broadly to members, retirees, and affiliated employers.

Executive Director Diane Oakley of the National Institute for Retirement Security also presented to the full conference about rethinking retirement security for Americans. She noted that private sector retirement plans have shifted away from defined benefit structures for a number of reasons. A few examples are profitability goals and stricter funding requirements to changes to risk profiles and increasing life expectancy.

However, she also explained that defined benefit plans such as PERA’s hybrid plan provide a number of benefits. These include:

  • Pooling the longevity risks of large numbers of individuals to provide lifetime financial security, eliminating the risk of outliving retirement savings.
  • Perpetually maintaining optimally balanced investment portfolios rather than having to down-shift to lower risk/return asset allocations as retirement nears.
  • Achieving higher investment returns compared to individual investors because of professional asset management and lower fees.

Oakley pointed to the critical need for public plans to demonstrate their positive economic impact. For example, Colorado PERA paid nearly $4 billion in 2014 alone to benefit recipients living in the state. PERA retirees spent those dollars at businesses such as pharmacies, grocery stores, restaurants, and gas stations. In turn, that spending resulted in wages earned, tax revenue generated, and businesses supported in local communities across Colorado.

Conferences like the one held by the National Pension Education Association allow retirement plan educators to learn from each other, but also to remember the importance of supporting public employees as they plan for financial security in retirement. Whether it’s a highway maintenance driver, a human resources administrator, or a retired prison guard, the PERA benefits team works with members, their employers, and retirees to educate them about the PERA retirement plan.

 

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.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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