The PERA Board of Trustees met in Denver on Jan. 20 for its first meeting of 2023.
Trustees discussed the 2023 PERA-related legislative landscape, continued work on the Board’s strategic vision for the future, and heard updates from PERA staff.
Legislative update
The 2023 legislative session kicked off earlier this month, and the Board’s agenda included discussing recently introduced legislation pertaining to PERA.
One such bill, SB23-056, would require the state to make an additional payment of $35,050,000 to PERA. That amount, in addition to the amount included in HB22-1029 from last year, is meant to fully recompense PERA for the state’s direct distribution payment of $225 million, missed in 2020. The Trustees support efforts to increase funding to PERA.
Two other bills concern PERA’s investments: SB23-016 would require the PERA Board to adopt a proxy voting policy that ensures any voting decisions align with the state’s greenhouse gas emission reduction goals, as well as require PERA to include in its annual Investment stewardship Report a description of climate-related investment risks, impacts and strategies. HB23-1092 would require PERA staff to make investment decisions solely on financial factors and would prohibit consideration of social, political, or ideological interests. The PERA Board opposes efforts to restrict PERA’s investment options or compel PERA to invest in a way that prioritizes a policy outcome over fiduciary duties.
Click here for a regularly updated list of PERA-related bills and their status.
Strategic planning
The Board continued its yearlong process of developing a new strategic plan that will guide the work of the PERA Board and staff for the next half-decade. The plan’s goals will build on PERA’s mission and vision statements: To provide retirement security for our members while ensuring the sustainability of the fund, and to innovate and build on a tradition of service by being a trusted partner in order to meet the changing needs of our diverse membership.
The Board will continue working on a draft plan throughout the year, with the goal of adopting a new strategic plan for 2024 through 2029 by the end of the year.
Market and portfolio update
Chief Investment Officer/ Chief Operating Officer Amy C. McGarrity provided the Board with a market and portfolio update, in which she presented details on economic conditions and PERA’s investments.
While McGarrity did not have final details on PERA’s investment performance in 2022, she noted that markets had a rough year in 2022, ending the year with broadly negative returns.
As an investor in most markets, PERA can expect it is not immune from market downturns. As a long-term, perpetual investor, PERA remains strategically invested in the markets with the goal of earning a return over decades, McGarrity said. In fact, PERA’s most recent 30-year rate of return (through Dec. 31, 2021), which reflects many market ups and downs, is 9.0% (annualized, gross-of-fees).
RELATED: Staying the Course: PERA’s Approach to Market volatility
Full audited details on PERA’s investment performance for the year will be available with PERA’s Annual Comprehensive Financial Report, released in June.
Chair/vice chair election
The Board concluded its meeting by voting on Board officers. Current Chair Marcus Pennell and Vice Chair Suzanne Kubec were both re-elected to new two-year terms.
Four positions on the Board are up for election this year, and candidacy is now open for those seats.
The next scheduled meeting of the Board of Trustees will take place on March 24, 2023.
StewardshipThe practice of overseeing or managing something entrusted to one’s care. PERA’s approach to investment stewardship is focused on ensuring the financial sustainability of the fund that pays benefits to retirees and beneficiaries.StewardshipThe practice of overseeing or managing something entrusted to one’s care. PERA’s approach to investment stewardship is focused on ensuring the financial sustainability of the fund that pays benefits to retirees and beneficiaries.Proxy votingThe process by which shareholders can vote on corporate proposals without being present at a shareholder meeting.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. VolatilityA state of unpredictable activity in financial markets, during which prices can experience significant and/or unexpected swings in either direction. VolatilityA state of unpredictable activity in financial markets, during which prices can experience significant and/or unexpected swings in either direction.
WEP!
Yes!
Dear Citizens: I have written to this forum before, concerning the WEP/GOP (Government Offset Provision, not the Republican Party). My position, and it appears to have been somewhat “echoed” here, is writing to our Congressional Reps and US Senators. Attached, or copied, if I have done it right… is a short snippet from one of Sen. Bennett’s staffers, concerning WEP. It is only a partial copy-‘n-paste, to be fair. I think (?) it was Dec. ’22.
“Senator Bennet is a cosponsor of the bill to fix the WEP. It’s not likely to pass this Congress, so it will have to be reintroduced next Congress. Senator Bennet will likely sign on again. Wish I had better news to report on that front.
Regards,
James
James Thompson | Regional Director
U.S. Senator Michael F. Bennet | Northern Colorado – Eastern Plains
1200 S. College Ave., Suite 211 | Fort Collins, CO 80524 | ( 970-224-2200 | Fax 970-224-2205.”
End quote, if I did it right. In my opinion, I want the Soc. Sec. benefits I earned, other than teaching; it would not be appropriate to receive Soc. Sec. for my 30 years of teaching. Like most of you, I worked additional, second jobs, summer jobs, … you name it. I just want to receive what I earned, and not be summarily excluded JUST because I HAVE a public pension. … Both Senators have responded, #2 Congress. District Neguse, never has responded. Thank you.
I am amazed that the trustees did not address the major crisis that faces and will continue to face PERA — the lack of a meaningful COLA. Since the passage of SB 18-200, PERA retirees’ cumulative COLA adjustments will have totalled 4.6% as of 7/1/23. Meanwhile, cumulative average inflation for calendar 2017 through 2022 has been 23.1%. Purchasing power of PERA pensions will have fallen 16.9% between 7/1/18 and 7/1/23! During FY23-24, pension purchasing power will fall another 4% or so (assuming 5% inflation and a 1% PERA COLA for 7/1/24).
Social Security pensions for calendar years 2018 through 2023 will be up a cumulative total of 22.3%. So social security payments will approximately keep pace with inflation. Any job seeker considering working for a PERA employer would at this time be crazy to do so.
Very good information thank you. With all the people that have moved into Colorado I don’t understand why are cola increases don’t amount to anything when I heard 28% of taxes go to the schools.
This should be priority number one for PERA.
I agree with Mr. Lipscomb. We are not even on a “fixed income plan.”
We are on a “declining income plan.” We know who to thank for trying to starve us into submission where submission means too hungry to go and find a ballot box.
WE THE PEOPLE….get what we vote for! Don’t like it? Vote differently!
I agree with Mr. Lipscomb and the other commenters that we must have meaningful COLA or our payments are actually declining in the face of inflation.
I am wondering if the future retirees the fund is trying to protect should expect such a decline in buying power. 18 % in 5 years! They dropped the cola in 2017 on the assumption that inflation would be about 2 % and we would lose very little buying power. We are getting this when some of us are quite elderly and can’t do much to change or address it.
I AGREE WITH COMMENTS QUESTIONING WHY PERA BOARD & STAFF (PERA BS) WON’T (OR CAN’T ?) WORK TOWARDS PROVIDING RETIREES A MEANINGFUL COLA!
As for the update from Chief Investment & Operating Officer McGarrity noting markets had a rough 2022, ending with broadly negative returns, I am so tired of PERA BS’ assertions that an end of year snapshot of the portfolio means anything at all (given daily market fluctuations, the great returns in bonds, and manipulations of “end of quarter window dressing” verses “end of year wash sales,” etc.).
In the alternative, when funds perform well, then why are PERA retirees still suffering by not having a COLA, and without the Board even advocating for one? Especially after declaring PERA’s prior “30-year rate of return (through Dec. 31, 2021)” was 9.0% (annualized, before paying-off fees, including secret private equity fund deals).
The point of leaving this reply is to remind PERA members that prior legislation has (in my opinion) diluted the number of board members who might actually care about retirees, with gubernatorial appointees that appear to be in cahoots with other politicians raiding the state’s pension trust funds… and maybe that is why a meaningful COLA is ignored by PERA BS?
Well said ! Now stand by and wait for the standard PERA response, sure to follow, “ …. The cola is set in statute and can be adjusted each year blah, blah…”
PERA has breached our contract under the supposed reason of “making sure it can pay its obligations”, but that doesn’t add up because PERA defaulted on its obligations beginning in 2008. You can’t save money for your bills by simply defaulting on a select number of them!!
To date PERA has cost me nearly 200k in my 17 years of retirement, while the State is flush with money. I would like to see them issue a voucher for that money so I could at least report the loss on my income.
You’re right when you say the state is flush with money! And if PERA Board & Staff (PERA BS) had a scintilla of integrity or any fiduciary sense for the members, they’d be lobbying for a meaningful COLA for retirees! However, PERA BS is just a shill for the politicians who in turn are puppets of lobbyists (for businesses and financial interests) who have engineered the raid on our pension funds…
Everyone should be relentlessly (but politely) contacting their elected representative and demand they pass a meaningful COLA for PERA retirees (and yes, raise taxes as necessary as pension obligations do NOT require a vote of the electorate under TABOR)…
There should be a march on the capitol in Denver and include the PERA building in a procession between the two.
How is PERA going to address inflation. These past 2 years have put the retirees 10% or more income. Everything has gone up including health insurance! Social Security recipients got at least 8% this year to match inflation. we cannot continue to get further behind in our money matters!