In our recent quiz about PERA benefits, there was one question that seemed to trip a lot of people up, and it had to do with the PERA Board of Trustees:
Which of the following is the PERA Board of Trustees responsible for setting?
- A: Employee and employer contribution rates
- B: Annual benefit increase amounts
- C: Benefit eligibility requirements
- D: All of the above
- E: None of the above
The correct answer is E: None of the above. While the Board is tasked with overseeing PERA operations, it isn’t directly responsible for setting many of the benefits that members receive.
PERA governance and operations are split between three main entities: The state legislature, the PERA Board, and PERA staff.
The legislature and state law
The state legislature established PERA as an instrumentality of the state in 1931. PERA and its benefits continue to be governed under Title 24, Article 51 of the Colorado Revised Statutes, also known as PERA Law.
State statute lays out in detail the various provisions that determine who receives PERA benefits, when, and how much they receive, including:
- Contribution amounts
- How service credit can be accrued and purchased
- Benefit options and eligibility
- Annual benefit increases
Because the legislature is responsible for setting benefits, any changes to PERA benefits must also happen at the State Capitol. Change happens when lawmakers bring forth a bill, which then makes its way through the legislative process with a majority vote in the House and Senate, along with the governor’s signature. Neither the Board nor PERA staff have the power to change any of the provisions set in statute.
So far this year, lawmakers have introduced more than a half-dozen bills pertaining to PERA and its members. Click here for the latest on where those bills stand.
The legislature also conducts routine oversight of PERA. Various legislative panels meet regularly with PERA leadership and staff, including the Legislative Audit Committee, the House and Senate Finance Committees, the Joint Budget Committee, the Pension Review Commission and the Pension Review Subcommittee.
The PERA Board of Trustees
The PERA Board is made up of 16 members: three Trustees appointed by the Governor and confirmed by the Senate; four members from the School Division; three members from the State Division; one member from the Local Government Division; one Judicial Division member; two PERA retirees; a non-voting representative from the DPS Division; and the State Treasurer as an ex officio, voting member. As fiduciaries, the Board has a responsibility to act in the best interests of PERA members.
While the legislature sets benefits and other important plan provisions, the PERA Board is responsible for administering those benefits and overseeing PERA operations and management. The Board’s Governance Manual, which adheres to best practices in public pension governance, defines these responsibilities. They include:
- Setting rules and policy for PERA administration
- Establishing organizational priorities and strategies
- Overseeing PERA’s investment program
The Board also reviews and releases various important reports each year. That includes the Annual Comprehensive Financial Report (ACFR), which provides details about PERA’s financial status, funded status and membership statistics. The ACFR will be available following the Board’s June meeting.
While the legislature and Board establish policy and rules, PERA staff are responsible for administering plan benefits and managing day-to-day operations. PERA currently employs approximately 300 people who work every day to meet the goals set out in the Board’s strategic plan. Some of those duties include:
- Processing employee and employer contributions
- Managing PERA’s investments
- Distributing retirement payments and other benefits
- Member communications and education
Providing retirement and other benefits to nearly 650,000 members is a big job, and it’s one we take seriously. The state legislature, PERA Board, and PERA staff all play important roles in making sure Colorado’s public employees will be able to receive reliable retirement income today and for generations to come.