Senate Bill 12-16 – Local Govt Rate Swap

On 1/30/2012 Senate Bill 16 was killed on a 2-3 vote of the State Affairs committee.

 

Senator Lambert introduced on opening day a bill that would allow PERA employers in the Local Government division to swap up to 2.5% of their payment to PERA to the employees.

The Colorado Coalition for Retirement Security OPPOSES this bill. We oppose any swapping structure where the payment is moved from the employer to the employee. Swaps jeopardize the fiscal stability of PERA over time as employee dollars are only worth about $.80 on the dollar compared to employer dollars. The reason for this discrepancy is because the employee dollars can be taken out of PERA by the member whereas an employer dollar cannot.

We supported Senate Bill 1 in 2010 because of its principle of shared sacrifice. Swapping that sacrifice from the employer to the employee destroys the principle of shared sacrifice.

The Facts About Senate Bill 16

* This bill eliminates the employer’s portion of the shared  sacrifice of the SB 10-01 and places the total burden for maintaining  PERA solvency on employees and retirees. SB01 as structured had 90% of the burden placed on employees  and retirees through employee contribution rate increases and benefit  cuts.

* This bill increases litigation risks astronomically. As testified to on SB11-74 and  SB11-76, the constitutionality of this swap is in question,  heightening the likelihood of an additional lawsuit.

* This bill creates inequity among employers. To the extent that an  employer didn’t opt to swap contributions, the effect would  be to subsidize other employers within the Division inequitably by  paying more towards the unfunded accrued liability.

You can view Senate Bill 16 in its entirety here.