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PERA Board Plan
Over the past several months the Colorado Coalition for Retirement Security (CCRS) has been meeting with the PERA staff and trustees to help find a way to secure PERA’s retirement fund for the future.
As many of you know PERA is at risk of running out of funds within the next 30 years due to the downturn in the market in 2008. In order to keep from running out of funds PERA has been working to craft a solution that—while painful—will make the plan sustainable for the long haul and share the responsibility for making it sustainable with everyone involved – employers, employees and retirees.
Today, the PERA Board of Trustees voted to recommend the following to the legislature:
This solution is being called a “2-2-2 plus” plan by PERA.
1) 2% increased employer contribution via AED increases from 2013 – 2017 of .4% annually capping out at 5%
2) 2% increases employee contribution via SAED increases from 2014 – 2017 of .5% annually capping out at 5%
3) Indexing the COLA to the CPI-W index and capping the increase at 2% and implementing a one year delay on the COLA after retirement.
4) The above three items would have guardrails placed around them. If the PERA fund reaches an actuarial value of 110% the above measures would ratchet off as appropriate. They would again ratchet on if funding then dropped below 90%
5) The plus part of the plan involves many different pieces:
a. Raising the highest average salary from 3 years to 5 years with a 6th base year and an 8% spiking cap – this would not apply to members eligible to retire at the date of implementation
b. Non-Vested employees (before the employee’s 5 year anniversary) will no longer receive the 50% match when they leave the program and request a refund
c. Modified rule of 90 and must be a minimum of 60 years old for full retirement - This change would apply to employees not yet vested (with PERA for fewer than five years)
d. Increase the applicable reduction factors for early retirement so that the early retirement benefits shall be not greater than the actuarial equivalent of a full service retirement at the earliest date of eligibility
e. Once someone retires from PERA and returns to work at a PERA employer under the 110 day rule they will pay an 8% employee contribution to PERA
f. Prevent the recalculation of a service retirement in the event of a suspension of a retirement
g. Expand the application of the post January 1, 2007, provisions regarding retirement effective date and benefit indexing applicable to persons not eligible to draw a benefit on the effective date of the statute
They have based this recommendation using the following guiding principles.
- Shared responsibility among members, employers and retirees
- Intergenerational equity
- Long-term sustainability
- Preservation of a defined benefits plan
- Maintaining the same benefit structure for PERA’s different divisions
- These recommendations are also designed to have little or no short-term impact on member behavior.
While the coalition applauds all of the long hours and effort PERA has put into this process and agrees with the guiding principles that were used - we are concerned that the Board is forgetting the additional framework we find ourselves working in and that is a down economy - we are facing budget cuts at the City and State and School level, employees are being furloughed and health care costs are sky rocketing.
Here is PERA's update as well click here.
Before the coalition, which represents over 200,000 members in PERA, takes a position on this recommendation we would love to hear your reaction. Please fill out the form below and let us know what you think. If you have a question please submit it by going here.
You should also attend your local PERA Shareholder meeting to hear more about this proposal and let them know what you think. You can find the schedule of shareholder meetings by going here.
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