Protect PERA, #WearRed for Public Ed

Protect PERA - Wear Red for Public EdCEA members are wearing RED for PUBLIC ED on TUESDAYS because educators are once again under attack. This time, special interests are coming after our PERA benefits. Enough is enough: it’s time for our elected officials to choose between Koch-backed corporate giveaways or educators and the students they serve. Every TUESDAY thru the end of May, wear RED for PUBLIC ED to support Educator Voice. Additionally, send your legislators an email (bit.ly/ProtectOurPERA) and give them a call (720-408-6669) and tell them NO on any bill that forces a “defined-contribution” scheme into our PERA retirement program. #ProtectPERA #ClassroomsNotCorporations #EducatorVoice

 

Colorado Education AssociationCEA's 2018 PERA Reform Guiding Principles (adopted by the CEA Board of Directors, Dec. 7, 2017)

 

  • CEA is committed to maintaining the financial stability of members’ retirement funds through a defined benefit program. Any efforts to destabilize or dismantle it, including through a new or hybrid defined-contribution program, would be opposed.
  • CEA will work towards PERA reforms to close the amortization period to within 39 years if possible. (half of current 78 year amortization period for School Division)
  • All PERA stakeholders – The state, current and future employees, retirees and employers – must all contribute to the stabilization of PERA either through or via PERA Reforms.
  • Employees should not be asked to contribute more to PERA during their time as current/active employees than the costs of their retirement benefits. (technically known as normal costs)
  • Any solution should help districts meet GASB (Governmental Accounting Standards Board) standards and maintain or improve bond ratings.
  • Any discussion around increasing the retirement age must account for the increased workload on educators that extends well beyond school hours and respective classroom environments for students.
  • CEA supports the concept of an “auto-adjustment” provision as long as all PERA stakeholders are involved in each adjustment or “click” and that each “click” is gradual to prevent wild swings from year to year.

 

SecurePERA, the Colorado Coalition for Retirement Security

The latest updates from Secure PERA, the Colorado Coalition for Retirement Security supporting retirement security for all Coloradans. CEA is a proud member of Secure PERA. CLICK HERE to sign up for future Secure PERA updates.

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SB 200 to Conference Committee - May 2, 2018

Yesterday, the House voted on 3rd reading to approve SB 200. On 2nd reading, the House added several technical amendments and one substantive amendment to add a sub-committee to the Legislative Oversight Committee which will include outside experts on it.

Just now, the State Senate voted to send SB 200 to a conference committee. The conference committee will work out the differences between the version passed by the Senate and the version passed by the House. Then the conference committee version will go back to both the House and the Senate for a vote.

You can see a new blog post on our website about what the differences between the Senate and House versions are. You can also visit our original blog that we update regularly to see what pieces of SB 200 effect you and additional details on the bill.

We will continue to monitor the conference committee and let you know what they come up with as soon as we know. In the meantime, you can be sharing why your pension is so important to you and your local economy by writing a letter to the editor of your local paper. You can do that directly on the paper's website or use our tool which is available here.

Changing topics on you - if you are an active member in the school, local government or state division you will be receiving your ballot to vote on your PERA Board of Trustees member any day. Please do not throw this ballot away - return this ballot before the end of the month! These folks work for free to represent you on PERA issues. You can learn more about each of the candidates here.

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SB 200- Details On What's In It - April 19, 2018

Secure PERA received LOTS of emails with questions and thoughts about Senate Bill 200. I won’t have enough hours in the day to respond to all of them, so I wanted to answer the most frequently asked questions below and then provide you with a link to contact your own State Representative with your thoughts about SB200.

Secure PERA

I wanted to start off by explaining who Secure PERA is and how our coalition operates. At the bottom of this and every email we have sent you this year you can see who the funders are of Secure PERA. These organizations make up the steering committee and each have an equal vote on the steering committee. Secure PERA has always operated on consensus, meaning all of the groups have to agree to do something.

We have groups that represent active and retired educators (Colorado Education Association & American Federation of Teachers Colorado), representatives of active and retired state employees (Colorado WINS and the Association of Colorado State Patrol Professionals), representatives of retired public employees (CSPERA – Colorado School & Public Employees Retirement Association), representatives of employers (Colorado Association of School Executives - CASE), we even have a group representing fire fighters who have a different pension plan than PERA but are supportive of maintaining PERA as a defined benefit plan (Colorado Professional Fire Fighters) and the National Public Pension Coalition who supports groups like our all across the nation.

If you want to learn more about us, visit the “Who We Are” tab on our website www.SecurePERA.org

Secure PERA has not been able to reach a consensus opinion on the current Senate Bill 200 so we are providing you the opportunity to tell your own State Representative how you feel about Senate Bill 200.

Click here to email your own State Representative

Current Senate Bill 200

In the last email I walked through the amendments that were made to Senate Bill 200 in the House Finance Committee. You can find the back and forth details of all those amendments on our website here. This post on our website is updated every time something happens.

I want to take some time today to break down the current Senate Bill 200 and what it means for each type of employee, retiree and employer as many of you had questions about how the bill would affect you personally.

We have seen many victories in the amendments made to Senate Bill 200:

  • The expansion of the defined contribution option has been removed
  • The highest average salary was decreased from 7 years to 5 years
  • The retirement age wasn’t increased for current members and wasn’t increased for new members as drastically
  • Employers were added back into the auto adjust formula – look below for more explanation on what the auto adjust is
  • We no longer have an oversight committee that includes non-elected “experts” as voting members
  • Corrections employees and local law enforcement employees were moved were moved into the State Patrol PERA plan – they will pay more but be able to retire earlier.
  • And, most importantly we have protected the defined benefit plan known as PERA for future generations.

Here is what the current bill means for you:

New Employees hired after 1/1/2020:

  • The highest average salary will be calculated from your highest 5 years instead of 3 years
  • The retirement age to receive a full benefit will be increased two years for school and DPS employees to 60 years of age and require 5 years of service. Other divisions are already at 60 years and State Patrol will remain at 50 (State Patrol pays more for their benefit for the earlier retirement age).
  • You will pay your 8% to PERA on your gross pay (current employees pay it on net pay)
  • When you retire you will have a three-year COLA freeze (one year from SB 1 and two years from SB200) and then your COLA (Cost of Living Adjustment) will be tied to inflation (CPI-W) with a maximum of 1.25% . The sum of the COLA paid to a division’s benefit recipients cannot exceed 10% of that division’s Annual Increase reserve.

Non-Vested Employees (Those who don’t have 5 years in PERA as of 1/1/2020):

  • The highest average salary will be calculated from your highest 5 years instead of 3 years
  • If hired after 7/1/2019 - You will pay your 8% to PERA on your gross pay (current employees pay it on net pay)
  • When you retire you will have a three-year COLA freeze (one year from SB 1 and two years from SB200) and then your COLA (Cost of Living Adjustment) will be tied to inflation (CPI-W) with a maximum of 1.25% . The sum of the COLA paid to a division’s benefit recipients cannot exceed 10% of that division’s Annual Increase reserve.

Current Vested Employees (Have 5 years in PERA):

  • When you retire you will have a three-year COLA freeze (one year from SB 1 and two years from SB200)
  • For employees who started before 12/31/2006 – your COLA will then be 1.25%
  • For employees who started after 1/1/2007 – your COLA (Cost of Living Adjustment) will be tied to inflation (CPI-W) with a maximum of 1.25% . The sum of the COLA paid to a division’s benefit recipients cannot exceed 10% of that division’s Annual Increase reserve.
 

New Employees

Non-Vested Employees

Vested Employees

Statutory Contribution Rate

8% (10% for State Patrol/ Corrections)

8% (10% for State Patrol/ Corrections)

8% (10% for State Patrol/ Corrections)

Highest Average Salary (HAS)

5 years

5 years

3 years (more details here)

Retirement Age

60 years (50 years for State Patrol/ Corrections) & 5 years of Service

Rule of 90 (age plus years of service) or age 65 (State Patrol/ Corrections Rule of 75)

Depends on date of employment

(see here for details)

COLA Suspension

3 years (1 from SB1)

3 years (1 from SB1)

3 years (1 from SB1)

COLA Rate (more details here)

Tied to CPI-W (inflation) max of 1.25%

Tied to CPI-W (inflation) max of 1.25%

Start before 12/31/06 – 1.25%

Start after 1/1/07 – Lower of inflation or 1.25%

Definition of PERA Includable Salary

Gross Salary

Net Salary (more details here)

Net Salary (more details here)

Retirees:

  • 2-year COLA suspension – 0% in July 2018 & 0% in July 2019
  • 1.25% COLA starting in July 2020

Employers/ State:

  • The State of Colorado will contribute $225 million directly to PERA in 2018-2019. In the following years the State will contribute approx. 3% of payroll (not including local government) directly to PERA. (This payment will be made directly to PERA instead of to the employers and then increasing their contribution rates to ensure 100% of the dollar go to PERA)
  • Employer contribution rates to PERA will remain unchanged, rates can be seen here.

All these changes have resulted in an approximate 1/3, 1/3, 1/3 cost split for the implementation of Senate Bill 200 between current and future employees (33%), retirees (28%), and employers/state (39%). It is important to remember that COLA changes affect current retirees and all the current and future employees as well.

The Auto Adjust Feature

I received several questions about what the auto adjust is and how it works.

Every year, employees and employers make contributions to PERA to pay for that employees’ benefit as well as the unfunded liability. Since 2001, those payments haven’t been enough and that has increased the unfunded liability even more. You have heard Secure PERA talk about the State underfunding PERA by $4.5 billion since 2001 – this is what we are talking about.

We want this underfunding of PERA to stop. Originally the AED and SAED were designed and then increased in 2010 to stop this underfunding but it hasn’t been enough.

Senate Bill 200 is intended to make PERA 100% funded in 30 years, the bill as currently amended does this. The auto adjust feature would then keep PERA on the path of 100% funding in 30 years and if PERA got off that path either to the positive or negative, the auto adjust feature would kick in and put them back on the path without legislative action.

The way it works is when the CAFR (Comprehensive Annual Financial Report) is finalized in June, PERA would include how they are doing on following the path laid out by SB200. PERA would look at the total contributions made and if they are 98% or less of the total required contributions than the auto adjust would increase employer and employee contribution amounts by up to .5% annually and decrease the COLA amount by up to .25% annually.

If the contributions made are 110% or more of the contributions required, then employer and employee contributions would go down up to .5% annually and the COLA would increase up to .25% annually. These adjustments could happen annually, but the contributions will never increase more than 2% total and the COLA can never go below .5%.

These adjustments would allow PERA to stay on the path to full funding with smaller changes rather than having to come back to the state legislature like we are this year and did in 2010 for big packages of changes. But, if we have another 2008 when PERA lost 26% of their portfolio, it would require a return to the state legislature.

Next Steps For SB200

This morning, the House Appropriations Committee passed Senate Bill 200 onto the whole House. We expect the House to vote on 2nd reading sometime in the coming weeks. Once they pass a bill on 2nd and 3rd reading the bill will go back to the Senate. The Senate will then be able to concur (agree with the House bill) or send the bill to a Conference Committee which would be made up of 3 Senators (2 Rs, 1D appointed by the Senate President) and 3 Representatives (2 Ds, 1 R appointed by the Speaker of the House) it would then be the job of this committee to try and come up with a version of the bill that could pass the House and Senate. Then the Senate and House would have to again vote on the bill the Conference Committee comes up with. And, ultimately the Governor would need to sign the bill.

You’ve heard me say it before – the making of the sausage isn’t very pretty - thank you for sticking it out with us!

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SB 200 Amended in House Finance - April 16, 2018

Just a quick note to let you know the House Finance committee just passed an amended Senate Bill 200 on a bi-partisan 10-3 vote tonight. Next the bill will go to House Appropriations.

Here is what is currently in the bill after all of the amendments in House Finance today.

  • An annual payment from the State to PERA of $225 million, the amount will adjust each year to approx. 3% of payroll. This is in lieu of employer and employee contribution increases.
  • 5 year Highest Average Salary (HAS), increased from 3 years.
  • Retirement age increase from 58 to 60 for the school and DPS divisions - other divisions are already at 60 years. (State Patrol/ CBI remain the same)
  • 2 year Cost of Living Adjustment (COLA) suspension, July 2018 & July 2019
  • COLA rate of 1.25%
  • Definition of salary from net to gross will only impact new employees
  • No change to the definition of Full Time Equivalent (FTE)
  • Auto adjust will again include employers so any adjustments necessary will be split 1/3, 1/3, 1/3 between employees, retirees, and employers
  • The Legislative Oversight committee will now only consist of State Senators and Representatives and has been streamlined in its responsibilities
  • Additionally, state corrections workers and local law enforcement have been moved into the State Patrol classification meaning they will pay higher contribution rates, both employee and employer, to receive an earlier retirement date
  • And, the DEFINED CONTRIBUTION EXPANSION HAS BEEN REMOVED!

There is a lot in there for everyone to like and not like, such is the nature of compromise, especially in a bi-partisan legislature.

Secure PERA does not currently have a position on the new amended SB200, the steering committee will meet on Wednesday and discuss the bill.

I will be back to you with more information for emailing your State Representative your thoughts on the latest version of SB 200 later this week.

Thank you to all of you who showed up to support #protectPERA and those of you who testified, we made an impact! Just look at that awesome photo from today!!

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SB 200 Shared Sacrifice Is Important - April 11, 2018

Next Monday, April 16th at 1:30 pm, the House Finance Committee will hear SB 200. You can find more details on the hearing, RSVP and stay updated if anything changes by clicking here.

We are hoping lots of people can attend and wear red to show your support of #ProtectPERA.

We are expecting the House Finance committee to do lots of amendments to Senate Bill 200 and we will be live tweeting and facebooking those changes so you can follow along.

In today's emails to the Finance Committee we want you to focus on shared sacrifice. In the Senate, all additional employer contributions were removed from the bill. We want to see the bill more closely reflect shared sacrifice and reflect the sacrifice that was already made.

In 2010, SB 1 required employees and retirees to take $14.9 billion in reductions. 90% of the "cost" of Senate Bill 1 was on the backs of the employees and retirees. Additionally, since 2001, the State has underfunded PERA by $4.5 billion; promising benefits to public employees that they didn't fully fund. These are two of the reasons Secure PERA supports a more balanced shared sacrifice approach to Senate Bill 200.

Click here to send an email to House Finance asking them to return SB200 to a model of shared sacrifice.

Reminder: When you click through you will be able to email all the House Finance Committee members. You do not need to start your email with a greeting like "Dear Representative," the form will personalize an email to each Representative with a greeting and a closing with your name and address. You also don't need to select which Representatives the email goes to, it will automatically go to all the committee members.

If you would like to know more about what is in SB200 after its trip thru the Senate you can click here, this post is constantly updated.

Thank you all for your support, together we will work with the House to get Senate Bill 200 in a much better place.

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SB 200 Assigned To House Finance; Email Them - April 5, 2018

Yesterday, House leadership assigned Senate Bill 200 to the House Finance and Appropriations Committees. The first hearing will be April 16th.

If you would like to know more about what is in SB200 after its trip thru the Senate you can click here.

We are expecting the House Finance committee to do lots of amendments to Senate Bill 200.

In today's emails to the Finance Committee we want you to focus on one topic of the bill that needs to be removed - the DC expansion and supplemental. We will be asking you to write emails in the coming days to the committee about retirement age, contributions and the COLA. By keeping each of these emails more closely tied to one subject we are hoping to better capture our voice.

Click here to send an email to House Finance asking them to remove the Defined Contribution expansion and supplemental from SB200.

If you would like more information about what Defined Contribution or DC plans are, click here.

If you would like more information about how the DC expansion and supplemental in SB 200 costs employers an additional 6% - 9% and still gives employees less retirement security, click here.

When you click here, to send an email to the House Finance Committee Members we will provide you with suggested talking points about why DC plans don't provide retirement security and cost more than the DB plan PERA already provides.

Thank you all for your support, together we will work with the House to get Senate Bill 200 in a much better place.

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Senate Bill 200 Moves To The House - March 27, 2018

Just a very quick email to let you know the Colorado Senate just passed Senate Bill 200 on a partisan 19-16 vote with Republicans and an Unaffiliated member voting yes and Democrats voting no. The bill now goes to the House.

As soon as we have a House committee assignment we will be back in touch asking you to email those committee members. We believe many changes will be made to the bill in the House. After the House, the bill will go to a conference committee made up of both chambers to try and find a compromise between the Senate and House versions of the bill.

I want to thank the several thousand of you who took the time to write personal emails to your Senators, several of those emails were read or invoked on the floor this morning.

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Senate Bill 200 - Passes Senate 2nd Reading with Amendments - March 26, 2018

This morning the Colorado State Senate passed Senate Bill 200 as amended on 2nd reading. Before passing the bill, the body agreed on two amendments.

The first amendment that received approval was an amendment by Senator Jahn to remove the retirement age increase for members already vested. We at Secure PERA along with PERA believe that increasing the retirement age of already vested employees is illegal and also would have caused problems with the IRS. We are glad to see this provision of the bill gone.

The second amendment to be approved was by Senator Tate and it moved up the start date of the DC (defined contribution) expansion from 2022 to 2021. Secure PERA does not support the expansion of the DC option so we did not support this amendment. This amendment would also mean that employers have to start paying the additional 6% - 9% for employees who select this option a year earlier.

We expect the Senate to pass SB 200 on 3rd reading tomorrow and for them to send it on to the House to be heard next week at the earliest. Once we know what committee the House is assigning the bill to we will begin an email campaign into those committee members. In the meantime, you have just under 24 hours to send your Senator an email asking them to vote no on SB200 on 3rd reading. We have updated the email campaign here.

Send an email to your State Senator asking them to oppose SB 200 on 3rd reading as it doesn't represent shared sacrifice or retirement security.

Secure PERA wants to give a huge thank you to the Senators who stood up and fought at the well for our positions of a higher COLA, lower contribution rates, not increasing the retirement age, not increasing the highest average salary, and removing the DC expansion and supplemental. Thank you Senators Kagan, Jones, Fields, Merrifield, Zenzinger, Williams, Kerr, Todd and Jahn. Please go onto their facebook pages and publicly thank them for standing with public employees. I have listed their pages below.

Senator Cheri Jahn, carried the amendment to remove active retirement age increase which passed.

The remaining amendments all failed but we thank these Democratic Senators for standing up for public employees.

Senator Kagan, he carried Amendment 13, as well as reducing the Highest Average Salary from 7 years to 5 years.

Senator Mike Merrifield, carried amendments to add back employer contributions and lower employee contributions.

Senator Angela Williams, carried the amendment to increase the COLA to 1.75% from 1.25%.

Senator Kerr, carried the amendments to get rid of the expansion of the Defined Contribution plan and create the Defined Contribution Supplemental.

Senator Zenzinger, carried the amendment to remove the retirement age increase for new employees.

We also want to thank the following Senators who went to the well (that is the podium the legislators speak from) numerous times to support our amendments and oppose SB 200.

Senator Jones

Senator Fields (she doesn't allow people to post on her page so send her an email instead at rhonda.fields.senate@state.co.us)

Senator Todd

And remember, you can always find the latest status of SB 200 on our website www.SecurePERA.org in the blog post SB 200 - Modifications to PERA. Or you can follow along for the blow by blow on our twitter or facebook pages.

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Senate Bill 200, Ask Your Senator To Support Amendment 13 - March 23, 2018

This morning the Senate took up Senate Bill 200 to fully fund PERA in 30 years. Our allies put up two amendments which both failed and then started discussing a third amendment before they laid the bill over to be continued on Monday.

There is one amendment in particular we would like you to pay attention to and email your Senator today asking them to support it.

Senator Kagan offered a strike below amendment which will deleted the content of Senate Bill 200 and replace it with a new proposal that eliminates the defined contribution plan expansion, lowers the cost on employees and retirees, and brings back employee contributions. Let's use this opportunity to reach out to our Senators again and ask them to support amendment 13 to Senate Bill 200 offered by Senator Kagan. Learn more details about whats in Amendment 13 by clicking here.

Click here to ask your Senator to support Amendment 13 to SB 200

We owe a huge thank you to Democratic Senators Kagan, Williams, Merrifield, Jones, Donovan and Todd who all carried favorable amendments or spoke in favor of them today.

If you would like to know more about the amendments that were presented today, visit our website here.

We expect the Senate to take the bill back up Monday morning and will again tweet and facebook what is going on during the hearing.

After that, the bill will go to 3rd reading in the Senate, likely on Tuesday, but it could be delayed. After 3rd reading, the bill will go to the House where we expect many of the amendments we are championing will be accepted.

As a reminder: be sure to check our calendar for upcoming town halls on PERA. There is one in Lakewood and Durango this Saturday. View the Secure PERA calendar here.

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Senate Bill 200 Sees Its First Vote - March 16, 2018

Yesterday, the Senate Finance Committee took SB200 back up for amendments and a vote.

Senator Tate successfully amended the bill to remove the 2% increased employer contribution and removed employers from being a part of the auto adjust mechanism. (Senators Court & Jahn voted against this) This means only employees and retirees will be helping to fix the unfunded liability if the bill was to pass in this form.

*It is important to note that if the definition of salary from gross to net remains in the bill employers will have to contribute on that change and would also pay additional contributions for anyone selecting the DC plan.

Senator Tate also moved to modified the membership of the Legislative Oversight Committee to have an equal number of Senators and Representatives, and to clarify that the non-elected experts aren't voting members of the committee.

Senator Court attempted to remove the DC Option expansion but was unsuccessful. The vote count was Senators Court & Jahn in favor of removal and Senators Neville, Smallwood and Tate in favor of DC expansion.

Once these amendments were voted on the committee voted to move the bill to Appropriations on a 4-1 vote with Senator Court not supporting the motion.

The Senate Appropriations Committee will hear the bill on Tuesday morning. This committee doesn't take testimony and will stick to questions about the finances of the bill.

Since the bill is moving so quickly to the Senate floor, there could be a vote next week, we would like you to start reaching out to your own State Senator and asking them to not support Senate Bill 200 unless it is drastically amended. We have lots of suggested talking points for you on the website when you write your email.

Click here to ask your Senator to oppose SB200 unless amended.

Today, the PERA Board also met and maintained their position of amending the bill and wanting to work with legislators to get a bill done this year.

If you are interested in seeing a presentation on PERA be sure to check out our calendar on www.SecurePERA.org.

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Senate Bill 200 Laid Over Until Thursday - March 13, 2018

This afternoon, the Senate Finance Committee heard four and a half hours of testimony on Senate Bill 200. The vast majority of the people testifying were seeking amendments.

You can click here to see what Secure PERA talked about in testimony given by 18 Secure PERA members. There were many more there testifying along with two committee rooms full to standing room only capacity - mostly in red! Thank you all so much for taking time out of your day to join us at the Capitol.

If you haven't emailed the committee yet, you still have time, they are planning on taking amendments and voting on the bill Thursday morning.

So, email the Senate Finance Committee NOW

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We Need Your Help on Senate Bill 200 - March 9, 2018

Tuesday (March 13) the Senate Finance Committee will be voting to decide if:

  • employees under the age of 46 need to work more years before they can retire,
  • if retirees will have their COLA cut to 0% for two years and then 1.25%,
  • if employees will have their contributions increase by 3%,
  • if employers will see an additional 2% contribution and then another 6%- 9% increase in contributions for DC participants,
  • whether they will expand the DC option to more employees setting them up for a less secure retirement,
  • and so many other pieces.

Secure PERA has decided to oppose this legislation as introduced and work to get it amended. In order to get these pieces changed we have two things we need your help with!

Attend the first hearing of Senate Bill 200

We have confirmed that Senate Bill 200 will be heard on Tuesday at 2 pm on the third floor of the Capitol in Senate Committee Room 357. There are several items before our bill so the hearing will likely start closer to 3:30 pm. We would love for you to attend and help us pack the room. If you would be willing to tell your story about why PERA is so important to you and why these changes are harmful that would be great.

Let us know here you will be coming, RSVPs aren't necessary, just nice.

Send an email to the Senate Finance Committee

We have set up a template with a TON of talking points about Senate Bill 200 for you to customize your email to the Senate Finance Committee members before they hear the bill on Tuesday at 2pm.

Click here to send an email to the Senate Finance Committee

We have added some new resources to our website to help you understand what is in the bill, and for those of you super curious about the DC option and how it works we have added a detailed explanation.

Click here for more details about Senate Bill 200

Click here for the detailed explanation about the DC option and supplemental as presented in Senate Bill 200 and why it would cost employers an extra 6%-9%.

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Breaking News - New PERA Bill Filed - March 7, 2018

Today, Senator Tate (Centennial - R), Senator Priola (Adams County - R), Representative KC Becker (Boulder - D) and Representative Pabon (Denver - D) introduced Senate Bill 200 to modify PERA to be 100% funded in 30 years.

This afternoon, the Secure PERA steering committee met and voted to oppose this bill as introduced but work to get it amended.

You can read more about what is in Senate Bill 200 on our Secure PERA website. We will also be updating our website with more details about why we are concerned about the contents of the bill.

CLICK HERE TO READ MORE ABOUT SENATE BILL 200

We are expecting the bill to be heard by Senate Finance on Tuesday at 2pm but it hasn't been scheduled yet. So, if you could put a hold on your calendars for that time and come join us at the Capitol to testify or just help pack the room to make sure legislators know we are paying attention to what goes on, that would be very helpful.

We will also do an email campaign into the Senate Finance committee members later this week. I want to take some time to put together really good talking points for you to use before we start sending in emails and the bill only dropped a few hours ago.

Lastly, I want to remind folks that the making of the sausage isn't very pretty and this will be a long and bumpy ride (yep, it's so messy it is worthy of two metaphors) before any bill makes it to the Governor for his signature.

So, to head off all of the emails I will get from you asking why two supporters of PERA like Representatives Becker and Pabon are on a bill that we don't like -- we expect both Representatives will listen to us about the concerns we have with Senate Bill 200 and will amend the bill into something better. We DO NOT believe they support the bill as introduced. The legislative making process creates some situations that look odd to folks not at the Capitol every day and this is one of those.

So, hang in there with us and I will try as hard as I can to keep you in the loop along the way and try to explain as much as I can about the process and why things happen - even when they don't make sense on the face.

So, learn more about what is in the bill and stay tuned for our email action and more about why the bill needs to be amended.

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No PERA Bill Yet But Help Us By Taking Action - March 2, 2018

We don't have a PERA bill yet but expect it to come next week and it will likely have a very quick hearing next week as well.

So, stay tuned and we will share the bill with you as soon as we see it and let you know when you will have the opportunity to come testify in committee and email the committee members.

In the meantime, please help us advance our support of PERA by writing a letter to the editor of your local newspaper. You can submit it on your own or use our form if you aren't sure where to send it.

WRITE A LETTER TO YOUR LOCAL NEWSPAPER EDITOR

 


 

Thank you all for your continued support as we continue to fight to make sure PERA is sustainable over the future.

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#LoveMyPension HB1111 Is Dead - Feb. 14, 2018

Happy Valentines Day, it comes with two great pieces of news!

1) Over 100 of you told us why you #LoveMyPension and we have created valentines that we have been sending out over facebook and twitter today.

2) This afternoon, the House State Affairs committee voted 5-3 on a partisan vote to postpone indefinitely or "kill" House Bill 1111. Thanks to all of you, nearly 700 emails went into the committee asking them protect your personal data and maintain the PERA Board's independently elected seats. Thank you!!

Lastly, don't forget to register for Secure PERA Lobby Day on February 28th. It is coming up quickly and we need to know how many breakfasts and lunches to order. Click here for more details and to RSVP for Lobby Day.

It is beginning to look like we may see the new omnibus PERA bill in time for lobby day. So, if you want to learn more about what is going on, be sure to register for lobby day and come join us on the 28th.

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The Legislature Is Off To A Quick Start On PERA - Jan. 29, 2018

The legislature is off and running. Below we have news of yet another attempt to change PERA. This new bad PERA bill would allow anyone on the PERA Board to view your personal information for any reason at all. The bill also changes the composition of the PERA Board. Both Secure PERA and PERA are opposed to House Bill 1111.

We also know at least two legislators are having town halls about PERA this weekend. The details are below. Be sure to let us know if you hear of any events with legislators discussing PERA that we should let folks know about. We need as many of you as possible to show up at these events and make sure the legislators know we support maintaining PERA as a defined benefit plan and that they shouldn't mess around with the retirement security of hard working public employees. The calendar on our website: www.SecurePERA.org is being updated regularly with these types of events.

Lastly, please join us the morning and early afternoon of February 28th for our annual Secure PERA Lobby Day. We will send out more details soon, but we hope you can join us at the Capitol to lobby our legislators about the importance of PERA.

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Colorado Leg Session Has Started - PERA a Hot Topic - Jan. 12, 2018

The 2018 Legislative Session has started. Yesterday, the Governor delivered his State of the State address and declared, "We need to find the right solution to PERA’s unfunded liability."

Click here to email your own State Senator and Representative to let them know how important PERA is to you.

On Wednesday, Speaker of the House Crisanta Duran (D) opened the session with, “Steps must be taken to strengthen PERA, the state pension fund, to ensure that we honor the commitment we’ve made to our state and public-sector employees. But it would be unfair to balance PERA solely on the backs of hard-working public servants. Likewise, slashing cost-of-living adjustments for retired state employees could put many of them deeper in the hole every time the cost of living rises. Our goals must include a PERA solution that ensures its long-term solvency while being fair to current employees and retirees.

Senate President Grantham (R) took a different approach stating, “Today, let us commit to PERA reform that provides our state employees with the benefits they were promised, and deserve, while ensuring that future generations don’t have to foot the bill. This is not a new issue, nor should it be a surprise to any member of this chamber that it’s a top priority. Current and future workers in the public sector have their own hopes and dreams for their careers and their retirement. Retirement security is a big part of those plans.

"Protecting only today’s retirees is insufficient; we must have our public pension system on sound financial footing so that today’s and future employees can also be paid when they retire. We also must come to terms with the fact that the workforce is changing, and that the solutions of the past may not be what is preferred by some of today’s workers. All public sector employees should have the same opportunities and choice in retirement planning that the State of Colorado employees enjoy; denying that choice is fundamentally not fair.

"The magnitude of the problem is larger than many believe – very possibly PERA is underfunded in excess of $55 Billion. This is large enough to affect the credit rating of the State and public institutions – and raise bonding costs for all important public construction projects. This unfunded liability is a debt in excess of $10,000 per man, woman, and child in Colorado. The fact that we don’t exactly know how much trouble we’re in also shows the need for more transparency in PERA’s finances. It will only serve to bolster confidence and give better understanding of the challenges we now face.

"Some say that we can put off reform for another year. Doing so will merely increase the debt we are facing by millions of more dollars – and put more financial strain on the pension system. Several proposals call for additional involvement by taxpayers – beyond the significant payments being made today for debt service. It is only fair then to ask for in return structural changes to PERA that start to deal with long term risk. We have to stop digging the hole at the same time that we are trying to fill it. If Option A is to do nothing, Option B is to apply a Band-Aid, and Option C is to do the hard work, I say we pick Option C.

"I won’t be here ten, twenty, or thirty years from now, and neither will any of you. I surely don’t want to hear the senators that fill our seats saying what a shame it is that the 71st General Assembly couldn’t solve this issue back in 2018. I don’t want future generations trying to tackle a $100 billion dollar unfunded liability when we could have solved it now. The choice rests with each of us. If we all, together, commit to solving the PERA question this year, then it isn’t a matter of what we’re going to get done this session, it’s simply a matter of how we’re going to get it done. And through the leadership of Sen. Tate and others we have an opportunity to accomplish this! An opportunity that we cannot simply let pass by.

No PERA bills have been introduced yet and we don't expect any for awhile. Right now legislators are working behind the scenes deciding what approach they want to take. While they are working on their ideas we need to remind them how important PERA is to their constituents. Please click here to send your own State Senator and Representative and email about how important PERA is to you.

We also encourage you to attend any town hall meetings your legislators are having and ask about their support for PERA. The best way to know about these are to sign up for their newsletters, you can google your legislator to find their campaign website and then sign up for their emails.

We will be keeping you up to date on legislation as we see it. Here's to a good 2018 legislative session!

Lynea Hansen
Executive Director
Secure PERA

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“UBIT” Federal Tax Issue Could Affect Public Pensions - Dec. 8, 2017

As part of our efforts to protect PERA, there’s a federal issue looming that could have a negative impact on public pensions including PERA. A relatively unknown provision, the Unrelated Business Income Tax (UBIT), would be applied to governmental pension plan investment earnings in the House-passed tax bill but was*not* included in the Senate-passed version of their tax reform bill. Final negotiations are now underway on a conference committee to reconcile differences including if a new UBIT tax on public pensions could become law.

Here are some key UBIT points shared by the National Council on Teacher Retirement (NCTR) in partnership with several other national organizations including NASRA and NCPERS:

  • This is a NEW tax on state and local government retirement systems, not a clarification of existing law, and overturns a 40-year-old position by the IRS to not apply UBIT to public pension trusts.
  • It sets a dangerous precedent regarding federal taxation of state agencies, eroding the Constitutional immunity states and the federal government each enjoys from taxation by the other.
  • Since the Great Recession, every state has made changes to one or more of its pension plans to strengthen their financial condition. Public pension plans have NOT sought any type of assistance from Congress, but expect Congress to avoid imposing adverse tax changes, particularly without any formal consideration of the impact on the funds and the affected investments (including economic development, real estate, and infrastructure).
  • If Congress wants public pension funds to exit the types of investments that would be subject to UBIT, they should, at a minimum, apply UBIT to new investments only, not ones that were entered into in good faith based on the long-standing understanding that UBIT expressly did not apply.
  • Existing public plan investments will be treated far worse than private investments that use a corporate blocker, which under tax reform would give them a nearly 20 percent lower tax rate than trusts that do not have such blockers in place.
  • In summary: Application of UBIT to public pension plans is a NEW tax, it sets a dangerous precedent with regard to federal taxation of state agencies, it overturns IRS’s 40-year-old position to not apply UBIT to state and local government retirement systems, and existing public plan investments will be treated far worse than private plans that choose to use blockers.

Reconciliation just started but they’re moving quickly to vote on a final bill possibly early next week.

Contact your US Senators and Congressperson by clicking here.

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Walker Stapleton FINALLY Shares His PERA Proposal - Dec. 6, 2017

Walker Stapleton released his PERA proposal to reporters, Dec. 6. We tried to listen into the call but he kicked us off – so much for being a transparent elected official. Here's the major points of his proposal:

  • No COLA for 20+ years
  • 5% contribution increase for active employees (this is approx. what would be required based off his plan below)
  • No additional employers dollars into PERA
  • Retirement age will be increased to match social security, 67 years old
  • Increase the highest average salary from 3 years to 10 years.
  • The 30 year expected rate of return should be lowered from 7.25% to 5%.

Walker doesn’t value the over half a million employees or retirees who count on PERA and don't have social security. He has also forgotten that these benefits help the entire state of Colorado's economy. CLICK HERE to let Walker know you don't agree with his priorities.

You can read the Denver Post’s coverage of his plan here and Colorado Politic's coverage here and here is one featuring our reaction.

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SecurePERA statement, Nov. 17, at the PERA Board meeting and during public comment...

Thank you for allowing me to address you this morning. I want to start out by clarifying that Secure PERA has not taken a position on either of the proposals that have been presented by PERA or the Governor. Instead, we initiated an intensive outreach effort.

This included a telephone townhall for Secure PERA members, 5 webinars to discuss the specifics, many presentations with opportunities for comment and a online survey that yielded nearly 4,500 responses, 80% of which were active employees.

What we have learned is that the change to the COLA is very concerning for our retirees and for future retirees. Operating on a fixed-income, they are worried about the changes they'll need to make. That impact will be felt by the entire state. As retirees adjust downward their expenses and purchasing habits, the effects will reverberate throughout the economy. I don't need to remind you that PERA puts over $3.5 billion into Colorado's economy.

Additionally, there are many who are concerned about whether employees can absorb the large increases in contribution rates, as well as the increased retirement age.

All of our members agree that the principle of shared sacrifice must be a part of any solution; we do not envision supporting a solution without an employer contribution.

One change we would like to see in your PERA Board proposal is how full time employment is calculated. We have seen tremendous amounts of push back regarding how this would be implemented and what it would mean for people.

Thank you Board members and staff for all of the time you have dedicated to helping find a solution. We know this isn't easy, but your commitment to keeping the defined benefit plan is very much appreciated by all of us.

During the meeting, the PERA staff and Board members discussed all of the feedback they have received to date. At this time, they did not make any changes to their proposal, but they did discuss the possibility of a December special meeting, if needed, to make changes.

Additionally, the PERA staff released new numbers on what the costs are to each group under the PERA proposal and the Governor’s proposal:

If you want to know more of the details about either of those proposals you can click here.

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Governor Presents Another PERA Proposal - Nov. 1, 2017

This afternoon, Governor Hickenlooper announced his vision for changes to the PERA system. Keep reading to learn more about these proposed changes, including how they differ from the PERA Board of Trustees proposed package of changes...

Under this plan, there would be no additional employer contributions. Employee contribution rates would increase by 2% (beginning January 1, 2019). The COLA for all current and future retirees would be reduced to 1.25%

The plan has some components that are the same as those in the PERA Board of Trustees package. They are:

  • For new and non-vested employees, the Highest Average Salary (HAS) calculation would change from 3 years to 5 years
  • For new employees, the retirement age would increase to 65 (55 for State Troopers)
  • The COLA would be suspended for two years. (For future retirees, this mean they would wait three years before collecting a COLA because of the suspension year in Senate Bill 1)

The Governor also proposed increasing the salaries for state employees by 3% starting July 1, 2018, which would cover the PERA 2% employee increase slated to begin January 1, 2019. and provide a 1% pay increase.


HOW DOES THE GOVERNOR'S PLAN COMPARE TO PERA'S?

 

PERA Plan

Gov Plan

Employer Contribution Increase

↑ 2%

↑ 0%

Existing Employee Contribution Increase

↑ 3%

↑ 2%

New Employee Contribution Increase

↑ 2%

↑ 2%

COLA Rate

1.5%

1.25%

Both plans also:

  • Include an auto adjust provision
  • Increase the retirement age to 65 for new employees
  • Increase the Highest Average Salary calculation to 5 years
  • Suspend the COLA for two additional years (total of 3 years for those not retired yet)
  • Change the definition of salary to gross salary
  • Change the way FTEs are calculated

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PERA Board Endorses Changes - Sep. 22, 2017

Today, the PERA Board of Trustees endorsed a package of changes which would accomplish the Board's goal of having PERA 100% funding in 30 years.

Secure PERA is still analyzing the proposed changes and will be seeking your input on them in the coming weeks. We are very likely to ask the PERA Board for some changes during their November meeting and in our meetings with legislators.

In the meantime, we wanted to fill you in on the proposed changes. PERA will be presenting this package during their PERAtour 2.0 which you can learn more about at www.PERAtour.org

The proposed package, which would still have to be approved by the Colorado General Assembly, includes:

For Active Employees as of 1/1/2020:

  • Additional 3% contribution starting in January 1, 2020 (currently 8% and 10% for troopers)
  • Salary definition will change to gross pay (currently net pay)

For New Employees as of 1/1/2020:

  • Additional 2% contribution starting in January 1, 2020 (currently 8% and 10% for troopers)
  • Increase retirement age to 65 years of age and 5 years of service or 40 years of service, Troopers increased to 55

Additional Changes For New Employees & Non-Vested Employees (5 years of service) as of 1/1/2020:

  • Highest Average Salary calculation number of years increased to 5 years (currently 3 years) and 3 years for Judicial Division (currently 1 year)
  • Salary definition changed to gross pay (currently net pay)
  • Change definition for service accrual to be a percentage of time actually worked

For Current & Future Retirees:

  • COLA rate reduced to 1.5% (currently 2%)
  • Two year COLA suspension (those not retired yet will have three years suspended, 1 year from SB1)

For Employers:

  • Additional 2% contribution
  • Salary definition will change to gross pay (currently net pay)

Learn more on PERA's website here and a chart of the changes is available here.

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Why not a 401k plan? - Aug. 6, 2017

This week, we are talking about the hybrid plan design of Colorado PERA and how it measures up against other retirement plan options, both public and private. Spoiler alert - the hybrid defined benefit plan is "...more efficient and uses dollars more effectively than the other types of plans in use today." And for the individual retiree, it produces the most replacement income for every contribution dollar spent.

How do we know this? In July of 2015, a report commissioned by the Colorado Legislature in 2014 (SB 14-214) to independently evaluate PERA compared to alternative plans in both the public and private sector. The study, conducted by Gabriel, Roeder, Smith & Company, looked at the cost effectiveness of the plan and the quality of the benefit for PERA members.

This in-depth report considered all of the factors and looked at the question from multiple angles. The brunt of what they found though, can be summarized in three points.

  1. PERA provides the best retirement benefit, among all alternatives >> "Alternative plans implemented for new hires require greater contributions in order to replace the same retirement income than the current PERA Hybrid Plan."
  2. PERA is the most cost efficient option >> "This study could find no plan that provides a more effective level of benefits than the PERA Hybrid plan.
  3. PERA is, without question, a better option than a 401k >> "Individually directed defined contribution plans do not earn investment returns to the same degree as large, professionally managed defined benefit plans."

A very important aspect of this report is not just the analysis that was completed to determine that the PERA Hybrid Plan is the best option for Colorado's public employees, but also the significant cost associated with moving to an alternative plan.

Knowing that we currently have the most cost efficient and effective plan, let's explore how much it would cost to move away from that plan - just for fun.

First, let's look at the the cost to maintain the same level of benefit. The report finds that, "it costs 142% more across all members to provide the same benefit at retirement to career employees, if all assumptions are met."

Next, the report calculated the potential costs associated with closing the Hybrid plan and starting an alternative one with new hires. That number, which accounts for the unfunded liability, is north of $800 million additional dollars in the first year!

 

Colorado PERA created this helpful chart to compare the current Hybrid plan with alternative options. Take a look at the stark differences.

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FAQs on Social Security and WEP - July 28, 2017

We wanted to make sure you saw this important article from Colorado PERA, published in PERA on the Issues, about social security. We have copied it verbatim for you below. The Windfall Elimination Provision and the interaction between PERA and social security is one of the most often asked about topics.

From PERA on the Issues, July 26, 2017 -- FAQ: Colorado PERA and Social Security

In late April, new legislation was introduced in the U.S. Senate that proposes to change how the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO) are applied to those who, like many PERA members, spend a majority of their work life in employment outside of the Social Security system. The Social Security Fairness Act of 2017, introduced by Sen. Sherrod Brown (D-OH), would repeal both the WEP and the GPO. The bill, S.915, has been assigned to the Senate Finance Committee. An identical bill, H.R.1205, has been introduced in the U.S. House of Representatives, and Colorado Reps. Ed Perlmutter (D-CO-07) and Jared Polis (D-CO-02) are cosponsors of the legislation.

Most PERA members contribute to PERA instead of Social Security. But if a PERA member also qualifies for a Social Security benefit, that benefit will most likely be reduced by either the Windfall Elimination Provision (WEP) or the Government Pension Offset (GPO). For members who have contributed to both PERA and Social Security, the Social Security benefit will be subject to the WEP. Members who are eligible for a Social Security spousal benefit – a benefit for those married to someone who has earned their own Social Security benefit – the Social Security spousal benefit will be reduced by the GPO.

Below is a list of frequently asked questions from PERA members about the WEP, GPO, Social Security, and PERA:

Question: Will my PERA benefit be reduced because I’m getting a Social Security benefit?

Answer: No. PERA does not reduce the PERA benefit for members who have also earned a Social Security benefit. However, the Social Security benefit may be subject to either the WEP or GPO.

Question: Will I get the projected retirement benefit amount that is currently listed on my Social Security earnings statement?

Answer: Probably not. Chances are very good that the actual Social Security benefit amount will be less than the amount listed on the Social Security earnings statement.

Question: By how much will my Social Security benefit be reduced because I’ve worked for an employer who contributes to PERA instead of Social Security?

Answer: It’s hard to say because every work situation is unique. In terms of earning a Social Security benefit, the reduction could be determined by a number of factors including the number of years worked under Social Security, called substantial earnings. For PERA members who also have 30 years of substantial earnings under Social Security, the reduction may be lower. However, PERA members with fewer than 20 years of substantial earnings under Social Security are subject to the maximum reduction under the WEP. There is a maximum dollar amount that can be subtracted from the Social Security benefit amount. This maximum dollar amount changes each year and is established when a beneficiary reaches age 62. For people turning 62 this year, that amount is $442.50. For people turning 62 in the future, that amount will most likely increase. Use the WEP calculator to determine how this provision in federal law might impact you.

The GPO works differently. Typically, Social Security benefits are reduced by two-thirds of the PERA (or other government pension) benefit, but there are some exceptions. A GPO calculator at Social Security’s website can help estimate a Social Security Spousal Benefit.

Question: If the PERA member dies and their spouse becomes the benefit recipient, would they be subject to a reduction in Social Security?

Answer: No. If the PERA member selected Option 2 or 3 at retirement and passes away, the cobeneficiary, whether a spouse or someone else, begins to receive a PERA benefit. The cobeneficiary’s Social Security benefit is not reduced because they are receiving this type of benefit from PERA.

Question: How do I know if I’ve even earned a Social Security benefit?

Answer: In order to receive a Social Security benefit, a worker will need to have earned 40 credits (formerly called quarters) under Social Security. Forty credits equals 10 years of work. Those who have fewer than 40 credits are not eligible to receive a Social Security benefit. Create an online Social Security account to learn more about the federal program.

Question: Why are the minimum ages for qualifying for a PERA retirement and receipt of Social Security different?

Answer: For PERA members who recently began working for a PERA-affiliated employer, the minimum age to be eligible for service retirement benefits is 60 (58 for those who work for a School Division employer). The minimum age to begin receiving unreduced Social Security benefits for those born in 1960 or later is now 67. Minimum retirement ages in both programs have increased over time, reflecting the longer life expectancies of workers in the United States.

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What is PERA's Status Today? - July 14, 2017

In 2014, the Colorado State Legislature & Governor Hickenlooper hired an outside actuarial firm to review the status of PERA’s funding. They recommended a simplified signal light to allow everyone to follow how PERA is doing and track how big the risk is that if something negative happened PERA wouldn’t be sustainable. Green = good & red = bad. You can read more about the PTA Sensitivity Analysis which developed this system here.

Following the passage of Senate Bill 1 most of the divisions were in the green until last year when the state and school divisions slipped into yellow after a few less than ideal years in the market (in 2014 PERA got a 5.7% rate of return and in 2015 PERA got a 1.5% rate of return). When those divisions slipped to yellow Secure PERA started looking into why.

Then, at the end of 2016 the PERA Board of Trustees made two decisions that caused all of the funds to slip into orange status. The first decision was to lower the 30-year expected rate of return from 7.5% to 7.25%. The Board had three actuarial firms come in and give them advice on where to set the 30 years rate and the came in at 6.84%, 7.5% and 8.49% as their recommendations. After a lot of debate, they decided to set the rate at 7.25%.

The second decision they made was to adopt new mortality tables. Fortunately, we are all living longer and these table reflected that but unfortunately it increased the unfunded liability of PERA since beneficiaries would be receiving their benefit for more years.

Collectively, these two decisions along with a few other smaller decisions made by the Board increased the unfunded liability by $21 billion and increased the time it would take PERA divisions to become fully funded by anywhere from 14 – 32 years depending on the division.

This means all of the PERA divisions are now ORANGE.

But, what does orange mean? Orange means PERA isn’t going to run out of money and will be able to pay benefits into the future, but it will take longer than 50 years for the divisions to become fully funded. PERA isn’t projected to run out of money but, if stock values decline PERA won't be as financially secure as some would like. In 2009, when we started working on Senate Bill 1, PERA was in the red. We aren’t there yet, but we also don’t want to stick our heads in the sand and hope for a 90s boom in the stock market.

The chart below will show you where the divisions have been each year since the year before we passed Senate Bill 1. (You can click on it to see a larger version online)

So, What Does This All Really Mean?

It means that we need to look again at PERA’s funding and benefit structure and see if some changes need to be made. PERA did their statewide listening tour in May & June – if you missed it visit here to learn more.

We at Secure PERA will be hosting a telephone town hall and webinar in the coming months to talk through all the changes the PERA Board is considering recommending to the State Legislature in the next session and get your feedback.

The ideas range from increasing contributions to increasing retirement age to reducing the COLA. So, stay tuned for information on our upcoming telephone town hall where we will go over all of this and take your questions.

The bottom line is that NOW IS THE TIME TO START PAYING ATTENTION! Let’s all work together to be sure and protect your retirement security.

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What was Senate Bill 1? - June 23, 2017

In 2009, Secure PERA began meeting with PERA and state legislators to talk about this groundbreaking legislation that would help correct the downward trajectory of PERA's fiscal stability. Our approach was to make sure that no sacrifices were taken unnecessarily and that the sacrifices were shared between the employer, employees, and retirees.

Senate Bill 1 (SB1) reforms had a significant impact on PERA's sustainability; it went from projected to run out of money within 30-35 years to on track to reach 100% funded.

In a nutshell, SB1 did the following:

  • Increased employee contributions by 2% via SAED* increases
  • Increased employer contributions 2% via AED** increases
  • Retiree COLA*** annual increase was reduced to 2%, and there was a 1-year holiday
  • And some additional benefit reductions

*SAED = Supplemental Amortization Equalization Disbursement. The SAED is an amount contributed by employers and is, to the extent permitted by law, to be funded by moneys otherwise available for employee wage increases. The SAED also has gradual increases.
**AED = Amortization Equalization Disbursement. The AED is an additional amount contributed by PERA employers that has gradual increases.
***COLA = Cost of Living Adjustment. This is the amount a retiree's payment is increased each year to account for things like inflation.

 

What did these changes mean for PERA members? Employees and retirees contributed $14.9 billion in reductions. When all was complete, 90% of the "cost" of making PERA secure came on the backs of retirees and employees.

Retirees who already retired by 2010 took a one year COLA holiday, and all current and future retirees sustained an annual reduction in COLA from 3.5% to 2% (unless PERA's market returns are negative, in which case the COLA will be indexed to CPI-W).

Employees added an additional 2% in contributions through SAED. These additional contributions were paid for using funds that would have otherwise been used for raises. Many employees also extended the length of their careers with the increased Rules of 85 & 88, thereby decreasing their overall benefit. An employee that starts work today will have a benefit worth 1/3 less over the life of their benefit.

Employers committed to contributing an additional 2% through AED contributions. This amounted to $125 million.

 

How did SB1 impact the fund? Senate Bill 1 worked. It was designed to get PERA back on a path towards 100% funding in the wake of the disastrous 2008 stock market crash - and it was successful. Today, PERA is paying out benefits and is not predicted to run out of money.

SB1 was designed with a 30-year expected rate of return of 8%. Contrary to common belief, we are hitting that mark. Since the passage of SB1, the average rate of return has been 8.62%.

 

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Funding Your Retirement - June 9, 2017

Employee Contributions
PERA members contribute 8% of their monthly salary (10% for Colorado Bureau of Investigation and State Troopers).

Employer Contributions

Employer contribution rates are established by state law and are determined as a percent of

member pay. Since July 1, 1985, a portion of PERA employer contributions are used to pay part of the health care premiums for benefit recipients enrolled in the PERA health care program.

These contribution amounts were increased in 2006, 2008 & 2010 using mechanisms called the AED & SAED.

AED= Amortization Equalization Disbursement. The AED is an additional amount contributed by PERA employers that has gradual increases.
SAED= Supplemental Amortization Equalization Disbursement. The SAED is also an amount contributed by employers and is, to the extent permitted by law, to be funded by moneys otherwise available for employee wage increases. The SAED also has gradual increases

While the SAED increase is attributed to the employer, the actual cost is passed onto the employee in the form of a reduced salary increase.

Here is a chart detailing employee and employer contribution rates for each division within PERA.

Investment Income
Over 25 years, since 1999, the average rate of return has been 8.38%. Since Senate Bill 1 (SB1), the average rate of return has been 8.62%.

These investments consist of common stocks of top-rated companies, corporate boards, U.S. Treasury and other government securities, mortgages, real estate property, and other investment vehicles.

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What is PERA? - June 2, 2017

Colorado Public Employees' Retirement Association (PERA) provides retirement and other benefits to the employees of more than 500 government agencies and public entities in the state of Colorado.

PERA is a hybrid defined benefit plan. On behalf of PERA members, contributions are invested in common stocks of top-rated companies, corporate boards, U.S. Treasury and other government securities, mortgages, real estate property, and other investment vehicles. These investment earnings are used to fund the monthly retirement benefits paid out by PERA.

The pension operates on this simple formula:

Contributions from Employers & Employees
+
Investment Income
=
Benefits Paid Out
+
Expenses


Contributions
PERA members contribute 8% of their monthly salary (10% for Colorado Bureau of Investigation and State Troopers). Employers also contribute a percentage of their total payroll. The percentage depends on the organization. These contribution amounts were increased in 2006 & 2008 (AED & SAED). Here is the chart of contribution rates across all PERA divisions.

AED= Amortization Equalization Disbursement. The AED is an additional amount contributed by PERA employers that has gradual increases.
SAED= Supplemental Amortization Equalization Disbursement. The SAED is also an amount contributed by employers and is, to the extent permitted by law, to be funded by moneys otherwise available for employee wage increases. The SAED also has gradual increases.

Investment Income
Currently, the assumed rate of return is 7.25%. This was set by the PERA Board of Trustees in 2016. Even with down markets in 2001, 2002, and 2008, PERA has averaged a 9% rate of return over the last 25 years. In 2008, the investment portfolio lost 26% or $11 billion – which was still better than its peers (-26.8%) or 401(k) plans (-27%).

Benefits
Retired workers receive benefits calculated by this formula: 2.5% x Highest Average Monthly Salary x Years of Service

  • 2.5% is the multiplier as determined by the Legislature.
  • Highest Average Salary is the average of the three highest yearly salaries earned under PERA employment. (It is only 1 year in the judicial division).
  • Years of Service is the member’s years and months of work for a PERA employer.

Expenses
PERA’s expenses total .4%. CEM Benchmarking awarded PERA the top honor in service compared to the other 77 national and international pension plans and praised PERA’s lower-than-average operating costs. PERA’s cost per member for operation is $57. National average per member operation costs is $73.

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Who is SecurePERA? - May 26, 2017

Dear Secure PERA Supporter,

You receive regular emails from us, but have you ever asked yourself who exactly is Secure PERA?

We wanted to take a minute to answer that question and highlight the great organizations that fund the Secure PERA coalition.

First, we are not PERA. Secure PERA is a coalition of PERA members, retirees and supporters. Collectively, we are dedicated to supporting retirement security for all Coloradans. Our work is funded by the member organizations, which include:

American Federation of Teachers Colorado
Association of Colorado State Patrol Professionals
Colorado Association of School Executives
Colorado Education Association
Colorado Professional Fire Fighters
CSPERA - Colorado School & Public Employees Retirement Association
Colorado WINS
NPPC - National Public Pension Coalition


We first formed in 2006 to work with PERA and the State Legislature on changes to PERA's defined benefit plan. In 2009, after the market crash of 2008, we re-activated our coalition. We were part of the bi-partisan team that created Senate Bill 1 in 2010. Senate Bill 1 was the first major reform of its kind in the nation and put PERA on a path to financial stability.

Today, we continue to advocate for policies that protect and improve PERA's fiscal stability, and oppose legislation that negatively impacts the retirement security of hard-working Coloradans.

Interested in learning more? Check out our website at WWW.SECUREPERA.ORG

Sincerely,

Lynea Hansen
Executive Director
Secure PERA