Phase 2 of PERAtour, PERA’s statewide community outreach effort, wrapped up on November 2. The goal for this second round of community meetings was to share details about a recommendation the PERA Board is preparing to make to the Colorado General Assembly in the 2018 legislative session which begins on January 10. This recommended package would improve PERA’s risk profile and funded status, and improve PERA’s ability to pay benefits over the long-term. To learn more about the Board’s proposal designed to shorten the length of time it will take the plan to reach full funding, click here.
Since kicking off the second phase of PERAtour in Grand Junction on October 16, PERA staff have traversed the state to meet with more than 2,000 members, retirees, and other stakeholders in Alamosa, Aurora, Boulder, Colorado Springs, Denver, Durango, Fort Collins, Greeley, Pueblo, and Sterling. For those not able to attend a meeting in-person, we held an interactive webcast (a recording of which can be found here), and solicited questions and comments via our dedicated website and phone line.
Over the course of PERAtour, the attendees at our community meetings, as well as the countless others who chimed in via the comment form at PERAtour.org, have posed a variety of thoughtful questions and comments about the provisions of the Board’s package, and the impact they will have now and in the future. Here is a sampling of some commonly asked questions we heard:
Why is the Board recommending these changes?
PERA’s current risk level is too high and funded status too low. According to the signal light framework put into place in 2015, most PERA divisions are classified in the “orange” status, which means a corrective action should be developed. The Board’s proposed changes will result in reducing PERA’s risk profile and improving its funded status, immediately and in the long‐term.
Why weren’t changes under Senate Bill 1 sufficient to ensure PERA’s long-term sustainability?
Since 2010, the reforms contained in Senate Bill 1 have supported PERA’s mission to promote the long-term financial security of its members while maintaining the stability of the fund. However, changes in demographics (people are living longer) and economics (lower future financial market expectations) since Senate Bill 1 passed have impacted PERA’s financial standing, increasing the risk to members, taxpayers, and all of Colorado. The recommended package proposed by the PERA Board will reduce this risk and improve PERA’s funded status.
Should I retire earlier than I had planned?
The decision to retire should not be driven by the proposed changes. There are no advantages to retiring early.
Will PERA employees, Trustees, and legislators be participating in the recommended changes?
Yes. PERA employees and legislators are PERA members and retirees, as are the member-elected Trustees on the Board. Further, member-elected Trustees serve without compensation.
Will the Board still be recommending these changes in light of the recent gains in the stock market?
Yes. While global stock markets may be doing well this year, the long-term expectations for the global financial markets are not as optimistic.
Shouldn’t PERA be reducing costs before cutting benefits?
PERA’s administrative costs are very low and every expenditure fulfills some aspect of PERA’s fiduciary duty to the membership. An international pension benefits administration benchmarking firm evaluates PERA’s administrative costs and the level of customer service PERA provides each year and produces a report card that we’re proud of. Read more about this evaluation here. In addition to low administrative costs, as a large institutional investor, PERA manages the assets on behalf of 560,000 members for a low cost as well.
If you have any questions or comments about the Board’s recommended package, please fill out the submission form on the PERAtour.org website. All feedback on the proposed changes will be shared with the Board at their next meeting on November 17.