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Latest
PERA News
This section
contains current items of interest to PERA members and retirees and the
general public. For other news regarding PERA, you also may want to view
the PERA News Archives. Any questions or
comments regarding this information may be directed to PERA via e-mail.
Colorado PERA Board Appoints New Trustee
The Colorado PERA Board of Trustees appointed M. Judy Chavez to a vacant seat in the State Division of the Board.
Chavez is an assistant dean of Budget and Human Resource Services at the Univeristy of Colorado Denver Business School. Her term will expire on June 20, 2009. She takes over the seat formerly held by Carol Hoglund, who retired earlier this year.
By State law, the management of the Public Employees’ Retirement Association is vested in the Board of Trustees while the General Assembly sets contribution rates and benefit levels. The Board is composed of 15 Trustees, including three Governor-appointed Trustees and the State Treasurer who serves as a voting ex-officio member of the Board.
Congress Seeks Input From Colorado PERA as It Explores Wall Street Crisis
Colorado Public Employees’ Retirement Association (PERA) General Counsel Gregory W. Smith appeared today as part of an expert panel called by Congress as it explores the causes of the nation’s financial crisis.
Smith spoke before the U.S. House of Representatives Committee on Oversight and Government Reform’s hearing on what it called “the regulatory mistakes and financial excesses that led to the bankruptcy filing by Lehman Brothers.”
Although PERA’s investment exposure to Lehman Brothers was relatively small, Smith appeared as a representative of public retirement systems, which are major investors in financial markets.
In his written testimony, Smith said, “As an entity responsible for the retirement security of over 420,000 public servants we believe it is important at the outset to recognize that the impact of the failure of Lehman extends far beyond the fat cats on Wall Street.”
Smith stressed the need for “transparency” in the market to ensure that investors large and small can make informed investment decisions. He also said that the regulatory environment should put investors first.
“In order to meet the needs of our membership we, like our peers that exist in virtually every state in the nation, are entirely dependent on the strength, efficiency, and transparency of our capital markets,” Smith testified.
He added: “Long term investor confidence would be promoted by restoring the quality of the disclosure and transparency standards historically imposed on companies that want to access the U.S. markets.”
Smith’s testimony was quoted in some of the extensive media coverage of the hearing, including the New York Times.
Like other investors, PERA has experienced a decline in the value of its portfolio that is invested by professionals on behalf of Colorado’s public employees. However, unlike most individual investors, PERA has a long-term investment focus that enables the fund to endure the ups and downs of the markets.
You may view video of the hearing online.
Testimony included in the record of the hearing may be accessed here: http://oversight.house.gov/story.asp?ID=2208
For more information on the impact of the financial markets on PERA, see http://www.copera.org/PERA/about/latestnews.stm#Update. |
Colorado PERA General Counsel Gregory W. Smith, fourth from left. |
Penn Treaty Suspends Long Term Care Sales
One of the insurers for the long term care program offered to PERA members and retirees, Penn Treaty, announced on Friday, October 3, 2008, that it is suspending sales of new policies. Penn Treaty’s subsidiary, American Network Insurance Company (“ANIC”), will not issue any new long-term care policies as of October 3. Therefore, PERA retirees, members and eligible family members who are not already participants in the long-term care program cannot sign-up for new policies today or in the near-term. The current policies issued by ANIC and Penn Treaty will continue to be serviced and renewed for the foreseeable future.
We apologize for any inconvenience and ensure you that PERA will make every effort to restore access to a quality long-term care insurance program for the benefit of our retirees, our members and their families.
Market Update
The U.S. stock market suffered a dramatic decline yesterday, September 29, 2008, with the Dow Jones Index losing 777 points. In previous updates over the last few weeks, Colorado PERA has discussed its well-diversified portfolio that is managed with a long-term investment horizon. The magnitude of the financial crisis and the impact on our investment portfolio continues to be carefully analyzed and monitored. PERA is responding to current economic and financial distress with caution and prudence.
PERA’s portfolio is suffering along with the vast majority of other large long-term institutional investors. We are making our way through these uncertain times the same way we have made it through stronger markets. We continue to scrutinize the over 17,000 investment positions we hold on behalf of our members and retirees. We manage our investments in stocks, bonds, real estate, private equity, and timber in the same risk framework we have relied upon in the recent past. The PERA Board of Trustees exercises careful oversight, our internal and external investment managers assess markets and risk factors, and our external consultants lend national perspective to our challenges and accomplishments.
While many eyes across America are focused on the daily change of stock prices, the seizing up of credit markets is a critical component of our nation’s current distress. Financial institutions provide investment capital to individuals as well as to companies large and small. The current paralysis in lending and access to other capital is serious. Some important steps have been taken by many institutions including the Federal Reserve, the U.S. Treasury, and the U.S. Congress. However, we believe that additional steps will need to be taken before we will see a return to more normally functioning markets where there are both buyers and sellers that allow for the crucial flow of capital in our economy.
We can point to reductions in some parts of our investment program and to our decisions not to enter certain markets in recent years that have served us well. We can also note the expansion of some parts of our program that have proven to be sound. This, however, does not negate the fact that we, too, suffer along with the markets. Additionally, we can point to our steadfast investment policies which have been tried and tested over the years to describe how we will make our way through challenges that face us today and in the weeks and months to come. We will continue to mitigate our downside risks while maintaining a large, diversified portfolio with a focus on long-term results. We will forge ahead with our culture of seeking innovation, seizing opportunities, and exercising the wise judgment to pass on opportunities that are not likely to be rewarded.
What does this mean for Colorado PERA benefit recipients and members? It means that PERA will continue to be prudent with our members’ and employers’ contributions and be responsible in making investments on behalf of our membership. Colorado PERA wants you to know that we are doing everything possible to protect the retirements of current and future PERA members and that we will remain vigilant in the uncertain times ahead.
Market Impact on Colorado PERA
PERA manages a $36.8 billion dollar portfolio on behalf of its 440,000 members. While PERA is not exempt from the unprecedented and significant events in the financial markets, the diversification and long-term nature of the investment program mitigates some of the potential impact.
PERA’s portfolio was $41.1 billion at December 31, 2007. Through August of this year, we have paid approximately $1.8 billion in benefits and received $1 billion in contributions. The decline in the size of the portfolio this year is largely due to the decline in the market value of its stock holdings. PERA reports audited financial results annually based on year-end data. Performance throughout the year is unaudited and incomplete, in part, due to the lagged reporting of private equity and real estate, which represent 17 percent of the total PERA portfolio. Twenty five percent of the PERA portfolio is held in fixed income, which is up approximately 1 percent year-to-date. Domestic and international stocks are 55 percent of the portfolio. PERA’s year-to-date unaudited and incomplete performance through September 19, 2008, was approximately negative 9 percent. The Dow Jones Industrial Average Index was down a negative 12.5 percent for the same time period.
There have been many financial institutions impacted by the current crisis. PERA does have limited exposure to a number of these institutions, including Lehman Brothers and AIG. For example, investments in Lehman and AIG represent less than one-fourth of 1 percent of PERA’s portfolio. PERA’s portfolio includes stock and bond index funds as well as active strategies. With thousands of companies held, it is common for us to have some exposure to many companies. In a larger context, it is worth noting that PERA has had a modest underweight to the financial sector in stocks and bonds.
Our response to recent events and dramatic market moves has been to stay the course with constant monitoring of the financial markets by PERA’s investment professionals and consultants. We have taken a number of risk mitigation steps in recent years, which has reduced some of the negative impact. We will continue to carefully monitor all of our investments and manage our program in the context of our long-term time horizon.
Keeping a Steady Hand During Rough Investment Times
With all the bad news about the economy lately, we’d like to provide some information on how recent volatility in the financial markets is impacting Colorado PERA. First, remember that PERA is a long-term investor with a time horizon much longer than individuals have. In most cases, we have many decades to invest member and employer contributions before we pay a retirement benefit. PERA’s investment portfolio is well-diversified and able to withstand the ups and downs of the market. PERA, as a large institutional investor, has access to investments that most individual investors do not have, and we use our professional investment expertise to make investments on behalf of our membership at a low cost. We know that the markets go up and down and that at times we'll have losses, but those losses will be offset by gains over the long run in PERA's diversified investment portfolio.
The Colorado PERA Board of Trustees has established an 8.5 percent average annual return assumption based on the unique mix of investments in the PERA portfolio. The chart below shows how, over time, PERA has accomplished its long term investment goals. (Note that the 25-year investment return of 10.8 percent is above the Board’s 8.5 percent average annual goal. This time frame includes seven less-than-8.5 percent return years.)
Colorado PERA Shareholder Presentation
If you were unable to attend one of the Shareholder meetings scheduled in your area, a copy of the presentation is below.
2008 Shareholder Presentation
No PERA Visitors During DNC
Due to the increased security risk during the Democratic National Convention (DNC), PERA will not admit any visitors to its downtown Denver office during the week of August 25. In addition, No member counseling appointments will be conducted at either the PERA Offices at 1300 Logan in Denver, or at The Pointe Office at 1120 West 122nd Avenue in Westminster. For assistance, please call us at 303-832-9550 or 1-800-759-7372.
Upcoming Shareholder
Meetings
As a PERA member or retiree, you are also a
“shareholder” of PERA, which means you need to know about the
state of your retirement plan. To help you learn and understand
more about your retirement plan, PERA will travel throughout
Colorado later this summer to inform members about some of the
issues facing PERA.
Shareholder Meetings Schedule
Colorado PERA Outranks Peers in Benefits Administration, Costs
In a study conducted by CEM Benchmarking Inc. in Toronto, Canada, Colorado PERA scored highest in service among a universe of 77 national and international pension funds while maintaining a significantly lower than average administrative cost.
PERA scored an 85 in the total service score versus a median of 72. The high score resulted from higher percentages of good call outcomes, lower call wait times, excellent online capabilities, and 100 percent of pensions being incepted without a cash flow interruption to new retirees.
PERA’s overall service score increased by four points over the last three-year period while administrative costs decreased by 3.3 percent per year. PERA’s total adjusted administration cost was $57 per active member and retiree, compared to the peer median cost of $73. The cost of doing business in Colorado is 4.6 percent more expensive than the 16 other national pension plans nearest to PERA in size.
PERA’s information technology capability was the third highest among all surveyed plans, leading to lower transactional volumes and costs.
Colorado PERA Board of Trustees Announce Higher Ed Vacancy
With the recent retirement of Trustee Carol Hoglund, there is a vacant State Division Trustee seat on the Colorado PERA Board of Trustees. As required by State law, this position must be filled by an active member who is employed by a Higher Education employer. If you are interested in serving on the Colorado PERA Board of Trustees and work for a Higher Education employer, please send your letter of interest and resume to:
Colorado PERA
c/o Karl Paulson
1300 Logan Street
Denver, CO 80203
Letters of interest and resumes will be accepted until July 31, 2008. A committee of Trustees from the State Division will review resumes and recommend a candidate for the vacant seat to the Board of Trustees at their September meeting.
How Kaiser Permanente Credits Will Work for PERA Retirees in PERACare
There has been information in the news recently about of the State of Colorado’s actions requiring Kaiser Permanente to pay credits to Colorado residents who have Kaiser health insurance coverage. Because the Kaiser plans in PERACare are group plans, any benefit recipient enrolled through PERA’s group plan will not be receiving a check from Kaiser.
Kaiser will be paying the credits to PERA. At this time, PERA understands that the agreement is for credits to be paid in mid-2009 and mid-2010. As more information is known, it will be considered in future Kaiser renewals and premium setting.
Report Regarding Iran-Related
Investment Policy
PERA has updated its Report Regarding
Iran-Related Investment Policy. You may review the Report on the Divestment Information page.
Colorado PERA Announces Board Election Results
Colorado PERA members re-elected Amy L. Nichols to a School Division seat and elected Richard A. Delk to a State Division seat on the 15-member Board of Trustees. Both will serve four-year terms.
In the School Division election, a total of 14,168 votes were cast. Nichols received 10,620 or 75 percent of the votes cast. In the State Division election, Delk received 50 percent, or 2,735, of the 5,516 votes cast.
Nichols has been a Board member since 2000 and is a math teacher in the Aurora Public Schools.
Delk is an accountant in the budget office of the Colorado State Patrol. He takes over the seat formerly held by Tamela Long, a business officer for the Colorado State Patrol.
By state law, the management of the Public Employees’ Retirement Association is vested in the Board of Trustees while the General Assembly sets contribution rates and benefit levels. The Board is composed of 15 Trustees, including three Governor-appointed Trustees and the State Treasurer who serves as a voting ex-officio member of the Board.
Colorado PERA Adds Online Presentation
Production has just been completed on Colorado PERA’s newest online presentation—the Retirement Process presentation. It is available for members to view on the Colorado PERA Web site. Any member who is ready to retire in the next year will want to view this presentation, which is an overview of the Colorado PERA retirement process. Earlier this year, our first online presentation debuted, Information for Newer Members, which is a brief overview of Colorado PERA benefits. Both online presentations were produced by Colorado PERA staff and feature Colorado PERA’s Field Education Representatives. Watch for more online presentations to be added throughout the year.
Upcoming PERA 401(k) Plan Changes Require Blackout Period
Effective July 1, 2008:
Effective immediately:
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The Rainier Large Cap Growth Equity Fund will replace the GMO U.S. Growth Fund
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The Northern Trust Institutional Government Select Fund will replace the Northern Trust Short Term Fund
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Rainier Large Cap Growth Equity Fund
The Rainier Large Cap Growth Equity Fund has investment objectives, strategies, and risk characteristics similar to the GMO U.S. Growth Fund, but it is formed as a collective trust fund rather than as a mutual fund. Collective trust funds offer many of the same benefits as mutual funds, such as portfolio diversification, professional management, and investment flexibility, but generally have lower investment fees and do not have some of the regulatory requirements that mutual funds do.
Northern Trust Institutional Government Select Fund
The Northern Trust Institutional Government Select Fund is more conservative than the Northern Trust Short Term Fund and is designed to protect investors in the fund from unexpected valuation risk. It accomplishes this by using an investment strategy that invests only in U.S. government securities. The transition to the new fund will result in no negative impact to assets as the fund operates within market guidelines that require the fund to maintain certain credit quality and liquidity levels. The 401(k) and DC Plan Web sites will be updated to reflect this change on July 1, 2008.
You will not need to take any action
If you are invested in these funds, your existing fund balance held in each of the funds will automatically transfer to the new funds. If you are currently making contributions to one of the funds, your future contributions will be directed into the new fund.
A short blackout period is necessary to transfer assets from the GMO U.S. Growth Fund to the Rainier Large Cap Growth Equity Fund. The blackout period will begin at 2:00 p.m. (Mountain time) on Tuesday, June 24, and will end on Tuesday, July 1. During this time you will not be able to transfer in or out of the GMO Fund and you will be temporarily unable to obtain loans or distributions from the Plan. Your money will be held until it is invested in the Rainier Large Cap Growth Equity Fund on July 1.
If you wish to move your existing fund balance to a fund other than the one you are being directed to prior to the blackout period, you must make that transfer before 2:00 p.m. (Mountain time) on June 24, 2008.
If you have any questions, please call 1-800-759-7372 and select the 401(k) and DC Plan option to speak with a Participant Services Representative. You must enter your Social Security Number and Personal Identification Number (PIN). Participant Services Representatives are available Monday through Friday, 6:00 a.m. to 6:00 p.m. (Mountain time), except on New York Stock Exchange holidays.
Board Approves Legislation for Denver Public Schools' Retirement System Merger Legislation
The Colorado PERA Board of Trustees held a special meeting on Friday, April 18, 2008, to discuss draft legislation for the Denver Public Schools' Retirement System merger into PERA.
View the Summary of the Draft Bill.
Report Regarding Iran-Related
Investment Policy
PERA has completed its first Report Regarding
Iran-Related Investment Policy. You may review the Report on the
Divestment Information page.
PERA Updates Timeline For
Global Custodian and Securities Lending RFP
You may view the updated
timeline for the global custodian and securities lending
RFP.
PERA Presentation For Newer
Members Available Online
PERA has developed an online presentation that
includes information that will be helpful to members with less
than five years of service credit. The presentation provides a
basic overview of PERA benefits. You can view the presentation
on the new Financial and
Retirement Education Resources page.
Clarification to Rule of 80
Information in February 2008
Member Report
We've received some feedback regarding "The Truth About PERA"
article on page 4 of the February 2008 Member Report. We
apologize that this information wasn't as clear as it could have
been.
For more information on retirement
eligibility, please refer to the following tables:
Benefit table effective June 1, 2000
For members who were hired on or before June 30, 2005.
Benefit table effective July 1, 2005
For members who were hired on or after July 1, 2005, and before
January 1, 2007.
Benefit table effective January 1, 2007
For members hired on and after January 1, 2007.
Colorado PERA Recognized for
Commitment to Accurate Financial Reporting
For the 22nd straight year, the Colorado
Public Employees’ Retirement Association (Colorado PERA) has
been awarded the Certificate of Achievement for Excellence in
Financial Reporting by the Government Finance Officers
Association of the United States and Canada (GFOA).
The Certificate of Achievement is the highest
form of recognition in the area of public employee retirement
system accounting and financial reporting. It recognizes PERA’s
2006 Comprehensive Annual Financial Report (CAFR) for meeting
the high standards of the program including demonstrating a
constructive “spirit of full disclosure” to clearly communicate
its financial story and motivate potential users and user groups
to read the CAFR.
PERA also received the GFOA Award for
Outstanding Achievement in Popular Annual Financial Reporting
for its 2006 Popular Annual Financial Report (PAFR), a summary
of the CAFR that is mailed to members and benefit recipients. To
receive the award for the PAFR, the content had to meet program
standards of creativity, presentation, understandability, and
reader appeal.
The GFOA is a nonprofit professional
association serving approximately 16,000 government finance
professionals with offices in Chicago and Washington, D.C.
Colorado PERA Board Adopts Policy
on Iran Related Investments
At its January 18, 2008, meeting, the PERA
Board of Trustees adopted a
Policy
on Iran Related Investments. With the adoption of the
policy, it is important to note that PERA serves the singular
purpose of operating the retirement system serving more than
400,000 current and former public servants. In meeting its
fiduciary responsibilities, PERA seeks to maximize long term
risk-adjusted investment returns. In accordance with its
fiduciary obligation, PERA’s Board of Trustees determines the
investment fund’s overall risk profile and risk constraints.
PERA has adopted a total fund strategy to
address specific risks related to direct public investments in
foreign companies doing business in Iran. Historically, the
evaluations of these risks have been executed at the asset class
and portfolio level by PERA’s staff and by PERA’s external
managers. The Board has established a policy that will provide
additional resources for researching and analyzing Iran-related
risk. The policy includes phases for identifying a list of
public companies doing business in Iran, criteria that will be
used, periods of time for engagement with companies identified,
investment moratorium requirements, and other possible actions
including potential divestment.
The Iran-related investment policy
demonstrates that PERA’s Board believes that the additional
resources and the centralization of research required by this
policy will improve the ability to assess Iran-related risk.
This investment process modification will also improve reporting
on Iran-related risk for the total fund.
View the
Policy for Iran
Related Investments.
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