Marie, we heard this question during our Listening Tour meetings and I am glad you wrote to ask. Some of you may recall that as PERA approached full funding in the late 1990s, legislation was introduced to enhance benefits and reduce contribution rates. This legislation was enacted just as the financial markets entered a downturn after the dot-com bubble burst. Then we had 9/11. Legislation passed in 2004 and 2006 gradually restored contribution rates and changed benefits for new PERA members. In 2005, the cost to purchase service credit was raised to reflect the full actuarial cost of the service purchased.

What’s important to know is that projections at the end of 2007 showed that with the changes made in 2004 and 2006, PERA was ahead of schedule to once again achieve fully funded status. That means that even with the reduced rate to purchase service credits available in the first half of the 2000s, PERA was on track to being 100 percent funded.

During the month of August, the PERA Board of Trustees and PERA staff conducted eight hearings around the state to get input from members, retirees, elected officials, and others as the Board works to develop legislation for the 2010 General Assembly’s consideration. The Listening Tours attracted over 2,500 attendees, with standing room only in most locations. The Trustees and I thought the meetings were highly successful and we appreciate all those who took time out of their evening schedules to attend a meeting.

In recognition of the fact that we could not travel to every location in the state and in anticipation of a high level of interest from our membership and others, we held our first live webcast of the Denver Listening Tour Meeting on August 11. The recorded version of the meeting is available online. You can review the slides from the Listening Tour presentation and watch the Public Comment portion of the Denver meeting from the same page.

Many of you have written to me and provided your ideas and concerns about potential benefit and contribution changes as we work to return PERA to sustainability. Each and every comment is important to us. That’s why I ask that you complete the Online Listening Tour Input Form so that we can compile all of your suggestions for the Board’s review.

Next Steps

View the timeline of the development of PERA's comprehensive legislative proposal.

The Board of Trustees will hold their annual planning session later this month. The session will be devoted to exploring the various options available for developing a legislative proposal. The Board will finalize their legislative recommendation in late October, just as the Shareholder Meetings begin. I encourage you to attend one of the Shareholder Meetings during late October and November. These meetings will explain the details of the Board’s recommendation to the General Assembly.

Shareholder Meeting Schedule

Again, thank you for writing and sharing your thoughts with me. I am honored to work for you.
– Meredith (9/4/09)

It will come as no surprise to most of you that PERA faces serious, long-term challenges in the face of unprecedented worldwide financial turmoil. I’ve received thoughtful suggestions from many of you over the past few months on how to respond. I thank you for sharing your opinions, which we take very seriously.

PERA has been upfront about the challenges we face. In September, the PERA Board of Trustees, acknowledging the seriousness of the situation, directed the PERA staff to protect the fund on an immediate basis and to analyze long-term consequences. These difficult times call for thoughtful measures to address the complex issues PERA faces as it provides retirement benefits to the public employees of Colorado. I want to assure you that the Board recognizes the importance of its duties and responsibilities to our membership.

Between now and October, the Board will hold twelve meetings. We will also conduct an additional six hearings in locations outside of Denver in August. Board Meetings are always open to the public and a portion of the agenda for every meeting is set aside for members and retirees to speak. Finally, we will conduct our annual Shareholders Meetings statewide in October and November. Your input is a critical part of the process to strengthen and secure your retirement plan.

PERA faces no immediate danger of being unable to pay benefits. In fact, PERA can pay benefits for many years to come just based on our current funding and benefit structure, coupled with our $29 billion in assets at present market value.

More information on the schedule of Board hearings around the state and the annual Shareholders Meetings will be posted on www.copera.org when they are finalized. The PERA Board of Trustees and I look forward to your input.

View the timeline of the development of PERA's comprehensive legislative proposal.

View the 2009 Actuarial, Benefit, and Investment Studies
– Meredith (4/10/09)

Only the Colorado General Assembly can change PERA benefit and contribution levels. While the PERA Board will be recommending legislation to the General Assembly to change the benefit and contribution structure during the 2010 session, any recommendations made will be mindful of how they might impact member behavior. Any new law changes will also have a future effective date. Plenty of advance notice of these changes will be given to the PERA membership so they can make an informed decision.
– Meredith (3/13/09)

We know that all of PERA’s employers are facing difficult times as they work to balance their budgets during this severe economic downturn. I understand your concern about your HAS and advise you to request a retirement benefit estimate as you near your planned retirement date. Once you know how many furlough days you are required to take and when you plan to take those days, PERA can provide you with an estimate that you can use to make your decision on whether you should work longer or retire as planned.
– Meredith (2/20/09)

Member and employer contribution rates are set by the Colorado General Assembly. The current rate for all members except for State Troopers and CBI Agents is 8 percent (Troopers and CBI Agents contribute 10 percent). Employer contribution rates vary by employer division. We have detailed information posted on contribution rates at these links:

Contribution Rate History

Future Contributions Rates Established in State Law

PERA’s actuary calculates its funded status every year. This measurement, which is expressed as a percentage, compares the value of PERA’s investments on December 31 to what is owed to retirees and to members who have not yet retired. This is not a simple calculation for several reasons:

	PERA owns investments in real estate and private equity that must be valued or appraised. These appraisals and valuations are performed as of December 31 and then audited before PERA receives them. This can take several months.
	Simultaneously, PERA’s actuary reviews the entire member and retiree population of PERA as of December 31. This analysis includes an assessment of many variables that are “assumed” about the membership, such as member salary growth, service credit earned, and the life expectancies of active and retired members, among other things. This is an extensive effort and it takes time to develop a complete “picture” of PERA’s 430,000 members.
	After membership and investment data is compiled, it is audited by a firm hired by the State Auditor’s Office.
	Every year in late June, PERA publishes the results of these analyses in the Comprehensive Annual Financial Report and PERA mails a summary of the report to all members and retirees in early July. The summary contains statistics such as the number of members, investment performance, and funded status over time.

PERA’s funded status at the end of 2007 was 75 percent. We expect that number to decline based on the downturn in the worldwide economy during 2008.
– Meredith (2/13/09)

Online resource: 2007 Summary Annual Financial Report

Colorado PERA, the Denver Public Schools, and the Denver Public Schools Retirement System merger negotiations are continuing. The bottom line for the merger is that neither the PERA plan nor the DPSRS plan can be negatively impacted.
– Meredith (2/13/09)

Yes, for a number of years, PERA has been an active member of the Council of Institutional Investors or CII. CII is an organization composed of other large public and private institutional investors who work to improve corporate governance – which includes advocating for reasonable executive compensation. – Meredith (2/9/09)
– Meredith (2/13/09)

Online resource: CII Web site

No. The PERA Board does not plan to seek legislation during 2009 that would change benefits for retirees or members.
– Meredith (1/9/09)

No. Tax-deferred contributions to an employer-sponsored defined contribution or deferred compensation plan such as a 401(k), 403(b), or 457 do not reduce your PERA salary or HAS. PERA encourages all members to save for retirement using employer-sponsored defined contribution or deferred compensation plans in addition to their PERA defined benefit account.
– Meredith (1/9/08)

Online resource: Your PERA Benefits (see definition of salary)

The annual increase is 3.5 percent for most PERA retirees and is paid in the March benefit. For those benefit recipients who became PERA members on or after July 1, 2005, the annual increase is the lesser of 3 percent or the CPI. There is a different annual increase for those who became PERA members on or after January 1, 2007. The annual increase for retirees who have not been retired for a year is prorated.
– Meredith (1/9/08)

Online resource: Retiree Report - March 2008

No. The Madoff fund is a hedge fund, and the PERA Board of Trustees wisely decided not to invest in hedge funds when they become popular several years ago. Some of you have also asked if PERA invests in credit default swaps (CDSs) and credit debt obligations (CDOs). PERA does not invest in these types of instruments.
– Meredith (12/19/08)

PERA is not insured by the Pension Benefit Guaranty Corporation like company pension plans; however, PERA is backed by the over 400 public employers in Colorado who offer PERA as a retirement plan for their employees.
– Meredith (12/19/08)

Since PERA is a defined benefit plan, your benefit is not based on the fluctuations in the financial markets, but on your contributions, age, and years of service. Your contributions will earn interest compounded annually (the interest rate will be 3 percent effective January 1, 2009) until you refund or roll over your account, or reach retirement eligibility and choose to receive a monthly benefit or a lump sum distribution.
– Meredith (12/19/08)

No. You should not share your Personal Information Number (PIN) with anyone. Your PIN allows you access to your personal financial account information at PERA. With a PIN, you can make important changes to your account such as changing your beneficiary or mailing address (in certain cases). You may wish to read a story in the February 2008 Member Report about a financial advisor who was convicted of illegally closing and transferring members’ 401(k) accounts to accounts under his management. He did this, in part, by using PIN numbers given to him by PERA members.
– Meredith (12/12/08)

The PERA Board of Trustees and PERA staff have been closely monitoring the impact of the decline in the financial markets on PERA. As the markets have continued to decline, the Board directed staff to review all areas for possible ways to improve PERA’s funded status. Benefit payments to retirees and benefit recipients represent over 98 percent of PERA’s expenses. That leaves the benefits being earned by members (active and inactive) as the only area to examine for savings.

The Attorney General’s opinion contains the following language: “Once a PERA member fulfills all the statutory requirements for a pension benefit, retires and begins receiving a pension, the member’s fully vested pension right cannot be reduced by the General Assembly.”

At this time, we cannot say for sure what future accrual of benefits might be impacted for members who are not eligible to retire and have not yet retired.

Reporters like to put a local perspective on what’s happening nationwide and since PERA is the largest retirement system in the state, it’s a story that has broad appeal. PERA has been forthright in communicating the unprecedented situation we, and all retirement plans in the nation, now face. The most recent news can always be found on our Web site at www.copera.org under Latest News.
– Meredith (12/8/08)

Contributing to a flexible spending account, also called a Section 125 Plan, reduces the amount of salary on which your PERA contributions are based. PERA uses this salary (called “PERA-includable salary”) to determine your Highest Average Salary to determine your PERA retirement benefit. If the salaries used to calculate your PERA benefit include years with contributions to a Section 125 Plan, the benefit paid to you will be lower than if you did not participate in a flexible spending plan.
– Meredith (11/20/08)

Online resources: PERA & Section 125 Plans, PERA Retirement Process, Benefits Information Meeting, Retirement Process Meeting (If you are interested in attending a PERA benefits meeting, you may use the Meetings and Appointment Scheduler to find a meeting that’s convenient for you)

PERA receives quite a few inquiries about the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) provisions of Social Security. We have a brochure with information on how the WEP and GPO impact PERA members who do not contribute to Social Security during their careers. While PERA follows federal legislation, the best resource for information on current legislation in Congress would be the offices of Colorado’s Senators and Congressional Representatives.
– Meredith (11/20/08)

Online resources: PERA & Social Security, if you do not know how to contact your elected officials in Congress, you may use the Legislative Action Center on the PERA Web site.

Susan, you are prudent to follow the news about Penn Treaty if you currently have a policy with them. In these volatile financial times, investors and policyholders should be aware of the financial status of the companies with which they are doing business. PERA staff is closely monitoring Penn Treaty's current situation, and we remain confident that PERA members who hold Penn Treaty policies are protected. We do not believe that Penn Treaty is about to declare bankruptcy, as you state. To the contrary, they are working with their regulators to develop a "voluntary rehabilitation" plan that will enable them to resume sales of new policies. Of importance to you directly, Penn Treaty sold individual policies to PERA members and retirees; those policies are protected by state insurance guaranty funds. Even if the insurance company were to stop operations–which we do not expect–state insurance regulators would step in to protect policyholders with policies in force. 

As I am sure you can appreciate, PERA cannot give you personal financial advice about whether another insurance policy would be better for you. PERA does expect to have arrangements in place with an additional long term care insurer in the near future, though, so that new policies can again be made available to PERA members and retirees. News will be posted on our Web site when it becomes available.
– Meredith (10/17/08)

We’ve posted information on the impact of the markets on our Web site on the Latest News page. A good reference point that gives members and retirees a foundation to begin understanding how PERA is impacted is the Shareholder Presentation. This presentation outlines the reasons why PERA is able to weather the ups and downs of the markets.

For retirees like Don, your PERA benefit will not decrease and you will receive your annual increase in 2009.
– Meredith (10/10/08)

To answer Sandy’s question, Colorado PERA was invited to testify at Congressional hearings on the demise of Lehman Brothers. PERA’s General Counsel represented other large public pension plans in his testimony before the House Committee on Oversight and Government Reform on Monday, October 6. We have the testimony posted on our Web site.
– Meredith (10/10/08)

In 2002, school districts sought legislation to allow small school districts meeting certain requirements to employ PERA retirees as teachers and principals for more than the 110-day/720-hour calendar year limit.  In 2003, legislation was passed that extended this critical shortage provision to other school district personnel such as bus drivers and cooks.  Both of these laws expired on June 30, 2005.  The PERA Board of Trustees has not considered seeking similar critical shortage legislation in 2009.
– Meredith (10/2/08)

PERA retirees may work for any employer not affiliated with PERA after retirement without restriction. However, State law specifies that retirees who return to work for a PERA-affiliated employer may only work for 110 days or 720 hours in a calendar year. State law also requires the employers of rehired retirees to pay the employer contribution rate (retirees do not pay the member contribution).  Some employers reduce the salary being paid to retirees that they’ve rehired to cover the cost of the employer contribution. 

These are the primary rules on working after retirement. Additional restrictions may apply depending on your specific situation. We have extensive information on these rules in our publications or you may contact PERA’s Customer Service Center with questions specific to your situation.
– Meredith (8/22/08)

Online resources: Working After Retirement booklet, Working During the Effective Month of Retirement fact sheet

That’s a great question, Gary.  You’re right, Americans are living longer, and Colorado ranks as one of the healthiest states in the nation. In order to account for these facts, PERA’s actuaries review PERA’s active and retired member population at the end of every year and recommend changes to life expectancy assumptions to the Board of Trustees.  At least every five years, another actuarial firm audits the assumptions made by the current actuary and may also recommend changes to the Board of Trustees.  The life expectancy variable is one of several assumptions that are reviewed each year by the actuaries, PERA staff, and the PERA Board of Trustees.  If adjustments need to be made, the Trustees can do so.  Some retirement systems use standardized mortality tables that are developed by the insurance industry to predict how long their retirees will live.  PERA uses the experience of our own population to predict what may happen in the future, which we think is a much more reliable source of information.
– Meredith (8/22/08)

Online resource: Actuarial Section of the 2007 Comprehensive Annual Financial Report (CAFR)

Many of you have written to me about the proposed PERA/DPSRS merger, and I thank you for expressing your opinions and concerns. Whether you have told me you are for or against the merger, the bottom line is that neither the PERA plan nor the DPSRS plan can be negatively impacted. That means that benefits cannot be enhanced by combining years of service in each plan, and that PERA is not “bailing out” DPSRS or DPS, or the other way around. Look for details about the merger under Latest News.
– Meredith (8/8/08)

The majority of the “Other” category under the Contributions/Deductions columns in the Summary Report represents transfers out of the various division trust funds into the Health Care Trust Fund for purchases of service credit. If a retirement benefit includes a service credit purchase, a percentage of the purchase amount is transferred to the Health Care Trust Fund when a member retires. This ensures that if a member qualifies for an increased health care subsidy as a result of a purchase of service credit, that the money for subsidies is available in the Health Care Trust Fund. The remainder in the “Other” category includes fee income, loan interest, and recovered 401(k) distributions.
– Meredith (8/8/08)

Online resource: 2007 Comprehensive Annual Financial Report (CAFR)

PERA ranks in the top 50 percent in investment performance when compared to other public pension funds over the last 10 years. Over the last five years, PERA’s investment performance ranks in the top 25 percent when compared to other public funds. The PERA portfolio is also diversified among the various asset classes (international and domestic stocks, bonds, private equity, real estate) based on PERA’s unique member and retiree population in order to fulfill PERA’s ultimate goal – to be able to pay benefits to current and future retirees.
– Meredith (8/8/08)

Yes. If your employer offers a 457 Plan, you may contribute to both the PERA 401(k) and your employer’s 457 Plan. The maximum contribution to each plan is $15,500 ($31,000 to both) in 2008. If you are age 50 and older, you may be able to contribute another $5,000 to each plan. Check with your employer to see if they offer a 457 plan.
– Meredith (8/8/08)

Keep in mind that PERA is a long-term investor with a time horizon that is much longer than individuals have.  PERA does not "time the market" nor do we actively move assets to less risky investments when the market is falling.  Because PERA is a long-term investor, we know 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 bottom line is that the PERA portfolio is well diversified and able to withstand the ups and downs of the market over time.
– Meredith (8/1/08)

Online resources: 2007 Comprehensive Annual Financial Report (CAFR), 2007 Summary Annual Financial Report, Investments Overview