Independent Report Finds Colorado PERA Continues to Offer Cost-Effective Retirement Benefits for Public Employees

DENVER—The Colorado Office of the State Auditor today released the results of an independent study that affirms Colorado PERA’s value in recruiting and retaining public employees by providing cost-effective retirement benefits to the state’s public workforce.

“We’re encouraged to see this independent analysis reinforce the value of providing a defined benefit retirement plan to the hundreds of thousands of public employees who serve Colorado,” said PERA CEO/Executive Director Andrew Roth. “Public pensions like PERA have long been important tools in building and maintaining a skilled public workforce.”

The study, conducted by national actuarial firm Cheiron, compared PERA’s Hybrid Defined Benefit (DB) Plan to various theoretical alternative plan designs, compared the DB Plan to the PERA Defined Contribution (DC) Plan, and included results from a survey of current and former state employees on the importance of retirement benefits in their employment decisions.

The study’s key findings include:

• While no single plan design provides a superior retirement benefit for all members, PERA’s Hybrid DB Plan provides higher income replacement for employees who spend the majority of their careers in public service compared to alternative plan designs.
  • While alternatives may provide higher income replacement for non-career employees, the other plan designs come with tradeoffs, such as placing additional longevity and investment risk on members, and higher costs.
  • The PERA DC Plan can provide higher income replacement for workers who leave covered employment earlier in their careers. However, it’s important to note income replacement ratios in the DB Plan are predictable, while in the DC Plan, they depend significantly on investment returns, which can significantly impact participants.
• The hybrid nature of PERA’s DB Plan provides flexibility for members who may not spend their entire careers in public service.
  • Plan features like portability, compounding interest, an employer match, and a money purchase calculation at retirement make the DB Plan an attractive choice regardless of career tenure.
• The PERA DB Plan remains a valuable tool for recruiting and retaining qualified public employees.
  • Retirement benefits were cited by 81% of survey respondents as a factor in their decision to work for the State of Colorado, and 83% cited retirement benefits as a factor in their decision to remain in Colorado state employment.
  • Given a choice between the DB and DC plans, 77% of those who gave it a great deal of thought chose the PERA Hybrid DB Plan.

PERA offers a DB Plan to employees of over 500 public employers in Colorado and the choice between a DB or a DC Plan to new employees in the State and Local Government Divisions. Both plans offer portable benefits at a low cost, and the study found the DB plan provides higher income replacement ratios than the DC plan for career employees.

The full report is available on PERA’s website and on the State Auditor’s website.

About Colorado PERA

Colorado PERA provides retirement and other benefits to over 700,000 current and former teachers, State Troopers, corrections officers, snowplow drivers, and other public employees who provide valuable service to all of Colorado. PERA is a vital and stable contributor to Colorado’s economy, distributing $4.6 billion in benefits in 2024 to more than 115,000 retirees who live in Colorado.