The PERA Board of Trustees has recommended reforms to PERA designed to reduce the overall risk profile of the plan and improve PERA’s funded status. In light of these recommendations, it can be helpful to see how PERA as it exists today compares to similar plans across the country and how the Board’s proposal for future changes might compare as well. Comparing the PERA benefit to that of public employees in others states can also help ensure that Colorado’s public employers can attract and retain talented employees.

In a time of shifting economic and fiscal realities, PERA is not alone in considering reforms that will impact funding levels and benefit structures over time. Significant changes have been proposed to Kentucky’s public pension systems, and in Ohio, the board of the retirement plan for teachers recently reduced the cost-of-living adjustment to zero.

(More information on the Board’s recommendation is available at a dedicated website, PERAtour.)

Looking at various features of similar public pension plans across the United States – that is, large public plans with members who, for the most part, do not participate in Social Security – shows that PERA is somewhat typical. Features such as member and employer contribution rates, cost of living adjustments (COLAs) or automatic increases, and benefit multipliers vary across plans, but Colorado’s plan tends to fall in the middle of a range of these features.

The charts below indicate how these public retirement plans compare, and where PERA fits in – both today and if the Board’s proposal were to be implemented in the future.

One area where PERA is an outlier is in excluding Section 125 and 132, or so-called “Cafeteria Plan” and flexible spending account deductions from PERA-includable salary. In a survey conducted by the National Association of State Retirement Administrators, Colorado is the only one of 28 plans surveyed that excludes these deductions.

(It should be noted that the data presented here are simplified for purposes of this discussion and caution must be used in interpreting the information. For example, in Colorado, State Troopers pay a higher employee contribution because they can retire sooner than other members. While a few of those exceptions are noted, in most cases the most common or average data point for a given plan is used. Our sources include data compiled by PERA staff in February of 2017 and comparison data from the Wisconsin Legislative Council from December, 2016.)

Member contribution rate by state
State	Rate as percent of payroll
Connecticut Teachers	6
Alaska Public Employees	6.75
Maine	7.65
Colorado (current)*	8
Louisiana State Employees	8
Louisiana Teachers	8
Illinois State Universities	8
Alaska Teachers	8.65
Illinois Teachers	9
Kentucky non-University	9.105
California	9.205
Colorado proposal*	10-11
AVERAGE of current plans	10.34
Massachusetts State Employees	11
Massachusetts Teachers	11
Ohio Public Employees	14
Ohio School Employees	14
Ohio Teachers	14
Nevada	14.5
Missouri	14.5
Texas	15.1

*Note that Colorado State Troopers currently contribute 10 percent of payroll. The Board proposal would increase contributions for members hired before January 1, 2020, by an additional 3 percent above current contribution rates and for those hired on or after January 1, 2020, by an additional 2 percent. This is because for new hires starting in 2020, and for members with less than five years of service credit as of January 1, 2020, more years of salary will be considered to calculate an average salary used to determine the total retirement benefit and the retirement age will be higher.

Employer contribution rate by state
State	Rate as percent of payroll
Massachusetts State Employees	12.41
Ohio Public Employees	14
Ohio School Employees	14
Ohio Teachers	14
Missouri	14.5
Nevada	14.5
Texas	15.1
Colorado (current)*	19.13
Maine	19.29
Massachusetts Teachers	19.61
Colorado (proposed)*	21.13
Alaska Public Employees	24.84
Louisiana Teachers	26.3
California	26.58
Alaska Teachers	29.27
Connecticut Teachers	30.35
Kentucky non-University	30.755
Illinois Teachers	36.64
Louisiana State Employees	37.8
Illinois State Universities	45

*More detailed information on PERA contribution rates may be found in this fact sheet. Note that while the SAED is paid by employers, it is to be funded by foregone wage increases. The figure here is for the State Division, the AED and SAED, minus 1.02 percent which is dedicated to the Health Care Trust Fund. Contribution rates shown in this table generally reflect teachers, higher education faculty, school employees, and regular state employees.

The multiplier in a defined benefit plan is a factor used to determine the monthly benefit. An example of PERA’s multiplier is 2.5 percent times years of service times the Highest Average Salary (HAS). For a member with 30 years of service credit, the monthly benefit would be 75 percent (30 times 2.5 percent) multiplied by the HAS. (The PERA Board reviewed changes to the multiplier, but decided to maintain the current 2.5 percent factor.)

Benefit multiplier by state
State	Benefit multiplier*
Maine	2
Connecticut Teachers	2
Ohio Teachers	2.2
Illinois State Universities	2.2
Illinois Teachers	2.2
Nevada	2.25
Texas	2.3
California	2.4 (varies by age)
Alaska Public Employees	2.5 (varies by service)
Alaska Teachers	2.5 (varies by service)
Colorado (current and proposed)	2.5
Louisiana State Employees	2.5
Louisiana Teachers	2.5
Massachusetts State Employees	2.5
Massachusetts Teachers	2.5
Ohio Public Employees	2.5 (varies by service)
Ohio School Employees	2.5 (varies by service)
Missouri	2.5
Kentucky non-University	3 (varies by service)

*Where noted, plans have variable multipliers based on age or years of service at retirement. Those listed are the highest possible multipliers earned.

Annual increase provisions by state
State	Rate as percent of payroll	Notes*
Ohio Teachers	0	Fixed/Simple
Texas	0	Ad hoc
Illinois Teachers	1.25	Indexed/Simple
Illinois State Universities	1.375	Indexed/Simple
Colorado (proposed)	1.5	Fixed/Compound
Kentucky non-University	1.5	Fixed/Compound
Louisiana State Employees	1.5	Ad hoc/Typically simple
Louisiana Teachers	1.5	Ad hoc/Typically simple
Missouri	1.5	Indexed/Compound
Connecticut Teachers	1.75	Indexed/Compound
Alaska Public Employees	1.95	Indexed/Compound
Alaska Teachers	1.95	Indexed/Compound
California	2	Fixed/Simple
Colorado (current)	2	Fixed/Compound
Maine	2.2	Indexed/Compound
Massachusetts State Employees	3	Ad hoc, Indexed/Simple
Massachusetts Teachers	3	Ad hoc, Indexed/Simple
Nevada	3	Indexed/Compound
Ohio Public Employees	3**	Fixed/Simple
Ohio School Employees	3	Fixed/Simple

*Annual increase provisions vary by state. Those that are indexed are tied to various measures, including Consumer Price Index (CPI), or Social Security benefit increases. Ad hoc increases may be recommended by a board or set by the state legislature. The COLA PERA pays is compounding, increasing the base benefit each year. However, some systems pay COLAs that are not compounded (simple interest) and do not increase the base benefit for the next year’s COLA payment.

**This figure does not reflect the recent decision of the Ohio Public Employees Retirement System to recommend a reduction in its cost of living adjustment to a 2.25 percent cap.