As the Legislature debates the details of Senate Bill 18-200, intended to improve PERA’s funded status and lower its overall risk, it is helpful to keep in mind how PERA compares to similar public employee retirement plans across the country – both today and if legislation is approved.

The proposed legislation incorporates many of the recommendations that the PERA Board approved last September, including changes to the age and service requirements necessary for a full service retirement benefit. The Board had recommended increasing those requirements to age 65 for most divisions with a minimum of five years of service. (The recommendation for State Troopers was a lower, but still increased, age.). These increases reflected the data gathered from the experience study that showed the PERA retiree population was living longer than previously projected. Read more about the Board’s changes to actuarial assumptions here and here.

As currently written, the bill would increase age and service requirements for all members who begin employment on or after January 1, 2020, inline with the Board’s recommendations. The bill would also change retirement eligibility for all current members who are age 46 or younger as of that date by adding one year to retirement eligibility for every four years less than age 46, not exceeding 65 years of age.

The minimum age at which an employee can retire and receive a full retirement benefit (often shortened to “retirement age”) is an important component of any retirement plan. Even for Social Security (which is not really a retirement plan but rather a social safety net to reduce old-age poverty), the retirement age for a full, or normal, retirement benefit, is now 66. For many years, it was 65 but has been gradually increasing for people born in 1938 or later. It will continue increasing until it reaches 67 for people born after 1959.

Different pension plans determine retirement eligibility using a variety of factors that typically include some combination of age at retirement combined with years of service (or purchased service, in some cases).

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 – Colorado PERA currently falls in the middle of the pack for retirement age requirements.

The minimum age for a normal PERA retirement is 58 for the most recent hires in the School Division and 60 for the most recent hires in other divisions not including Troopers, giving Colorado one of the lower – but not the lowest – retirement ages in this comparative group. Under the proposed legislation, Colorado’s retirement age of 65 would be one of the higher – but not the highest – retirement ages. And the retirement age would still fall lower than that of Social Security.

Many of the plans with a lower retirement age are making trade-offs elsewhere. For example, Ohio Teachers has a retirement age of 60 but just reduced its cost of living adjustment or COLA to zero. In Kentucky, a number of changes are currently pending in the legislature that would reduce the COLA to 0.75%.

The chart below shows how Colorado’s retirement age requirements compare to this group, reflecting normal or full retirement eligibility requirements for the most recent hires or newest retirement tiers, where applicable.

(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 and have a lower minimum retirement age. While a few of those exceptions are noted, in most cases the most common or average for a given plan is used. Our sources include data compiled by PERA staff in February 2017 and comparison data from the Wisconsin Legislative Council from December 2016.)