As regular readers of PERA on the Issues know, Senate Bill 18-200 (SB 200) was passed by the General Assembly and signed by Governor Hickenlooper earlier this year. Changes resulting from this legislation will put PERA on a path to full funding in approximately 30 years and give PERA’s members and retirees, as well as Colorado taxpayers, a stronger, more stable retirement fund.

Included in SB 200 is an innovative mechanism that automatically adjusts both contributions to and distributions from the PERA trust funds in order to keep the plan on track to that goal of full funding.

The provision requires automatic changes to four components of PERA funding: member contributions, employer contributions, the State’s direct distribution and the annual increase (AI) paid to retirees. Prior to SB 200, the only way that contribution rates or annual increase percentages could change was by passing legislation.

If PERA’s period to reach full funding falls behind the funding goal, contributions and the direct distribution would increase while the AI would decrease. If the funding period moves ahead of the goal, contributions and the direct distribution would decrease, and the AI would increase. There are limitations on increases or decreases in a single year.

Through implementation of the automatic adjustment, PERA’s funding will continue to make progress toward full funding within 30 years of SB 200.

A fact sheet on the automatic adjustment can be found here, and a video explaining the provision can be viewed here.