On Tuesday, June 26, Colorado PERA conducted telephone town halls for members and retirees. If you missed the calls, recordings and transcripts of each call have been posted here.

A summary of the most asked questions and responses is below. Questions about individual retirement benefits may be answered by contacting PERA Customer Service at 1-800-759-7372.

Q: How does the automatic adjustment feature in Senate Bill 200 work?

A: 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.

With the automatic adjustment feature of SB 200, if PERA’s projected period to reach full funding falls behind the funding goal, contributions and the direct distribution would increase (the direct distribution will not exceed $225 million) while the AI would decrease (but not lower than 0.5 percent). 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.

See the Automatic Adjustment fact sheet for details.

Q: Why are the different divisions within PERA treated differently? For example, employers in the Local Government Division won’t be contributing more and won’t receive any of the direct distribution from the State.

A: The reason behind a different contribution level for Local Government employers is the division has a better funded status and the additional contributions were not needed to bring the division to full funding within 30 years. Keep in mind that employers in the Local Government Division do not receive funding from the State currently and therefore are not included in the divisions receiving a portion of the direct distribution.

Q: What was the impact of SB 200 on PERA’s funded status?

A: Each division is a separate trust (School, State, Denver Public Schools, Judicial, Local Government). The projected amortization period (or the time it will take to be fully funded) for each division, recognizing the changes in SB 200 and incorporating the 2017 investment return, is below.

Amortization Period for Each Division

Division	Projected Period of Time to Reach Full Funding
State	27 years
School	30 years
Local Government	15 years
Judicial	15 years
Denver Public Schools (DPS)	17 years

Q: How does the direct distribution work?

A: In short, the direct distribution of $225 million will come directly to PERA from the state budget each year. This amount may decrease, if the automatic adjustment provision kicks in, but will never exceed $225 million. For more information, please see this PERA on the Issues post and fact sheet.

Q: I recently read an article about PERA’s investment expenses. Can you explain what PERA spends on investment fees?

A: The article was focused on private equity and real estate investment fees. The goal of these asset classes is outperformance and diversification versus the public markets over the long term, which they have provided. For the 10-year period ending December 2017, PERA’s investments have outperformed a hypothetical 60 percent global equity, 40 percent fixed income portfolio by approximately $3.1 billion dollars. In other words, PERA’s investment program that includes private equity has generated $3.1 billion more than if PERA didn’t invest in the asset class. .

Read more on investment fees.

Q: What is PERA’s position on divesting from certain investment opportunities, such as fossil fuels?

PERA invests on behalf of the membership to achieve one goal: to secure the retirement benefits promised to Colorado’s current and former public employees. The PERA Board has a fiduciary obligation to the membership and, in part, fulfills its obligation by designing an investment strategy that seeks to maximize returns. That said, the Board routinely reviews its existing policies related to investment prohibitions. In June 2018, the Board’s Investment Committee began reviewing and possibly updating the Statement on Divestment adopted by the Board in 2007. The Investment Committee members received educational presentations from their fiduciary counsel, their investment consultant, and PERA staff regarding divestment and engagement. The Board will continue its process of deliberation on this topic over the next few months.

Q: What is PERA doing about the Windfall Elimination Provision in Social Security?

A: Because the Windfall Elimination Provision (WEP) saves the Social Security trust fund money (and getting rid of it would cost the federal government money), Congress has been reluctant to act. PERA and the national organizations in which we participate track movement on federal legislation and if there is any news on this front, we will certainly share it with PERA members.

Read more on the WEP here.

Q: Will PERA employees and the Board be sacrificing like the rest of us?

PERA employees and Trustees elected by the m

On Tuesday, October 3, Colorado PERA conducted telephone town halls for members and retirees. If you missed the calls, recordings have been posted here.

A summary of the most asked questions and responses is below.

Why is the Board recommending benefit cuts and contribution increases when the stock market is at a record high this year?

The Board’s recommendations are intended to reduce PERA’s risk profile in the future, making PERA more sustainable and able to adapt to our changing environment. Two key changes have increased the time it will take PERA to become fully funded. First, the PERA Board lowered the long-term rate of return assumption (which made the cost of providing retirement benefits higher). While the U.S. stock market may be doing well this year, the long-term forecast for the global financial markets is not as optimistic. (Read more about PERA’s diversified portfolio of investments and its risk profile.) Second, the Board adopted new mortality tables that reflect the longer lives of PERA retirees.

Haven’t retirees already sacrificed enough with the reduction in the COLA in 2010? Why can’t PERA members who are still working pay more?

The Board is keenly aware that recommended changes impact public employees who have provided valuable services to the state and their communities. The Board’s   approach to lowering PERA’s risk profile was to spread the responsibility of ensuring PERA’s financial strength across the PERA membership (this includes PERA’s employers). More than 90 percent of PERAtour attendees agreed with the principle that   the PERA benefit should allow retirees to maintain their standard of living throughout their lifetime, meaning that a dignified retirement starts with a livable base benefit that is maintained through annual increases. And more than 80 percent of PERAtour attendees agreed that the PERA retirement plan should require shared responsibility among members, retirees and employers.

Is PERA worried that increased contributions from members will make public employment in Colorado unattractive?

Yes. One of the Board’s objectives established before the recommended legislative package was finalized was that PERA remain fair and attractive to future public   employees. In other words, the PERA retirement benefit needs to continue to adapt and be flexible to the needs of the modern workforce. A correlated principle was that PERA should serve as a tool for employers to recruit and retain top quality talent.

I have heard a lot of people expressing concerns about PERA. Why is PERA constantly a topic of discussion?

PERA believes conversations about the retirement system covering more than 560,000 current and former Colorado public employees should be based in fact and that’s why the PERAtour website was created. By proactively working with experts and engaging the PERA membership and stakeholders around the state, PERA is promoting sensible and workable reforms that ensure a secure retirement at a low cost for Colorado’s current, future, and former public employees.

When will the proposed changes go into effect?

The Board was careful to create a package of recommendations that would not influence member behavior. Details on the timing and what segment of the PERA membership each recommendation will impact may be found in this fact sheet. Only the Colorado General Assembly can change PERA benefits and contribution rates. The 2018 legislative session begins on January 10, 2018.

Still have a question? Submit it to [email protected].