Since 1931, Colorado PERA has been providing retirement and other benefits to the public employees who keep our state running. As the workforce and retirement landscape have changed, PERA also has adapted and grown; Colorado’s largest public retirement plan now covers nearly 700,000 current and former public workers.

PERA benefits, including the hybrid defined benefit plan and the option for some members to choose a defined contribution plan, have been valuable in helping public agencies recruit and retain employees for decades. Critics of defined benefit pensions, however, argue that today’s workers would be better served by other types of plans. An upcoming study will help shed light on that debate.

Purpose and scope

During the 2024 legislative session, state lawmakers passed House Bill 1427, which calls for the State Auditor, in cooperation with PERA, to enlist an independent actuarial firm experienced with public pensions to conduct a comprehensive study comparing the cost and effectiveness of the PERA Defined Benefit (DB) Plan to alternative plan designs, as well as providing an analysis of certain aspects of PERA’s current defined benefit and defined contribution plans.

The study will be similar in scope and purpose to a study that took place following similar legislation in 2014. That study compared various facets of the PERA DB Plan—such as cost per member, contribution rates, income replacement ratio, and portability—to other public and private sector plan types, including Social Security. The study is available online here.

Why refresh the study after a decade? In part, things have changed, and state leaders see value in having updated data. Since the last study, Colorado has seen tremendous growth, the public workforce has changed, and various reforms have put PERA on a path to full funding. This new study will incorporate all those changes to provide a more accurate assessment of PERA’s value to employers and the state as a whole.

While a lot has changed in the past 10 years, one thing that hasn’t is PERA’s commitment to providing retirement security to our members. The previous study concluded that PERA’s plan provides a better benefit at a lower cost than other plans, making it the best option for providing retirement benefits to the state’s public employees. We believe an updated study will show the same results.

What’s next?

The State Auditor and PERA have until the end of October to select an actuarial firm to conduct the study. Once a firm is selected, the study is likely to take several months to complete.

When the study is complete, PERA and the State Auditor will provide a report of the study’s findings to the governor, the Joint Budget Committee, the Legislative Audit Committee, and the House and Senate Finance Committees.

We’ll also provide a summary of the study’s findings here on PERA On The Issues. Make sure you’re subscribed to our biweekly newsletter to receive all the latest updates.