
<p>Retirement insights from a Colorado PERA perspective</p>



<p></p>


A distant view shows a mountainous landscape with sloping peaks, green trees in the foreground, and a cloudy sky above.


<p><em>The 2025 legislative session commenced January 8 and will continue for up to 120 days.</em></p>



<p><em>Below you’ll find summaries of proposed legislation affecting Colorado PERA. The status of each bill will be updated regularly.</em></p>



<p>Last updated: January 15, 2025</p>



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<h2 class="wp-block-heading"><a href="https://leg.colorado.gov/bills/sb25-028" target="_blank" rel="noreferrer noopener">SB25-028</a></h2>



<h3 class="wp-block-heading">Public Employees&#8217; Retirement Association Risk-Reduction Measures</h3>



<p><strong>Summary:</strong> Codifies into state law certain reporting practices the PERA Board already performs on a regular basis and modifies the cadence of those reports, including actuarial experience studies and independent reviews of actuarial audits.</p>



<p><strong>Sponsors:</strong> Rep. Eliza Hamrick, Rep. Rick Taggart, Sen. Chris Kolker</p>



<p><strong>Status:</strong> Introduced Jan. 8, scheduled for hearing in Senate Finance Committee Feb. 4.</p>



<h2 class="wp-block-heading"><a href="https://leg.colorado.gov/bills/hb25-1052" target="_blank" rel="noreferrer noopener">HB25-1052</a></h2>



<h3 class="wp-block-heading">Income Tax Credit for Public Employees&#8217; Retirement Association Retirees</h3>



<p><strong>Summary:</strong> Creates a temporary refundable tax credit of $700 for qualifying PERA retirees. To qualify, a retiree would have to be 65 or older at the end of tax year 2025 or 2026, and have annual gross income of no more than $38,000 for single tax filers or $76,000 for joint filers.</p>



<p><strong>Sponsors:</strong> Rep. Eliza Hamrick, Rep. Rick Taggart, Sen. Chris Kolker</p>



<p><strong>Status:</strong> Introduced Jan. 8, scheduled for hearing in House Finance Committee Jan. 27.</p>


2025 Proposed PERA-Related Legislation Status


<p>State lawmakers convened at the Capitol Building in Denver on January 8 to begin the 75<sup>th</sup> Colorado General Assembly. Over the course of 120 days, legislators will introduce and debate hundreds of bills that could become law.</p>



<p>As in past legislative sessions, a handful of those bills will be related to PERA and its members. We caught up with PERA Director of Public &amp; Government Affairs Michael Steppat ahead of the new session to get his perspective on what to expect.</p>



<h4 class="wp-block-heading"><strong>What role does the State Legislature play in PERA?</strong></h4>



<p>While the PERA Board of Trustees is responsible for administering benefits and overseeing PERA’s investments, the Colorado General Assembly is responsible for many other aspects of PERA, such as contribution rates, benefit levels, providing oversight through various legislative committees, and setting the amount of the annual benefit increases that retirees receive.</p>



<p>It’s important to make sure lawmakers understand how PERA works and how legislation can potentially affect our funding progress. The majority of time spent in the weeks leading up to the start of the new session involves meeting with legislators and other stakeholders on PERA-related issues and potential legislation for the upcoming session.</p>



<h4 class="wp-block-heading"><strong>How does the recent election impact PERA?</strong></h4>



<p>Due to term limits for state legislators in Colorado and just natural turnover, the previous election cycle and futures cycles include many individuals being elected for the very first time. This means it is an ongoing process to educate lawmakers on PERA-related issues. As is the case with most public policy issues, there are very few who are experts right out of the gate in every aspect of an issue and this is especially true with a state retirement system. There will certainly be incoming lawmakers with experience in finance or investments or actuarial science, but it is not common for someone to have experience in all aspects of a pension plan like PERA.</p>



<p>A primary focus, both year-round and following a recent election, is to meet with and educate lawmakers. To get a good sense of how quickly the state legislature turns over, just look at how many legislators are still part of the General Assembly who voted on Senate Bill 200 in 2018—it’s fewer than a dozen out of 100 total legislators.</p>



<h4 class="wp-block-heading"><strong>We already have an idea of some of the PERA-related legislative issues lawmakers will be looking at this year. Can you tell us more about that?</strong></h4>



<p>Legislative work doesn’t only happen while the General Assembly is in session—throughout the summer and fall, various “interim” (the period when the legislature is not in regular session) committees meet and begin work on studying issues and drafting bills for the next session. This past September, the Pension Review Commission drafted two bills related to PERA.</p>



<p>The first, known as Bill A (until it is given a bill number after being officially introduced), is identical to a <a href="https://leg.colorado.gov/bills/sb24-044" target="_blank" rel="noreferrer noopener">bill from last session</a> that would provide a temporary tax credit for PERA retirees to reduce the impact of inflation. The second, Bill B, would codify into state law certain reporting practices the PERA Board already performs on a regular basis and would modify the cadence of those reports.</p>



<p><strong>READ MORE:</strong> <a href="https://www.copera.org/pera-on-the-issues/state-lawmakers-pursuing-two-pera-related-bills-in-2025" target="_blank" rel="noreferrer noopener">State Lawmakers Pursuing Two PERA-Related Bills in 2025</a></p>



<p>In addition, there’s been discussion at the Capitol regarding a potential <a href="https://www.axios.com/local/denver/2024/11/13/pinnacol-privatize-polis-colorado" target="_blank" rel="noreferrer noopener" class="broken_link">”conversion” of the State’s share of Pinnacol Assurance</a>, which is currently the State’s workers’ compensation insurer, after the proposal was included as part of the Governor’s budget request to the General Assembly last month. The proposed conversion has two main aspects related to PERA that were both included in the budget request. The first is that if Pinnacol becomes a private entity, then it cannot continue to be part of PERA both for current and future employees, and it would have to disaffiliate from PERA. The second involves using the proceeds from the sale of Pinnacol to offset the State’s $225m ‘direct distribution’ payment to PERA in future years.</p>



<h4 class="wp-block-heading"><strong>Aside from PERA-related topics, what are some other legislative priorities lawmakers will likely be pursuing this year?</strong></h4>



<p>A top priority for the Legislature this session will be <a href="https://www.axios.com/local/denver/2024/12/02/colorado-budget-writers-warn-cuts-2025" target="_blank" rel="noreferrer noopener" class="broken_link">coming up with a balanced budget</a>. When Gov. Jared Polis submitted his budget proposal to the Joint Budget Committee, it included nearly $700 million in cuts to fill a projected funding gap. The Legislature ultimately develops the State budget, and they may have different ideas for how to make up the shortage, so we’ll be closely monitoring as that process plays out to see if there are implications to PERA.</p>



<p>It is important to note PERA benefits come out of the trust funds reserved for paying those benefits, which are funded through contributions from employees and their employers as well as investment returns.</p>



<h4 class="wp-block-heading"><strong>At the federal level, a new Congress is just getting underway. What can we expect in Washington, DC?</strong></h4>



<p>The beginning of the year will be busy for Congress. The House and Senate convened on January 3, and President Trump will be sworn in for his second term on January 20. Then, Congress will begin confirmation hearings for Trump’s various nominees. With Republicans controlling the White House and both chambers of Congress, we can expect to see the party try to push through many of its legislative priorities on issues such as immigration, trade, and regulation. One policy issue at the federal level which does often impact PERA more than many others is changes to healthcare policy and we will continue to monitor what, if any, proposals come forward in that respect.</p>



<h4 class="wp-block-heading"><strong>In the final days of the last Congress, legislators took the historic step of approving a bill to repeal Social Security’s Windfall Elimination Provision (WEP) and Government Pension Offset (GPO), and President Biden has since signed the bill into law. What’s the latest on that issue?</strong></h4>



<p>Congress had been trying to repeal or modify WEP and GPO for decades without success, but the political environment was just right to make it happen at the end of 2024. We were encouraged to see legislators take action to improve the retirement security of public employees and we’ll be watching closely to see how the repeal of those two federal provisions unfolds.</p>



<p>There’s still a lot we don’t know at this point—it’s unclear what the implementation of the Social Security Fairness Act will look like, and the Social Security Administration has yet to release any details. As written the bill should apply to Social Security benefits paid in 2024, so some retirees may be owed additional benefit payments, but we don’t yet know when that might happen.</p>



<h4 class="wp-block-heading"><strong>What do you recommend to anyone who wants to get involved in the legislative process?</strong></h4>



<p>I always tell people the most important thing they can do is contact their&nbsp;<a href="https://leg.colorado.gov/legislators" target="_blank" rel="noreferrer noopener">legislators</a>&nbsp;about issues that are important to them. In addition, the General Assembly&nbsp;<a href="https://leg.colorado.gov/" target="_blank" rel="noreferrer noopener">website</a>&nbsp;has lots of great information. You can listen to&nbsp;<a href="https://leg.colorado.gov/content/committees" target="_blank" rel="noreferrer noopener">committee meetings</a>, view&nbsp;calendars, review the&nbsp;<a href="https://leg.colorado.gov/bills" target="_blank" rel="noreferrer noopener">status of a bill</a>, and sign up to testify at committee meetings.</p>



<p>And of course the biweekly <a href="https://www.copera.org/pera-on-the-issues/subscribe" target="_blank" rel="noreferrer noopener"><em>PERA On The Issues</em> newsletter</a> will have up-to-date information on any legislation that affects PERA.</p>


What to Expect from the 2025 Legislative Session


<p>The Colorado PERA Board of Trustees convened for its final regular meeting of 2024 on Friday, November 15.</p>



<p>Below are summaries of some of the key actions the Board took during the meeting. You may also view a <a href="https://www.youtube.com/live/PEsqqE25_w0?feature=share" target="_blank" rel="noreferrer noopener">recorded livestream</a> of the meeting.</p>



<h4 class="wp-block-heading"><strong>PERA operating budget</strong></h4>



<p>Following a budget workshop during which PERA executives briefed the Board on the need for a larger budget to cover important technology upgrades, the Board approved PERA’s 2025 operating budget of $132 million. The 19.6% increase over 2024’s budget includes costs associated with a multi-year project to modernize the core technology systems necessary to administer benefits as well as other critical needs.</p>



<p>Read more about <a href="https://www.copera.org/news/colorado-pera-board-approves-increase-in-operating-budget-to-fund-technology-upgrades" target="_blank" rel="noreferrer noopener">PERA’s 2025 budget</a>.</p>



<h4 class="wp-block-heading"><strong>Strategic planning update</strong></h4>



<p>For months now, the Board, PERA staff, and consultants have been working together to develop PERA’s next three-year strategic plan. That process has involved stakeholder research, identifying areas of strength and opportunity, and solidifying long-term priorities and goals for the organization.</p>



<p>From here, work will continue on crafting the plan, with a draft expected to be ready for Board review in January. Once approved, it will be up to staff to begin implementing the plan and fulfilling its strategic vision.</p>



<h4 class="wp-block-heading"><strong>Member contribution interest rate</strong></h4>



<p>Every PERA Defined Benefit Plan account accrues interest, compounded annually. If a PERA member <a href="https://copera.org/welcome-pera-members/life-and-job-changes/leaving-employment" target="_blank" rel="noreferrer noopener">leaves PERA-covered employment</a> and requests a refund of their account, they receive their contributions, the interest earned on that balance, and any applicable employer match. If that member keeps their account with PERA, the balance will continue to accrue interest and the member has multiple options upon reaching retirement eligibility, including choosing a lifetime monthly benefit.</p>



<p>The Board is responsible for setting the interest rate every year; it currently stands at 3 percent. The Board’s policy evaluates the interest rate as a component of members’ overall retirement benefit. After discussing the issue, Trustees voted to keep the interest rate at 3 percent for 2025.</p>



<h4 class="wp-block-heading"><strong>Trustee appointment and Board officer election</strong></h4>



<p>The Board held elections to name a new Chair and Vice Chair, as terms for current Chair Marcus Pennell and Vice Chair Taylor McLemore are set to expire. Current Vice Chair Taylor McLemore was elected Chair, and the Hon. Rebecca R. Freyre was elected Vice Chair. Outgoing Chair Marcus Pennell served the limit of two terms as Chair and was ineligible for reelection.</p>



<p>Both McLemore and Freyre will serve two-year terms.</p>



<p>In addition to electing new officers, the Board appointed Dr. Louis Fletcher to fill a School Division seat vacated by Trustee Scott Smith in September. Fletcher had the second-highest number of votes in the 2024 election for that seat, and will serve until the next election in 2025.</p>



<p><strong>READ MORE:</strong> <a href="https://www.copera.org/news/pera-board-elects-new-chair-vice-chair" target="_blank" rel="noreferrer noopener">PERA Board Elects New Chair, Vice Chair</a></p>



<h4 class="wp-block-heading"><strong>Denver Public Schools “true-up” discussion</strong></h4>



<p>When legislation was passed to merge Denver Public Schools Retirement System into Colorado PERA in 2010, it included a provision that aims to equalize the ratio of unfunded actuarial accrued liability over payroll of the DPS Division and the School Division in 30 years. Every five years, PERA conducts an analysis of those ratios and whether adjustments to the DPS Division employer contribution rate would be needed to stay on track.</p>



<p>The results show that a reduction in the DPS Division’s employer contribution rate would be necessary to equalize this ratio in 2039, but the PERA Board has previously taken a formal stance in opposition to the defunding provisions—such as the 5-year “true-up”—that were included in the merger legislation, and more recently has opposed any legislation seeking to reduce contributions pursuant to the Board&#8217;s funding policy.</p>



<p>Additionally, a reduction in employer contributions from the DPS Division could increase the possibility of triggering the Automatic Adjustment Provision in future years, which could increase contributions in other divisions and further decrease the Annual Increase retirees receive on their retirement benefit.</p>



<h4 class="wp-block-heading"><strong>Upcoming legislative session</strong></h4>



<p>Director of Public &amp; Government Affairs Michael Steppat and Chief Executive Officer/Executive Director Andrew Roth provided the Trustees with an update on interim legislative activity and PERA-related bills that could be introduced in the upcoming 2025 legislative session.</p>



<p>The&nbsp;<a href="https://leg.colorado.gov/committees/pension-review-commission/2024-regular-session" target="_blank" rel="noreferrer noopener">Pension Review Commission</a>, which is responsible for recommending legislation pertaining to PERA and the Fire and Police Pension Association of Colorado, drafted two bills for the 2025 session.</p>



<p>The first, known as Bill A, is similar to a bill from last session that would provide a temporary tax credit for PERA retirees to reduce the impact of inflation. The second draft, Bill B, pertains to PERA studies and reporting and aims to lay out in statute some of the work the PERA Board already does on a regular basis and modify the cadence of those reports.</p>



<p><strong>READ MORE:</strong> <a href="https://www.copera.org/pera-on-the-issues/state-lawmakers-pursuing-two-pera-related-bills-in-2025" target="_blank" rel="noreferrer noopener">State Lawmakers Pursuing Two PERA-Related Bills in 2025</a></p>



<h4 class="wp-block-heading"><strong>Actuarial experience study</strong></h4>



<p>In order to accurately estimate PERA’s financial status and how much money is needed to provide benefits now and into the future, we use a set of predictions, known as actuarial assumptions, that undergo regular review and updates as needed. Those assumptions include economic factors like inflation, investment returns and payroll growth, as well as demographic assumptions such as when people retire and how long they’ll live.</p>



<p>The process of reviewing those assumptions is known as an actuarial experience study, so called because the study involves comparing PERA’s assumptions with the actual experience over a set time period. The last experience study <a href="https://www.copera.org/pera-on-the-issues/2020-experience-study-preparing-for-a-secure-future" target="_blank" rel="noreferrer noopener">took place in 2020</a>. While nobody can predict the future perfectly, regularly performing experience studies ensures our estimates of current and future benefit obligations are as accurate as possible.</p>



<p>The current experience study will look at the period between January 1, 2020 and December 31, 2023. This is an important period because it will show the effects of the COVID-19 pandemic, such as higher mortality and earlier retirements.</p>



<p>Over the coming months, PERA staff will continue working with actuarial consultants to conduct the study, after which the consultants may recommend changes to some assumptions. If the Board adopts any recommended changes, we’ll be sure to provide an update on what that might mean for PERA’s finances.</p>



<h4 class="wp-block-heading"><strong>2025 Board election</strong></h4>



<p>The Board’s final action item was approving the calendar for next year’s Board election.</p>



<p>There will be five seats up for election in 2025: Three active member seats in the School Division, one active member seat in the State Division (excluding higher-education employers), and one retiree seat (School, Local Government, and Judicial Divisions only). Candidacy will open in early January, with the election taking place in May.</p>



<p>New in 2025, members and retirees will have the added option of being able to cast their votes via the Colorado PERA <a href="https://www.copera.org/pera-mobile-app" target="_blank" rel="noreferrer noopener">mobile app</a> or on copera.org, in addition to the option to vote by mail.</p>



<p>The Board’s next regularly scheduled meeting will take place on January 17, 2025.</p>


PERA Board Approves Budget, Member Interest Rate and More at November 2024 Meeting


<p>Lawmakers in Colorado are moving forward with two PERA-related bill drafts following a summer of legislative activity in interim committees.</p>



<p>PERA leaders and staff have been meeting with legislators throughout the summer to provide updates, answer questions, and provide feedback during this annual period of PERA review and oversight.</p>



<h4 class="wp-block-heading"><strong>Drafts of PERA-related bills</strong></h4>



<p>The <a href="https://leg.colorado.gov/committees/pension-review-commission/2024-regular-session" target="_blank" rel="noreferrer noopener">Pension Review Commission</a>, which is responsible for recommending legislation pertaining to PERA and the Fire and Police Pension Association of Colorado, met on Friday, September 27 to finalize two bill drafts related to PERA.</p>



<p>The first, known as Bill A, is similar to a bill from last session that would provide a temporary tax credit for PERA retirees to reduce the impact of inflation. The $700 credit would apply to retirees who are at least 65 years old and have adjusted gross income of no more than $38,000 for single filers or $76,000 for joint filers.</p>



<p>The second draft, Bill B, pertains to PERA studies and reporting. The bill aims to lay out in statute some of the work the PERA Board already does on a regular basis, such as periodic actuarial audits and actuarial experience studies. The bill also would modify the cadence of those reports.</p>



<p>The Commission had been considering a bill to tie to inflation the State’s annual $225 million direct distribution to PERA, based on a recommendation from the Pension Review Subcommittee. Lawmakers decided not to move forward with that bill as one of their official interim committee-recommended pieces of legislation because of its added cost amid a projected shortfall in the state budget. Lawmakers may still decide individually to move forward with any particular bills during the legislative session.</p>



<h4 class="wp-block-heading"><strong>Pension Review Subcommittee recommendations</strong></h4>



<p>Throughout the summer, PERA also engaged with the <a href="https://leg.colorado.gov/committees/pension-review-subcommittee/2024-regular-session" target="_blank" rel="noreferrer noopener">Pension Review Subcommittee</a>, which consists of a mix of legislators and members of the public and reports up to the Pension Review Commission. In addition to making recommendations to the Pension Review Commission, the Subcommittee also makes recommendations to the PERA Board and writes an annual <a href="https://leg.colorado.gov/content/recommendations-letter-citizens" target="_blank" rel="noreferrer noopener">letter to the residents of Colorado</a> on PERA’s financial health.</p>



<p>In the course of its work, the Pension Review Subcommittee came up with three recommendations for the PERA Board:</p>



<ol type="1">
<li>Provide more detail on the benchmarks PERA uses to measure performance of the various asset classes in the PERA Defined Benefit Plan portfolio.</li>



<li>Improve transparency around PERA Board meetings by making meeting recordings and materials more easily accessible online.</li>



<li>Study the impact of allowing non-vested PERA members who refund their account to receive their balance plus investment returns instead of the current Board-established 3% compounding interest.</li>
</ol>



<p>The PERA Board discussed the recommendations at its <a href="https://www.copera.org/pera-on-the-issues/pera-board-discusses-strategic-plan-investment-strategy-and-more-at-2024-planning-session" target="_blank" rel="noreferrer noopener">September Planning Session</a> and <a href="https://www.copera.org/news/colorado-pera-responds-to-pension-oversight-committees" target="_blank" rel="noreferrer noopener">agreed to consider all three</a>. Investment staff provided the Subcommittee with the information requested on benchmarks, the Board agreed to archive meeting recordings and public materials online starting in November; meetings are currently streamed live and available upon request. The Board also agreed staff will study the cost of providing market returns when a member refunds their account.</p>



<h4 class="wp-block-heading"><strong>What’s next?</strong></h4>



<p>All bill drafts from interim committees go to the Legislative Council Committee for consideration. If approved, lawmakers can then introduce those bills in the next legislative session, which begins on January 8, 2025.</p>



<p>The PERA Board’s next regularly scheduled meeting is set for November 15.</p>


Tag Archives:

2025 Proposed PERA-Related Legislation Status

What to Expect from the 2025 Legislative Session

PERA Board Approves Budget, Member Interest Rate and More at November 2024 Meeting

State Lawmakers Pursuing Two PERA-Related Bills in 2025

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