Retirement insights from a Colorado PERA perspective

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<a href="https://coloradosun.com/2026/01/13/colorado-legislature-2026-budget-problem/" target="_blank" rel="noreferrer noopener">Colorado Lawmakers Return to Capitol Facing $850 Million Mountain of Tough Budget Decisions | The Colorado Sun</a>



The State budget is once again front and center as the 2026 legislative session gets underway. Lawmakers are facing the prospect of cutting approximately $850 million in spending to pass a balanced budget for the next fiscal year, which begins July 1.



<a href="https://www.cnbc.com/2026/01/08/irs-accepting-tax-returns.html" target="_blank" rel="noreferrer noopener">When Does the IRS Start Accepting Tax Returns? Jan. 26 | CNBC</a>



Tax season is nearly upon us—the Internal Revenue Service announced it will begin accepting individual tax returns on January 26. Some taxpayers could see bigger refunds this year due to various changes included in President Trump’s One Big Beautiful Bill Act. The deadline to file is April 15 for most taxpayers.



<a href="https://www.aarp.org/money/retirement/obscure-terms-to-know/">5 Obscure Retirement Terms You Should Know |</a><a href="https://www.aarp.org/money/retirement/obscure-terms-to-know/" target="_blank" rel="noreferrer noopener"> </a><a href="https://www.aarp.org/money/retirement/obscure-terms-to-know/">AARP</a>



How well do you know retirement terminology? Take this short quiz from AARP to test your knowledge and learn about important topics like required minimum distributions and longevity risk.



<a href="https://www.napa-net.org/news/2026/1/young-retirement-savers-are-doing-what-older-savers-wish-they-had" target="_blank" rel="noreferrer noopener">Why Young Retirement Savers Are Beating Older Generations | National Association of Plan Advisors</a>



A new survey found younger generations seem to be heeding advice to save money for retirement early in their careers. Compared to Generation X and Baby Boomers, Generation Z and Millennials are contributing to workplace retirement plans earlier, monitoring their progress, and planning for market volatility, according to the survey from Nationwide Retirement.



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News You Should Know is a digest of news from publications around the nation about finance, investing, and retirement.

News You Should Know: Colorado Lawmakers Facing $850 Million Budget Gap

The 2026 legislative session commenced January 14 and will continue for up to 120 days.



Below you&#8217;ll find summaries and status information for proposed legislation that affects PERA and its members and retirees. We&#8217;ll update the status of each bill regularly and encourage you to <a href="https://www.copera.org/pera-on-the-issues/subscribe">subscribe to our biweekly newsletter</a> for regular updates. Note that bill summaries describe each bill as introduced and may not reflect all recent changes.



Last updated: January 27, 2026



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<h2 class="wp-block-heading"><a href="https://leg.colorado.gov/bills/HB26-1026" target="_blank" rel="noreferrer noopener">House Bill 1026</a></h2>



<h3 class="wp-block-heading">Expanding Plan Options for PERA</h3>



Summary: Would make changes to PERA provisions related to purchasing service credit and the PERAPlus 457 Plan. Under current law, PERA members can purchase service credit based on previous periods of employment; this bill would allow for limited purchases of service credit for periods of unemployment. The bill would also require all PERA-affiliated employers to offer the PERAPlus 457 Plan and its Roth option to their employees in addition to existing plan options.



Sponsors: <a href="https://leg.colorado.gov/legislators/bob-marshall" target="_blank" rel="noreferrer noopener">Rep. Bob Marshall</a>, <a href="https://leg.colorado.gov/legislators/eliza-hamrick" target="_blank" rel="noreferrer noopener">Rep. Eliza Hamrick</a>, <a href="https://leg.colorado.gov/legislators/chris-kolker" target="_blank" rel="noreferrer noopener">Sen. Chris Kolker</a>



Status: Introduced January 14; scheduled for discussion in House Finance Committee February 9



<h2 class="wp-block-heading"><a href="https://leg.colorado.gov/bills/HB26-1027" target="_blank" rel="noreferrer noopener">House Bill 1027</a></h2>



<h3 class="wp-block-heading">BOCES Definition &amp; Executive Director</h3>



Summary: Under current state law, certain PERA retirees are allowed to return to work for a PERA-affiliated employer without facing a reduction in their PERA benefit. This bill would add executive directors of boards of cooperative services (BOCES) to the list of approved retirees.



Sponsors: <a href="https://leg.colorado.gov/legislators/tammy-story" target="_blank" rel="noreferrer noopener">Rep. Tammy Story</a>, <a href="https://leg.colorado.gov/legislators/chris-kolker" target="_blank" rel="noreferrer noopener">Sen. Chris Kolker</a>



Status: Introduced January 14; scheduled for discussion in House Education Committee January 29



<h2 class="wp-block-heading"><a href="https://leg.colorado.gov/bills/HB26-1062" target="_blank" rel="noreferrer noopener">House Bill 1062</a></h2>



<h3 class="wp-block-heading">Expand Deduction for Retirement Benefits</h3>



Summary: Under current state law, individuals can deduct a portion of their pension or other annuity income from their taxable income, up to the applicable limit. This bill would remove all caps on the deduction beginning with the 2027 tax year.



Sponsors: <a href="https://leg.colorado.gov/legislators/ron-weinberg" target="_blank" rel="noreferrer noopener">Rep. Ron Weinberg</a>



Status: Introduced January 14; assigned to House Finance Committee

2026 Proposed PERA-Related Legislation Status

The second regular session of the 75th Colorado General Assembly will begin on Wednesday, January 14. Lawmakers will then spend up to 120 days introducing and debating bills that could become law and passing a budget for the next fiscal year.



Before all the legislative activity begins, we sat down with PERA’s Director of Public and Government Affairs, Michael Steppat, to discuss the session and what we can expect as it relates to PERA.



Tell our readers a little bit about the Legislature’s role in overseeing PERA and the work you do.



It can be helpful to think of the General Assembly as PERA’s plan sponsor while the PERA Board administers benefits. The General Assembly is responsible for determining things like contribution rates and benefit levels, providing oversight through various legislative committees, and setting the amount of the annual benefit increases that retirees receive.



Because lawmakers have the power to change plan provisions and benefits, it’s important to make sure they understand how PERA works and how legislation can potentially affect our members, retirees, and funding progress. A lot of my time leading up to and during the legislative session involves meeting with legislators and other stakeholders on PERA-related issues and potential legislation. I also attend bill hearings to help inform committee members and answer their questions.



Ahead of the session, you’ve been talking with lawmakers about some PERA-related proposals. Can you give us some more detail on those?



We’ve been exploring some options from a study PERA’s actuaries performed earlier this year for a couple of proactive legislative changes meant to reduce the likelihood of triggering the <a href="https://www.copera.org/automatic-adjustment-provision" target="_blank" rel="noreferrer noopener">Automatic Adjustment Provision</a> (AAP) that took effect with Senate Bill 200 in 2018. The AAP automatically adjusts member and employer contributions, the State’s direct distribution, and retiree annual increases based on our funding progress. It is a calculation laid out in statute that essentially compares what came into the fund in any given year versus what should have come in that year to keep PERA on track to full funding by 2048. If we fall behind in a given year, contributions go up the following year while annual increases go down, and vice versa.



We know those adjustments can be really challenging for our members and retirees, so we worked with our actuaries to come up with two legislative proposals that are meant to reduce the likelihood of any automatic adjustments in the near future—without jeopardizing our progress toward reaching full funding by 2048.



Those proposals include providing PERA flexibility to&nbsp;allocate&nbsp;the&nbsp;State’s annual $225 million direct distribution&nbsp;to whichever division trust funds&nbsp;would help minimize the likelihood of&nbsp;triggering automatic&nbsp;adjustments and&nbsp;redirecting a&nbsp;portion&nbsp;of employers’ health care trust fund contributions to instead help pay off&nbsp;pension&nbsp;liabilities.&nbsp;The health care trust fund is closer to full funding than the pension trust funds, so we want to make sure those contributions are going where they’re needed most.



We think these two bill proposals will be beneficial for our members, retirees and employers, because they would reduce the chance of automatic adjustments without having any negative financial impact on our funding progress. Additionally, these proposed changes do not require any new funding mechanisms from the State, which is very important as the Legislature is facing yet another year with a budget shortfall and having to make drastic cuts to balance the budget.



Speaking of the budget, lawmakers will be tasked with cutting hundreds of millions of dollars in State spending. Could any of those cuts affect PERA?



PERA doesn’t rely on the State budget for the administration or operating costs of the plan, but the General Assembly and the State of Colorado as an employer make contributions to PERA that could be subject to legislation.



For example, during the early days of the COVID-19 pandemic, the Legislature paused (and later repaid) its annual $225 million direct distribution to PERA due to a significant budget shortfall. We don’t expect anything like that this year. However, Governor Polis included in his budget proposal a 1% reduction in what the State Division contributes as an employer to PERA. Specifically, the governor’s budget request calls for reducing the Amortization Equalization Disbursement (AED) and Supplemental Amortization Equalization Disbursement (SAED) both by 0.5% for employers in the State Division to help balance the fiscal year 2026-27 budget. The AED and SAED are employer contributions to PERA for the purpose of reducing the unfunded actuarial accrued liability.



The proposed 1% reduction would reduce contributions to PERA by about $40 million over the state’s next fiscal year, adding up to about $180 million by the time PERA reaches full funding in 2048.



PERA leadership remains actively engaged with policymakers to oppose measures that would negatively impact the fund’s financial health and we have already provided formal testimony to the Legislature’s Joint Budget Committee outlining the long-term risks of reduced contributions, to ensure they fully understand the consequences for members and retirees.



The Governor’s list of budget recommendations also revives the proposal to privatize Pinnacol Assurance. How does PERA factor into that proposal?



Pinnacol Assurance is the State’s workers’ compensation insurer, and the Governor’s Office wants to convert it from a quasi-public entity to a private one to take advantage of the hundreds of millions of dollars Pinnacol has in its reserves.



If that happens, Pinnacol could not continue to be part of PERA, since its staff would no longer be public employees. In order to disaffiliate from PERA, Pinnacol would be required to pay its portion of DB Plan liabilities—estimated to be approximately $300 million—to fund the benefits its employees have earned prior to disaffiliation.



This is the second year in a row the Governor’s budget request has proposed privatizing Pinnacol Assurance, but it has also been a policy discussion that has come up multiple times over the past few decades and, so far, without any consensus on potential changes to the structure of the state’s largest workers’ compensation carrier and insurer of last resort. If policymakers can agree on a solution to the more fundamental question of whether Pinnacol should be allowed to privatize, then PERA will factor in and we’ll seek to ensure any disaffiliation payment to PERA is satisfactory to cover the expected liabilities over time.



We sometimes hear from members who want to know how they can weigh in on legislation—what’s your advice?



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/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.



I also encourage anyone who’s interested in PERA-related policy to join the <a href="https://www.copera.org/about/legislation/ambassador-program" target="_blank" rel="noreferrer noopener">Ambassador Program</a> to receive email updates on the legislative session and bills that might affect PERA.



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

What to Expect from Colorado’s 2026 Legislative Session

The Colorado PERA Board of Trustees met in Denver on Friday, November&nbsp;21 for its final regularly scheduled meeting of the year.&nbsp;



Trustees voted to approve PERA’s 2026 operating budget, set the interest rate for member accounts,&nbsp;discussed the upcoming legislative session, and more.&nbsp;Additional&nbsp;details, including meeting materials and a recording of the livestream,&nbsp;are available on the&nbsp;<a href="https://www.copera.org/about/board-and-leadership/board-meeting-archive" target="_blank" rel="noreferrer noopener">Board Meeting Archive</a>&nbsp;page.&nbsp;&nbsp;



<h2 style="color:#000000;" class="wp-block-heading has-black-color has-text-color has-medium-font-size">Investment consultant decision&nbsp;</h2>



Earlier this year, the Board directed staff to&nbsp;request proposals from investment consulting firms as part of its regular review of third-party service providers.&nbsp;The Board’s Investment Committee interviewed three firms and&nbsp;the full Board&nbsp;<a href="https://www.copera.org/news/pera-board-retains-aon-as-investment-consultant" target="_blank" rel="noreferrer noopener">voted to retain&nbsp;Aon</a>,&nbsp;its&nbsp;current investment consultant.&nbsp;



The Board&nbsp;is responsible for&nbsp;overseeing PERA’s investment program and&nbsp;utilizes&nbsp;an investment consultant to provide research, analysis, and advice in areas such as investment strategy, asset allocation, and fund performance. The investment consultant also conducts periodic&nbsp;<a href="https://www.copera.org/pera-on-the-issues/asset-liability-study-a-guide-to-building-a-strategic-portfolio" target="_blank" rel="noreferrer noopener">asset/liability analysis</a>&nbsp;that informs PERA’s strategic asset allocation, performance benchmarks, and assumed rate of return.&nbsp;



<h2 style="color:#000000;" class="wp-block-heading has-black-color has-text-color has-medium-font-size">Strategic plan update&nbsp;</h2>



PERA CEO/Executive Director Andrew Roth and&nbsp;Director of Strategy Annalise Anderson&nbsp;provided an update to the&nbsp;Board on the organization’s three-year strategic plan.&nbsp;As the first year under the plan winds down, Roth and Anderson said they expect to&nbsp;complete 100% of the&nbsp;plan’s&nbsp;measures and targets for 2025.&nbsp;



One of the main goals included in the plan is improving the customer and stakeholder experience, and&nbsp;Roth&nbsp;detailed&nbsp;much of&nbsp;the work he’s done over the past year, including meeting with lawmakers,&nbsp;holding&nbsp;in-person&nbsp;<a href="https://copera.org/about/pera-town-hall" target="_blank" rel="noreferrer noopener">Town Halls</a>&nbsp;to connect with members and retirees&nbsp;in Fort Collins and Pueblo, and increasing outreach to PERA-affiliated employers.&nbsp;



Leaders will&nbsp;begin working on an implementation plan for year&nbsp;two&nbsp;to help guide&nbsp;staff’s work&nbsp;throughout 2026, with regular updates continuing at future Board meetings.&nbsp;



<h2 style="color:#000000;" class="wp-block-heading has-black-color has-text-color has-medium-font-size">Upcoming legislative session&nbsp;</h2>



Director of Public and Government Affairs Michael Steppat joined Roth to&nbsp;discuss the 2026 legislative session and some of the issues they expect&nbsp;state&nbsp;lawmakers to tackle.&nbsp;



Similar to&nbsp;the 2025 session, legislators&nbsp;will face the challenging task of cutting&nbsp;hundreds of millions in&nbsp;state&nbsp;spending to pass a balanced budget.&nbsp;While that&nbsp;won’t&nbsp;happen until the spring, Gov. Jared&nbsp;Polis&nbsp;has already&nbsp;submitted&nbsp;his proposed budget. The governor’s proposal&nbsp;calls for privatizing the state’s&nbsp;worker compensation insurance provider, Pinnacol Assurance, and reducing the&nbsp;amortization equalization disbursement (AED), a contribution that employers make to PERA, for employers in the State Division.&nbsp;



If Pinnacol were to become a private entity, it would have to disaffiliate from PERA and&nbsp;pay its&nbsp;portion&nbsp;of DB Plan liabilities, which are estimated to be&nbsp;approximately $300 million.&nbsp;&nbsp;



The proposed 1% reduction in the&nbsp;AED is estimated to reduce contributions to PERA by about $40 million over the next two years, adding up to about $180 million by the time PERA reaches full funding in 2048.&nbsp;



Steppat and Roth also discussed two legislative proposals that, if introduced and passed, could help&nbsp;reduce the likelihood of triggering automatic adjustments to PERA contributions and retiree annual increases in future years under the&nbsp;<a href="https://www.copera.org/automatic-adjustment-provision" target="_blank" rel="noreferrer noopener">Automatic Adjustment Provision</a>.&nbsp;Those proposals include providing PERA flexibility to&nbsp;allocate&nbsp;the&nbsp;State’s annual $225 million direct distribution&nbsp;to whichever division trust funds&nbsp;would help minimize the likelihood of&nbsp;triggering automatic&nbsp;adjustments and&nbsp;reallocating a&nbsp;portion&nbsp;of employers’ health care trust fund contributions to help pay off&nbsp;pension&nbsp;liabilities.&nbsp;



The 2026 legislative session begins&nbsp;on January 14, and&nbsp;PERA On&nbsp;The&nbsp;Issues&nbsp;will be closely tracking all PERA-related bills throughout the session.&nbsp;



<h2 style="color:#000000;" class="wp-block-heading has-black-color has-text-color has-medium-font-size">2026 Board election&nbsp;</h2>



Two seats on the Board will be up for election in 2026: A School Division seat and a State Division seat to be filled by an employee of an institution of higher education.&nbsp;



Candidacy for the two open seats will open in early January, and active members in the School and State divisions will receive ballots in May.&nbsp;



<h2 style="color:#000000;" class="wp-block-heading has-black-color has-text-color has-medium-font-size">Member contribution interest rate&nbsp;</h2>



Each November, the Board&nbsp;is responsible for&nbsp;setting&nbsp;the interest rate that applies to PERA DB Plan accounts for the upcoming year.&nbsp;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&nbsp;DB Plan&nbsp;account, they receive their contributions, the interest earned on that balance&nbsp;(compounded annually), and any applicable employer match. If that member keeps their account with PERA, the balance will continue to&nbsp;accrue&nbsp;interest&nbsp;and the member has multiple options upon reaching retirement eligibility, including choosing a lifetime monthly benefit.&nbsp;



The Board’s policy evaluates the interest rate as a&nbsp;component&nbsp;of members’ overall retirement benefit. After discussing the issue, Trustees voted to keep the interest rate at 3 percent for 2026.&nbsp;



<h2 style="color:#000000;" class="wp-block-heading has-black-color has-text-color has-medium-font-size">2026 actuarial audit&nbsp;</h2>



In 2026, the Board will&nbsp;hire an outside firm to conduct its periodic actuarial audit.&nbsp;Such audits have been part of the Board’s governance practices since the 1980s, with audits taking place every four or five years. With the passage of Senate&nbsp;Bill 28 in 2025, the Board is now required by law to conduct actuarial audits every four years. The last audit took place in 2022.&nbsp;



The&nbsp;goal&nbsp;of the actuarial audit is to&nbsp;receive an independent assessment of PERA’s actuarial methods and assumptions&nbsp;and&nbsp;attempt&nbsp;to&nbsp;replicate the&nbsp;calculations of the Board’s&nbsp;actuarial&nbsp;consultant, Segal.&nbsp;&nbsp;&nbsp;



Staff will conduct a search for a third-party&nbsp;firm to conduct the audit in early 2026, with results expected by the Board’s November 2026 meeting.&nbsp;



<h2 style="color:#000000;" class="wp-block-heading has-black-color has-text-color has-medium-font-size">2026 meeting dates&nbsp;</h2>



The Board concluded its business with a look at&nbsp;2026’s meeting calendar. The following Board meetings are scheduled for the year:&nbsp;



<ul>
<li>January 23&nbsp;</li>
</ul>



<ul>
<li>March 20&nbsp;</li>
</ul>



<ul>
<li>June 25&nbsp;</li>
</ul>



<ul>
<li>September 23-26 (planning session and meeting)&nbsp;</li>
</ul>



<ul>
<li>November 20&nbsp;</li>
</ul>







For more information on Board meetings, including recordings and meeting materials, visit&nbsp;the&nbsp;<a href="https://www.copera.org/about/board-and-leadership" target="_blank" rel="noreferrer noopener">Board and Leadership</a>&nbsp;page.&nbsp;

Tag Archives:

News You Should Know: Colorado Lawmakers Facing $850 Million Budget Gap

2026 Proposed PERA-Related Legislation Status

What to Expect from Colorado’s 2026 Legislative Session

PERA Board Approves Interest Rate, Discusses Upcoming Legislative Session at November 2025 Meeting

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