Retirement insights from a Colorado PERA perspective

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

The Colorado PERA Board of Trustees has wrapped up work on an important periodic study that helps ensure better accuracy of PERA’s financial calculations.



Known as an actuarial experience study, the analysis gives retirement plans like PERA a periodic refinement or more accurate picture of their financial health and future obligations.



<h4 class="wp-block-heading">Planning for the future</h4>



PERA is in the business of providing retirement benefits for as long as a person lives, and that presents a unique challenge: Making sure we have an accurate sense of how much it will cost to pay those benefits over several decades and beyond.



Because a retiree’s benefit in the PERA Defined Benefit Plan is based on their age, years of service, and salary history, we need to be able to predict how certain factors will change over time, such as:



<ul>
<li>Expected lifespan of the retiree population</li>



<li>Expected pay increase patterns over the career of active members</li>



<li>Typical ages at which active members retire</li>



<li>Expected annual investment return, in the long-term</li>



<li>Expected change in the value of a dollar (rate of inflation)</li>
</ul>







Those factors are referred to as actuarial assumptions, and they’re grouped into either economic assumptions (inflation and investment returns) or demographic assumptions (rates of mortality and retirement). Together, the assumptions play a key role in the calculations PERA conducts every year as reported in its actuarial valuations and <a href="https://copera.org/annual-report" target="_blank" rel="noreferrer noopener">Annual Comprehensive Financial Report</a>.



RELATED: <a href="https://www.copera.org/pera-on-the-issues/explaining-the-role-of-actuaries-in-retirement-plans-like-pera" target="_blank" rel="noreferrer noopener">Explaining the Role of Actuaries in Retirement Plans Like PERA</a>



The process of reviewing and refining actuarial assumptions is known as an experience study, so called because it involves comparing the assumptions with what actually happened over a set period of time. For example, if wage growth is much different than expected during the period of study, some adjustments to that assumption are likely needed going forward.



PERA typically conducts an actuarial experience study every four years. This year’s experience study offered additional challenges because the period studied, from January 1, 2020, to December 31, 2023, encompassed effects of the COVID-19 pandemic. Special consideration was needed to ensure the higher mortality and greater number of unreduced retirements were not inappropriately reflected within the revised assumptions.



<h4 class="wp-block-heading">Experience study results</h4>



The PERA Board’s actuarial consultant, Segal, conducted the experience study and provided the Board with recommendations for adjustments to various assumptions as a result.



Segal recommended the following adjustments to demographic assumptions:



<ul>
<li>Salary scale assumptions were altered to better reflect actual recent experience.</li>



<li>Assumed rates of termination, retirement, and disability were revised to more closely reflect actual experience.</li>



<li>Mortality base tables were retained with revised adjustments for credibility and gender, where applicable, and the applied generational projection scale was updated for all groups.</li>



<li>Administrative expense load was increased from 0.40% to 0.45%, as a percentage of covered payroll.</li>



<li>Assumed annual membership growth (for projection purposes only) was decreased for the School, Local Government, and DPS Divisions.</li>



<li>Assumed rates of PERACare participation for both Health Care Trust Funds were reduced to better reflect actual recent experience.</li>
</ul>







Segal recommended retention of the current economic assumptions, including the long-term expected rate of return (7.25%), price inflation (2.3%), and wage inflation (3.0%).



The Board voted unanimously to adopt all recommendations for the five Division Trust Funds and the two Health Care Trust Funds.



<h4 class="wp-block-heading">What the changes mean</h4>



First and foremost, changes in PERA’s actuarial assumptions do not affect the payment of retirement benefits. If you’re a PERA retiree, you’ll continue to receive your monthly benefit payments as expected, and working members can count on PERA providing benefits when they retire.



The main impact of the experience study is on PERA’s current and projected liabilities—which help determine how much money PERA will need to have on hand to pay benefits for its members.



The recent experience review noted over the period studied, that certain assumptions resulted in liability gains while others resulted in liability losses. However, the net result was an actuarial loss overall—meaning, the revised assumptions will likely result in a negative effect on PERA’s funding status.



The exact impact of the updated assumptions won’t be clear until the release of the Annual Comprehensive Financial Report (ACFR), as that will be the first time the revised assumptions are incorporated into PERA’s annual valuation process—assessing plan liabilities and other important actuarial metrics.



The 2024 ACFR will be available following the PERA Board’s June 27, 2025, meeting.

Actuarial Experience Study: Refining the Financial View of the Future

In November, the PERA Board of Trustees&nbsp;<a href="https://www.copera.org/pera-on-the-issues/pera-board-approves-budget-member-interest-rate-and-more-at-november-2024-meeting" target="_blank" rel="noreferrer noopener">voted to elect new officers</a>. Taylor McLemore was elected to serve as Chair and the Hon. Rebecca R. Freyre was elected Vice Chair. They’ll begin two-year terms in January.



Freyre is a judge with the Colorado Court of Appeals, and she has been on the PERA Board since 2019. Freyre has been Chair of the Board’s Investment Committee since 2021.



We recently connected with Freyre to learn more about her experience and perspective as she prepares to take on a new role on the Board.



<h5 class="wp-block-heading">Tell us a little about yourself and the experience you bring to the Board.</h5>



I grew up in Kansas but had family in Colorado and knew this was where I wanted to live. I moved here in 1982 and worked in the financial services industry for the next six years. Finding corporate work unfulfilling, I attended law school in the evenings and decided to devote my career to public service. I was a public defender for 25 years and have served as a judicial officer for the last nine years.



<h5 class="wp-block-heading">How has your career in the justice system informed your work as a Trustee?</h5>



My work as a Trustee is a natural extension of my public service work in the justice system, where I must remain focused on following the law in a fair and impartial manner. PERA is subject to statute, so implementing the legislature’s fiduciary mandate of all Trustees feels very familiar. As a judicial officer, I can’t please everyone—every case has a winner and a loser. Similarly, Trustees must make decisions as fiduciaries that ensure PERA’s long-term stability and viability, and those decisions rarely make everyone happy.



<h5 class="wp-block-heading">What are you most looking forward to as you prepare to take on the role of Vice Chair?</h5>



I most look forward to working with my amazing fellow Trustees and assisting the new Board Chair in supporting PERA’s movement toward full funding. PERA has a thoughtful group of highly qualified Trustees, and I am confident that this team can fulfill its fiduciary duty to PERA’s members in a transparent manner as PERA faces the challenges that lie ahead.



<h5 class="wp-block-heading">What does effective Board leadership look like to you?</h5>



Effective Board leadership starts at the top, and <a href="https://www.copera.org/pera-on-the-issues/meet-the-new-chair-of-the-pera-board" target="_blank" rel="noreferrer noopener">our new Board chair</a> demonstrated that leadership when he chaired our ad hoc hiring committee that selected PERA’s new CEO. Effective leadership is professional, transparent, and focused on the Board’s governance and fiduciary mandate. It must also be collaborative with PERA staff to serve the needs of all PERA members.



<h5 class="wp-block-heading">There will be elections for five seats on the Board in 2025. Do you have any advice for someone interested in becoming a Trustee?</h5>



First, decide where your passion lies and whether being a fiduciary is right for you—it isn’t right for everyone. Being a fiduciary requires Trustees to remove their “division” hats and to make decisions that are in the best interests of all PERA members, not just those who elect you. It also requires the ability to view decisions in the long-term and to resist short-term reactions. Being a Trustee is exceptionally fulfilling, but it is also hard work and requires making tough decisions. If your passion is to advocate specifically for your division, then you may wish to become involved in organizations that directly interact with the legislature.

Meet the New Vice Chair of the PERA Board

In November, the PERA Board of Trustees <a href="https://www.copera.org/pera-on-the-issues/pera-board-approves-budget-member-interest-rate-and-more-at-november-2024-meeting" target="_blank" rel="noreferrer noopener">voted to elect new officers</a>. Taylor McLemore was elected to serve as Chair and the Hon. Rebecca R. Freyre was elected Vice Chair. They’ll begin two-year terms in January.



McLemore is a Governor-appointed Trustee and <a href="https://www.copera.org/board-members/taylor-mclemore" target="_blank" rel="noreferrer noopener">has been on the Board since 2021</a>. Prior to his election as Chair, McLemore served as Chair of the Board’s Ad Hoc Executive Director Search Committee and Vice Chair of the Governance and Executive Committees.



We recently connected with McLemore to learn more about his experience and perspective as he prepares to take on a new role on the Board.



<h5 class="wp-block-heading">Why don’t you start by telling us a little bit about yourself?</h5>



I grew up in Colorado and I care deeply about this state as a community. I have been an entrepreneur, technology executive, and community builder across my career. I was enthusiastic about the opportunity to support and serve PERA—the mission is near and dear to my heart because of all the people who work so hard to make our state a great state, and what PERA is committed to providing them in terms of their retirement stability and other benefits.



<h5 class="wp-block-heading">What are some of the things you’re thinking about as you get ready to take on the role of Board Chair?</h5>



I&#8217;m excited to lead the Board of Trustees to support the next stage of PERA&#8217;s journey toward stability and full funding. I believe we have a very thoughtful group of Trustees who bring diverse&nbsp;perspectives. Together, we can solve any challenges that lie ahead.



My role as Chair is mostly focused on how we tap into the intelligence, lived experience and diversity of those Trustees to be a well-functioning governance body. Specifically, in my role as Chair, I care a lot about our ability to be transparent&nbsp;to our stakeholders while fulfilling our fiduciary&nbsp;duty. And I think that we have started to make meaningful progress on transparency and want to continue that pathway to do even more.



<h5 class="wp-block-heading">What does effective Board leadership look like to you?</h5>



First, I believe in always focusing on our governance and fiduciary&nbsp;mandates. Second, creating a productive environment for intellectually honest debate where we can understand the challenges that PERA faces. The Board has to work on solutions in collaboration with PERA executives and staff, and I think we should be creative in thinking about how we build a PERA that is stable and productive for our members into the&nbsp;very&nbsp;far&nbsp;future.



<h5 class="wp-block-heading">The Board is getting closer to finalizing its next multi-year strategic plan. Can you talk about some of the priorities that are informing that work?</h5>



The strategic plan is working hard to balance what we need in the near, medium, and long terms. This touches everything, including our current level of funding and what the implications of that are for our members, employers and our state legislative stakeholders. What we are looking at specifically, is how our investing and operational strategies will achieve those goals.



On the operational side, we are very focused on our technology infrastructure. Our pension administration technology is some of the oldest that is currently being used in the pension space. This creates risk for our ability to maintain it and ensure that it is performing for our members. All of this leads us to the conclusion that we need to invest significantly to have modern technology that will be stable long-term to support our operations and what our members appropriately expect from us.



<h5 class="wp-block-heading">What’s something you wish more people knew about PERA and/or the Board?</h5>



I wish more people knew about the diversity and impressive lived experience and expertise across the Board. Our Board has elected representatives from our membership and Governor-appointed members who include teachers, state employees, HR leaders, business leaders, and much more. We combine all of this experience to work on our understanding of the challenges and opportunities ahead of PERA.

Meet the New Chair of the PERA Board

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



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.



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



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.



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>.



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



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.



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.



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



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.



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.



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



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.



Both McLemore and Freyre will serve two-year terms.



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.



READ MORE: <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>



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



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.



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.



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.



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



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.



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.



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.



READ MORE: <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>



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



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.



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.



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.



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.



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



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



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.



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.



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

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

At its June meeting, the PERA Board of Trustees released the 2023 Annual Comprehensive Financial Report, which contains a detailed account of PERA’s finances, investment performance, and funded status for the 2023 calendar year.



The report provides a wealth of information for anyone who wants to know more about PERA’s financial health, operations, and membership. Below we highlight some key numbers from the report and what they mean for members and retirees.



<h4 class="wp-block-heading">Financial highlights</h4>


<div class="wp-block-image">
<figure class="alignright size-large is-resized"><a href="https://content.copera.org/wp-content/uploads/2024/06/by-the-numbers-acfr-2023.png"><img decoding="async" loading="lazy" src="https://content.copera.org/wp-content/uploads/2024/06/by-the-numbers-acfr-2023-791x1024.png" alt="An overview of PERA's financial results from 2023. Investment portfolio fair value: $61.5 billion. Net rate of return: 13.4%. Members actively contributing to PERA: 213,548. Employers: 410. Total covered participants: 59,470. Funded status: 69.6%. Retirees and benefit recipients: 138,553. Annual retirement benefit payments: $5.3 billion. Invested in Colorado-based companies, partnerships, and assets: $788.9 million. 30-year rate of return: 8.3%." class="wp-image-51503" width="396" height="512" srcset="https://content.copera.org/wp-content/uploads/2024/06/by-the-numbers-acfr-2023-791x1024.png 791w, https://content.copera.org/wp-content/uploads/2024/06/by-the-numbers-acfr-2023-232x300.png 232w, https://content.copera.org/wp-content/uploads/2024/06/by-the-numbers-acfr-2023-768x994.png 768w, https://content.copera.org/wp-content/uploads/2024/06/by-the-numbers-acfr-2023-1187x1536.png 1187w, https://content.copera.org/wp-content/uploads/2024/06/by-the-numbers-acfr-2023-1583x2048.png 1583w, https://content.copera.org/wp-content/uploads/2024/06/by-the-numbers-acfr-2023.png 1700w" sizes="(max-width: 396px) 100vw, 396px" /></a><figcaption class="wp-element-caption">Click/tap to enlarge</figcaption></figure></div>


As of December 31, 2023, PERA manages an investment portfolio of $61.5 billion for the defined benefit trust funds. The portfolio ended the year with a positive return of 13.4% net-of-fees. Over the past 30 years, the portfolio has earned an annualized return of 8.3%.



In total, PERA paid $5.3 billion in retirement benefits to more than 138,000 retirees and benefit recipients in 2023.



As required by state law, PERA is on a path to full funding by 2048, and as of the end of the year, the combined funded ratio for the defined benefit trust funds was 69.6%.



Want to know more? Explore highlights from the ACFR in an <a href="https://www.copera.org/pera-by-the-numbers-a-closer-look-at-the-2022-annual-report" target="_blank" rel="noreferrer noopener" class="broken_link">interactive format here</a>.



<h4 class="wp-block-heading">What the numbers mean</h4>



The bottom line is member contributions and retiree benefit increases will remain at their current levels.



The&nbsp;<a href="https://www.copera.org/pera-board-releases-2022-annual-report" target="_blank" rel="noreferrer noopener" class="broken_link">Automatic Adjustment Provision</a>, which went into effect with Senate Bill 200 in 2018, adjusts member and employer contributions and annual benefit increases based on PERA’s funding progress. The&nbsp;calculation is made on an annual basis, to take effect the following year.



Based on 2023’s financial results, adjustments via the provision will not be needed next year. That means member contributions will remain unchanged in 2025. Employer contribution rates also will not change as a result of the provision. Eligible benefit recipients will receive a 1% Annual Increase in July 2024 and another 1% Annual Increase in July 2025.



More resources



<ul>
<li><a href="https://www.copera.org/pera-by-the-numbers-a-closer-look-at-the-2022-annual-report" target="_blank" rel="noreferrer noopener" class="broken_link">Digital Snapshot</a></li>



<li><a href="https://copera.org/annual-report" target="_blank" rel="noreferrer noopener">2023 Annual Comprehensive Financial Report (</a>PDF)</li>



<li><a href="https://copera.org/2023-popular-annual-financial-report" target="_blank" rel="noreferrer noopener">2023 Popular Annual Financial Report</a> (PDF)</li>



<li><a href="https://content.copera.org/pera-board-releases-2023-annual-report/" target="_blank" rel="noreferrer noopener">2023 Actuarial Valuation</a> (PDF)</li>
</ul>

PERA Board Releases 2023 Annual Report

The Colorado PERA Board of Trustees met virtually on Friday, March 15 for its second regularly scheduled meeting of the year.



Below is a summary of key actions and discussions that took place during the meeting.



<h4 class="wp-block-heading">New Executive Director</h4>



At the beginning of the meeting, the Board announced it has selected PERA’s next Executive Director following an eight-month nationwide search.



Andrew Roth will fill that role beginning May 13. He comes to PERA from the Teacher Retirement System of Texas, and previously worked at the California State Teachers’ Retirement System and in various departments within the State of California.



<blockquote class="wp-block-quote">
READ MORE: <a href="https://peraontheissues.com/pera-board-names-andrew-roth-as-new-executive-director/" target="_blank" rel="noreferrer noopener">PERA Board Names Andrew Roth as New Executive D</a><a href="https://content.copera.org/pera-board-names-andrew-roth-as-new-executive-director/" target="_blank" rel="noreferrer noopener">irector</a>
</blockquote>



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



The Board announced in January that four Trustee seats would be up for election in May. At the March meeting, Trustees voted to move forward with elections for three of those seats—one in the School Division and two in the State Division.



The Denver Public School Division seat, currently held by Amy Grant, is uncontested. The Board voted to reappoint Grant to another four-year term beginning in July.



Members in the School and State divisions will receive ballots in May, and the Board will announce election results at its June meeting.



<h4 class="wp-block-heading">Legislative update</h4>



State lawmakers are halfway through the 2024 legislative session, and Public and Government Affairs Manager Michael Steppat joined Interim Executive Director/Chief Investment Officer Amy C. McGarrity to provide an update on PERA-related legislation.



So far this session, legislators have introduced more than 500 bills, <a href="https://content.copera.org/2024-proposed-legislation-status/" target="_blank" rel="noreferrer noopener">seven of which pertain to PERA</a>.



Of those seven proposed bills, one—<a href="https://leg.colorado.gov/bills/hb24-1169" target="_blank" rel="noreferrer noopener">HB24-1169</a>, which would have repealed a 2016 law that requires PERA to divest all direct holdings from companies that have economic prohibitions against Israel—has died in committee. The other six remain under consideration at the State Capitol.



Steppat said it’s likely there will be some additional PERA-related legislation before the session is over. PERA On The Issues will continue to <a href="https://content.copera.org/2024-proposed-legislation-status/" target="_blank" rel="noreferrer noopener">track all PERA bills</a> and post updates when they’re available.



<blockquote class="wp-block-quote">
RELATED: <a href="https://content.copera.org/an-update-on-2023-wep-gpo-legislation/" target="_blank" rel="noreferrer noopener">An Update on 2023 WEP/GPO Legislation</a>
</blockquote>



<h4 class="wp-block-heading">Asset/liability study continues</h4>



The Board also received an update on its <a href="https://content.copera.org/asset-liability-study-a-guide-to-building-a-strategic-portfolio/" target="_blank" rel="noreferrer noopener">ongoing asset/liability study</a>. That study, which is an in-depth analysis of PERA’s investment portfolio and strategy, will help the Trustees determine if any changes are needed to PERA’s asset allocation, or mix of investments.



The Board’s consultants, Aon, modeled several different&nbsp;asset allocation—some with more risk than the current portfolio and some with less—across thousands of different economic scenarios to project how each option might affect PERA’s investment returns and progress toward its funding goals.



Overall, PERA’s current portfolio is within a reasonable range, Aon said, but there may be some opportunities to further diversify in a way that increases the potential for higher returns without adding unnecessary risk.



Consultants and PERA staff will continue to work on a recommendation and will present more information at the next Board meeting.



The Board’s next regular meeting, which will also include the release of PERA’s 2023&nbsp;Annual Comprehensive Financial Report&nbsp;and&nbsp;Investment&nbsp;Stewardship&nbsp;Report, is scheduled for June 21.

Recap of PERA Board’s March 2024 Meeting

After an extensive nationwide search, the Colorado PERA Board of Trustees announced it has selected PERA’s next Executive Director.



The Board named Andrew Roth, Deputy Director of the Teacher Retirement System of Texas, as PERA’s eighth Chief Executive Officer/Executive Director. The Board announced Roth’s appointment at&nbsp;<a href="https://peraontheissues.com/recap-of-pera-boards-march-2024-board-meeting/" target="_blank" rel="noreferrer noopener">its March 15 meeting.</a>



“The Board conducted an extremely thorough process with highly qualified candidates from across the country,” said Board Chair Marcus Pennell. “Mr. Roth stood out among these leaders because of his experience managing complex pension organizations, a commitment to PERA’s&nbsp;fiduciary&nbsp;obligations and as someone who has demonstrated a dedication to public service.”



Prior to his role at the Teacher Retirement System of Texas, Roth served in high-level positions at the California State Teachers’ Retirement System and in various departments within the State of California.



“PERA is one of the nation’s premier pension funds and it is an honor to serve the members and retirees who have dedicated their careers to public service in the great state of Colorado,” Roth said. “PERA has contributed to a secure retirement for Colorado’s public workforce for nearly 100 years, and I appreciate the Board’s confidence in me to carry this vital mission into the future. I look forward to working closely with the Board, our employees, and every member to ensure PERA remains steadfastly focused on meeting the retirement needs of hundreds of thousands of Coloradans.”



Roth will begin his new role as Chief Executive Officer/Executive Director on May 13.

PERA Board Names Andrew Roth as New Executive Director

Gov. Jared Polis appointed Taylor McLemore to the PERA Board of Trustees in 2021, and in January McLemore was elected by his Trustee colleagues to fill the Vice Chair seat vacated by Suzanne Kubec.



We recently sat down with McLemore to talk about his background and his new role on the Board.



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<h5 class="wp-block-heading">Tell us about yourself and the experience you bring to the Board.</h5>



I am an entrepreneur, and my career has spanned across a variety of industries and sectors, everything from starting in the investment banking and capital markets world, to founding companies, to helping grow and scale companies, and now I’m a venture capital investor. I’ve also spent time in the nonprofit world, founding and building nonprofits focused on education and economic mobility.



I believe every organization, for-profit business or nonprofit has the opportunity to truly influence their community. I approach the Board’s work from that ecosystem perspective, and I hope that’s something that makes me a productive and contributing Board member. PERA exists to serve its members, but PERA also has a critical relationship with the broader State of Colorado, our Legislature, the partners that we invest in and so on. My varied experience provides me with open-mindedness to be listening and be thoughtful as we balance input from lots of parties to figure out how we achieve the most important thing—a stable PERA that serves its members.



<h5 class="wp-block-heading">The term “fiduciary” comes up a lot in Board discussions. How do you view that duty with regard to the Board’s work?</h5>



Our role as fiduciaries is very clear. It’s articulated in both state and federal law what that means and how we need to prioritize the interests of the organization above all other interests. It’s our duty of loyalty and a duty of care, putting PERA’s priorities first and managing any conflicts of interest. It is important that the Board do the work within the mandate of our charter by the State of Colorado and the laws established by our state Legislature. The Board focuses on governance and policy for PERA as an organization. The Executive Director is responsible to the Board to lead PERA and drive outcomes aligned with PERA’s strategic plan. PERA’s management team leads and runs PERA. It is critical that the Board operate from its clearly defined role. Additionally, we, the Board, utilize a set of highly skilled and intelligent consultants and service providers to serve the Board. It is our responsibility that PERA has a competent and aligned Executive Director, and for the Board consultants that we have the professional and capable firms and consultants supporting all of the functions of the Board.



<h5 class="wp-block-heading">You’ve been leading the Board’s Ad Hoc Committee that’s searching for PERA’s next Executive Director. How has that experience prepared you for a larger leadership role on the Board?</h5>



PERA is a large organization with a fair amount of complexity, so it takes some time to really understand the organization well enough to be able to support from a governance perspective the executive team that’s operating and leading PERA. In addition to serving on the Board for three years, chairing the Ad Hoc Committee for the Executive Director Search has been a great additional layer of experience because our committee had to ask some really specific questions about what skills, competencies, and lived experience PERA’s future leader needs to have. That profile that we have developed to guide the Executive Director search process is a reflection of what we have learned as a Board and the critical areas of focus going into the future. This embodies my approach to leadership on the Board. We have a valuable diversity of experience and knowledge across the Trustees, and we need to operate in a manner that leverages our collective wisdom, channeling it into action and then outcomes.



<h5 class="wp-block-heading">Do you have any updates on the Executive Director search?</h5>



Our search firm has contacted over 400 people in the search process, which is one of the things we really prioritized—casting a broad net. We know there are some candidates already in the public pension space who are probably highly qualified candidates, but we really saw value in seeking out a diversity of candidates, with diversity defined a lot of different ways, including lived experience and professional experience. We received over 200 applications and have narrowed those candidates down to a smaller pool that the Ad Hoc Committee will be interviewing. We’ll then recommend an even smaller subset of candidates to the full Board, which will select and hire the next Executive Director.



<h5 class="wp-block-heading">Do you have any advice for PERA members interested in running for one of the <a href="https://peraontheissues.com/four-seats-on-pera-board-up-for-election-in-2024/">four open seats on the Board</a>? </h5>



I think serving on the PERA Board of Trustees is a really meaningful form of service. I really think of PERA as a critical set of community members in Colorado. There’s nothing more important than people who are teaching our children, the state troopers keeping us safe, the people in the judicial branch that are administering justice, and that’s just a subset of our membership. This state doesn’t run without the people of PERA, and even when they’re retired, we know that PERA members continue to be amazing leaders in their communities. And so if someone is running for election, it’s probably because they’re already a meaningful public servant in how they are pursuing their career, and running to join as a PERA Trustee is a great way to extend that service and impact.

Q&A With the PERA Board’s New Vice Chair, Taylor McLemore

The Colorado PERA Board of Trustees met on Friday, January 19 for its first regular meeting of 2024.



The agenda included important topics of discussion and various action items. Some of the Board’s major actions at the meeting are summarized below.



<h4 class="wp-block-heading">Board appointment and Vice Chair election</h4>



Current Board Vice Chair Suzanne Kubec is retiring, and therefore vacating her seat on the PERA Board. In accordance with Board policy, Chair Marcus Pennell moved to fill that seat with the candidate from the State Division’s previous Board election who received the second-highest number of votes. As a result, Ashley M. Smith, who served on the Board from 2021 to 2022, was appointed to fill that seat until the next election in 2025.



Additionally, the Board held an election to replace Kubec as Vice Chair, and the Trustees elected Taylor McLemore to fill that role. McLemore has been on the Board since 2021 and currently serves as chair of the Ad Hoc Committee overseeing the search for PERA’s next Executive Director.



<blockquote class="wp-block-quote">
REMINDER: <a href="https://peraontheissues.com/four-seats-on-pera-board-up-for-election-in-2024/" target="_blank" rel="noreferrer noopener">Four Seats on PERA Board Up For Election in 2024</a>
</blockquote>



<h4 class="wp-block-heading">Executive Director search update</h4>



McLemore provided an update on the Ad Hoc Committee’s Executive Director search, stating that more than 200 people have applied for the job. The committee is working with an outside search firm to screen applicants and identify candidates of high interest who will receive in-person interviews in February. The committee will then provide a list of top candidates to the full Board, which will be responsible for selecting a finalist.



<h4 class="wp-block-heading">Legislative update</h4>



The 2024 legislative session is underway, and lawmakers have so far introduced <a href="https://peraontheissues.com/2024-proposed-legislation-status/" target="_blank" rel="noreferrer noopener">three PERA-related bills</a>. Interim Executive Director/Chief Investment Officer Amy C. McGarrity and Public and Government Affairs Manager Michael Steppat updated the Trustees on the bills:



<ul>
<li>HB24-1044: Would expand the number of PERA retirees who can work for school districts without reductions in their benefits.</li>



<li>SB24-013: Would increase district attorney and assistant district attorney pay&nbsp;and allow county boards to require assistant DAs to become a member of the PERA Defined Benefit Plan.</li>



<li>SB24-044: Would create a temporary tax credit for qualifying PERA retirees in tax years 2024 and 2025.</li>
</ul>



The Board generally takes a position on a bill if it has a financial impact on PERA, and Trustees voted to take an “amend” position on HB24-1044. That means the Board is looking for lawmakers to amend the bill to include a way to offset potential negative impacts on PERA’s funding.



<blockquote class="wp-block-quote">
READ MORE: <a href="https://peraontheissues.com/2024-proposed-legislation-status/" target="_blank" rel="noreferrer noopener">2024 Proposed Legislation Status</a>
</blockquote>



<h4 class="wp-block-heading">Asset/liability study update</h4>



In September, the Board began the process of examining PERA’s strategic asset allocation through what’s known as an <a href="https://peraontheissues.com/asset-liability-study-a-guide-to-building-a-strategic-portfolio/" target="_blank" rel="noreferrer noopener">asset/liability study</a>. The Board’s consultants, Aon, discussed the work that’s been completed so far, including meeting with PERA’s investment staff and modeling future funding scenarios based on the existing asset makeup.



That work will continue over the next several months, with more analysis and modeling to determine if different asset allocations or levels of diversification would better help PERA meet its goals.



<h4 class="wp-block-heading">Future meetings</h4>



The Board has four more regular meetings scheduled for 2024:



<ul>
<li>March 15</li>



<li>June 21</li>



<li>September 20</li>



<li>November 15</li>
</ul>



In addition, the Ad Hoc Committee will be meeting to interview Executive Director candidates in February. All meetings are streamed live and include time for public comment.



For more information, visit <a href="https://www.copera.org/about/board-and-leadership" target="_blank" rel="noreferrer noopener">copera.org/board-of-trustees</a>.

Recap of PERA Board’s January 2024 Meeting

Candidacy nomination information is now available to PERA members interested in running for any of the four open seats on the PERA Board of Trustees.



The following seats are up for election in 2024:



<ul>
<li>State Division—4-year term&nbsp;(to be filled by an active member, currently employed with a non-Higher Education employer in the State Division)</li>



<li>State Division—2-year term&nbsp;(to be filled by an active member, currently employed at an Institution of Higher Education)</li>



<li>School Division—4-year term&nbsp;(to be filled by an active member, currently employed in the School Division)</li>



<li>DPS Division—4-year term&nbsp;(to be filled by a member or retiree, currently employed in or retired from the DPS Division)</li>
</ul>



If you’re interested in running for a seat on PERA’s Board, you can submit an&nbsp;<a href="https://www.copera.org/recap-of-pera-boards-january-2023-meeting" target="_blank" rel="noreferrer noopener" class="broken_link">online candidacy packet request</a> through Feb. 29, 2024.



The PERA Board meets at least five times per year and is responsible for adopting the rules and policies for the administration of PERA. The Board comprises 16 Trustees, and PERA members and retirees directly elect 12 of them. The governor appoints three (with approval by the Senate), and the State Treasurer serves as an ex officio member. Elected Board members serve without pay, but are reimbursed for necessary expenses.



Ballots will be mailed in early May to active members in the State, School and DPS Divisions, and to retired members from the DPS Division.



The Board will announce the results of the election in June, and elected Trustees will begin their terms July 1.



For more information, visit <a href="https://copera.org/about/board-and-leadership">copera.org/board-of-trustees</a>.

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