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 Mile High City recently hosted a conference with hundreds of public pension professionals from around the United States, including Colorado PERA.



The <a href="https://www.ncpers.org/" target="_blank" rel="noreferrer noopener">National Conference on Public Employee Retirement Systems</a> (NCPERS) held its Annual Conference and Exhibition in Denver May 18 to 21.



The four-day conference featured educational sessions, panel discussions, and workshops on topics such as plan governance, fiduciary best practices, investment strategies, artificial intelligence, and much more.



Several members of PERA’s executive team and members of the Board of Trustees participated in the conference. Colorado State Treasurer Dave Young, a member of the PERA Board of Trustees, delivered the conference’s welcome address and PERA CEO/Executive Director Andrew Roth moderated a panel of investment professionals discussing the economic outlook. Chief Investment Officer/Chief Operating Officer Amy C. McGarrity and Trustee Scott Simon—who is also the Chief Investment Officer for the Fire &amp; Police Pension Association of Colorado—participated in a panel discussion with other public pension CIOs.



PERA staff, executives, and Trustees have long been involved with industry groups like NCPERS to lend our expertise and learn from peer organizations.



“Conferences like the NCPERS Annual Conference and Exhibition provide us with a valuable opportunity to share ideas with other public pension plans, exchange best practices, and work together to improve the retirement security of the nation’s public workforce,” Roth said. “We were honored to have this year’s participants in Denver and show them all our beautiful city has to offer.”

Denver Hosts National Conference for Public Pension Professionals

The American public continues to hold positive opinions of defined benefit pension plans, according to <a href="https://www.nirsonline.org/reports/what-do-americans-think-about-pensions-for-public-employees/" target="_blank" rel="noreferrer noopener">the latest survey data from the National Institute on Retirement Security</a> (NIRS).



Researchers contacted more than 1,200 adults aged 25 and older across the country to understand public opinion about defined benefit plans like what Colorado PERA offers. They found 86% of survey respondents think all workers should have access to a defined benefit pension, and not just public employees.



In addition, while Americans may be divided politically, the NIRS survey found strong agreement on the value of pensions. More than 80 percent of each political group—Democrats, Republicans, and Independents—voiced their support for pensions.



Unlike a defined contribution plan such as a 401(k), a defined benefit plan like the PERA Defined Benefit Plan provides retirement income a person cannot outlive. That makes for a valuable benefit that can be a powerful tool in maintaining a qualified workforce.



<figure class="wp-block-image size-full"><img decoding="async" loading="lazy" width="2428" height="1414" src="https://content.copera.org/wp-content/uploads/2024/11/nirs-american-attitudes-on-pensions.png" alt="Two pie charts showing results of a survey of Americans' attitudes toward pensions. The left chart shows 82% of Americans agree that pensions are a good way to recruit and retain qualified teachers. The right chart shows 84% of Americans agree that pensions are a good way to recruit and retain qualified public safety employees." class="wp-image-54938" srcset="https://content.copera.org/wp-content/uploads/2024/11/nirs-american-attitudes-on-pensions.png 2428w, https://content.copera.org/wp-content/uploads/2024/11/nirs-american-attitudes-on-pensions-300x175.png 300w, https://content.copera.org/wp-content/uploads/2024/11/nirs-american-attitudes-on-pensions-1024x596.png 1024w, https://content.copera.org/wp-content/uploads/2024/11/nirs-american-attitudes-on-pensions-768x447.png 768w, https://content.copera.org/wp-content/uploads/2024/11/nirs-american-attitudes-on-pensions-1536x895.png 1536w, https://content.copera.org/wp-content/uploads/2024/11/nirs-american-attitudes-on-pensions-2048x1193.png 2048w" sizes="(max-width: 2428px) 100vw, 2428px" /><figcaption class="wp-element-caption">Image courtesy: National Institute on Retirement Security</figcaption></figure>



Defined benefit plans are most common in the public sector today, and the NIRS survey asked respondents whether they agreed that pensions are a valuable tool to recruit and retain workers who provide important public services, such as teachers and public safety workers. The survey found 82% agree that pensions help recruit and retain teachers and 84% agree that they help recruit and retain public safety workers.



Since 1931, Colorado PERA has been helping support Colorado’s public workforce by providing lifetime retirement and other benefits. In addition to the PERA Defined Benefit Plan, PERA members have access to defined contribution plans, health care benefits, and more, ensuring the state’s public workers have the tools they need for a secure retirement.

Survey Finds Strong Support for Public Pensions

The first week of May is <a href="https://ourpublicservice.org/our-solutions/recognition/public-service-recognition-week/" target="_blank" rel="noreferrer noopener">Public Service Recognition Week</a>, a time to celebrate and honor the millions of local, state and federal employees who serve communities across the United States every day.



Supporting Colorado’s public employees is a daily mission for PERA, which provides retirement and other benefits to more than 620,000 current and former teachers, state troopers, corrections officers, snow plow drivers, and other public workers. PERA’s mission is to provide retirement security to its members while ensuring the stability of the fund.



PERA’s membership is split into five divisions, with most members participating in the Defined Benefit Plan (some state and local government employees have the option to choose between the Defined Benefit Plan and the Defined Contribution Plan). In the DB plan, each division has its own trust fund that pays benefits for that division. Member and employer contributions to each fund are pooled and invested to ensure that each division’s members — whether public school teachers, state employees, local government workers, or judges — can rely on regular, monthly income they won’t outlive in retirement.



While each PERA division encompasses a different range of careers, each provides vital services to keep Colorado communities thriving.



<h2 class="wp-block-heading">School Division</h2>



The School Division is by far PERA’s largest, with more than 128,000 active members in 2022. That’s more than half of the total active membership. It’s also the division with the largest number of benefit recipients — more than 72,000.



School Division members include teachers, bus drivers, cafeteria workers, school administrators and other staff of public schools across Colorado, from Adams County to Yuma County. Public school employees carry out the important work of educating, transporting, feeding and supporting thousands of children every day, helping them learn and develop into contributing members of society.



Employees of Boards of Cooperative Education Services (BOCES), which provide various services to multiple districts, are also members of the School Division.



<h2 class="wp-block-heading">Denver Public Schools Division</h2>



Denver Public Schools, the state’s largest school district, had its own retirement system until 2010, when it merged with PERA. Because of the unique nature of merging the DPS plan into PERA, its members remain in a separate division from other school districts, with some differences in rules and regulations.



The DPS division includes more than 15,000 active members and more than 7,000 benefit recipients.



<h2 class="wp-block-heading">State Division</h2>



The second largest PERA division, the State Division, includes more than 54,000 active members from a wide variety of professions that provide important services in every corner of the state. This division includes lawmakers and legislative staff at the State Capitol, as well as employees of various state agencies, such as the departments of transportation, public safety, military and veterans affairs, and agriculture. The State Division also includes Colorado’s many institutions of higher education, from local community colleges to the state’s major research universities.



State troopers, snow plow drivers, park rangers, social workers, corrections officers, college professors and other State Division employees work every day to keep Colorado communities safe, healthy and vibrant places to live.



<h2 class="wp-block-heading">Local Government Division</h2>



Equally important as the state employees who keep Colorado running are the nearly 13,000 Local Government Division employees who power cities and towns across the state. That includes not only government staff but also employees of various utility and sanitation districts, housing authorities, libraries, health departments and fire protection districts.



Local government workers help build, maintain and protect the quality of life that so many of Colorado’s communities are known for.



<h2 class="wp-block-heading">Judicial Division</h2>



The Judicial Division is PERA’s smallest, with fewer than 400 active members. Most courthouse workers in Colorado fall under the State Division, so the Judicial Division covers only judges. The division includes judges who preside over county courtrooms, the Court of Appeals, the Colorado Supreme Court and the 1st through 22nd district courts.



Judicial Division judges have the important task of administering justice in Colorado by overseeing criminal trials, civil cases, probate proceedings, juvenile offenses and much more.



Whatever their division and employer, every PERA member provides an important public service that supports all of Colorado. And when they retire, PERA will be here to provide reliable income and other benefits to ensure every public employee can enter their golden years with peace of mind.



<blockquote class="wp-block-quote">
Follow PERA on <a href="https://www.facebook.com/ColoradoPERA/" target="_blank" rel="noreferrer noopener" class="broken_link">Facebook</a>, <a href="https://content.copera.org/nearly-1700-people-respond-to-reader-survey/" target="_blank" rel="noreferrer noopener">Instagram</a> and <a href="https://twitter.com/ColoradoPERA" target="_blank" rel="noreferrer noopener">Twitter</a> for more on Public Service Recognition Week.
</blockquote>

Honoring the Important Work of Colorado’s Public Employees

A <a href="https://www.nirsonline.org/reports/betterbang3/" target="_blank" rel="noreferrer noopener">recent study</a> from the National Institute on Retirement Security found that defined benefit (DB) pensions like Colorado PERA’s continue to offer substantial cost savings over defined contribution (DC) accounts like 401(k)s.



The research affirms NIRS’s findings from 2008 and 2014 that DB plans can provide retirement benefits at about half the cost (49 percent) of the typical DC plan.



The cost savings come from key differences in how DB and DC plans work, the authors state. In particular, they highlight the following three advantages of DB plans:



<ul>
<li>Longevity risk-pooling: Defined benefit plans cover a large number of people, with each person’s benefits coming from the same trust fund. For that reason, DB plans only have to accumulate enough money to fund benefits for the average life expectancy of the group. An individual in a defined contribution plan, on the other hand, has to accumulate enough funds to cover their expenses for the rest of their life, including the possibility of living longer than their life expectancy. That means a DC account needs to have a higher balance at retirement in order to provide the same level of benefits as the DB plan.</li>



<li>Maintenance of portfolio diversification: Individuals in DC plans are typically encouraged to shift their portfolio to a more conservative, or lower-risk, mix of investments as they get older to protect their balance from drops in the stock market. A DB plan, with its shared trust fund, can maintain a well-balanced portfolio over the long term and weather short-term risks in the stock market, ultimately earning higher returns.</li>



<li>Lower fees and professional management: Because of the pooled nature of DB plans, the fees for managing investments are shared by the group and are lower than the typical DC plan, in which each individual pays fees on their account. In addition, DB plan investment managers have a fiduciary duty — they must make decisions to ensure the longevity of the fund — while individual investors in DC plans may not have the expertise to make the right decisions.</li>
</ul>



Simply put, a person saving for retirement in a DC plan needs to save more money than the typical DB plan. Overall, the authors conclude that it is about twice as expensive to save for retirement under a DC plan like a 401(k) than it is with a DB pension plan.



Both DB and DC plans have their advantages, and Colorado PERA offers both, with some members having the ability to choose whichever plans works best for them. PERA offers all of its members a hybrid defined benefit plan that gives members increased flexibility and additional options, whether through a monthly lifetime benefit or complete portability to another retirement plan. PERA members can also supplement their retirement savings with a <a href="https://www.copera.org/peraplus-401-k-457-plans" target="_blank" rel="noreferrer noopener">401(k) or 457 plan</a>. 



It’s a powerful retirement tool that adapts to the many different paths people take in public service: whether working part-time or full-time, whether planning on a long tenure or a short one, and whether near retirement or far from it. Learn more about PERA’s <a href="https://www.copera.org/welcome-pera-members/new-members/new-members-in-the-defined-benefit-plan" target="_blank" rel="noreferrer noopener">defined benefit plan</a>.

Tag Archives:

Denver Hosts National Conference for Public Pension Professionals

Survey Finds Strong Support for Public Pensions

Honoring the Important Work of Colorado’s Public Employees

Study: Defined Benefit Pensions Continue to Be More Cost-Effective Than 401(k)s

Subscribe to PERA On The Issues