FoP Concerns
SB1 to be heard Feb. 10
SB1 is scheduled for Wednesday, Feb. 10, at 1:30 pm in the Legislative Services Building Room A (the building across the street from the Capitol). We encourage your attendance. You may sign up to speak to the Committee.
SB01 Amended, passes Senate
Senate Bill 01 passed the Senate today with a 25-10 vote. The bill was amended on the Senate floor to require PERA to send a written notice to all PERA members, DPS members and inactive members that "the possibility of an actuarial necessity could occur in the future, and the General Assembly may modify by bill the benefits allowed to members of the defined benefit plan." We have heard that the House Finance Committee will hear the bill next Wednesday, February 10. Keep watch on this web site for information about when.
Those voting against the bill were: Senators Cadman, Harvey, K. King, Kopp, Lundberg, Mitchell, Renfroe, Scheffel, Schultheis, and Spence (all Republicans). Sen. Renfroe introduced the amendment.
HB 1153 to be heard
HB1153 will be heard on Thursday, Feb. 11, upon adjournment of the House (time might be around 11 a.m.). This bill changes the composition of the Board of Trustees of PERA (see below).
We encourage you to attend this hearing and testify. Friends of PERA supports a PERA Board of Trustees that is primarily elected by the membership. The accusation that there is a conflict of interest is erroneous and without substance, as seen by the most recent proposal to put most of the cost to fix the plan on the retirees and members. Elected trustees have not been accused of any wrongdoing, serve the membership in a voluntary capacity without compensation, have more at stake than appointed Trustees, rely on fund for their retirement income, and are the only ones who represent the membership. Taxpayers are represented by 100 legislators. (House State, Veterans and Military Affairs Committee)
2010 COLA for Military Retirees
Each year military retirement pay is adjusted to meet the increased cost of living. This Cost-of-Living-Adjustment (COLA) varies from year to year based on the previous year's Consumer Price Index (CPI). The CPI dipped below 4 percent in the first two quarters of FY2009 and was still in negative numbers at the end of the fiscal year. Due to the negative CPI in FY2009 there will be no COLA increase for military retirees in 2010. (Source: Defense Finance and Accounting Center)
Senate Finance Committee Amends, Passes SB01
The Senate Finance Committee heard Senate Bill 01 on January 26. Nineteen persons (besides the PERA CEO and General Counsel) testified for the bill and 15 people testified against parts of the bill. The hearing went from about 2:30 pm until 8:00 p.m. There were 12 amendments voted on of which only four passed. SB 01 with the amendments passed 5 yea, 2 nay. Those voting in favor of the bills were Sen. Brophy (R), Sen. Hudak (D), Sen. Johnston (D), Sen. Steadman (D) and Sen. Sandoval (D). Those voting opposed to the bill were Sen. King (R) and Sen. Scheffels (R).
The amendments resulted in:
- 2% COLA on July 1, 2011, versus a 0% COLA.
- A reduction in the AED by 0.5% for school employers and an increase in SAED for school employees in exchange for a Rule of 88 (retirement eligible at age 58) cotinuation when the other divisions of PERA go to a Rule of 90 (retirement age of 60). This applies only to those new employees hired after January 1, 2017.
If I understand correctly, the bill now goes to the Senate Appropriations Committee.
Changing the PERA Board Composition
HB 10-1153 - PERA Board Composition Modifications
Introduced in the House by Rep. James Kerr, R-Littleton, This bill would change the composition of the Board of Trustees to:
- Eight trustees who are not PERA members or retirees (currently there are three), appointed by the governor, confirmed by the Senate;
- The state treasurer;
- Five elected active members and one elected retiree (versus the current 11).
HB 1153 is not in the best interest of members or retirees. If enacted, political appointees will control the PERA Board. More…
Sen. Shaffer, PERA Board Work a Compromise
The PERA Board adopted some modifications in its legislative proposal presented to them by Senate President Brandon Shaffer at a special meeting of the Board of Trustees on Thursday, January 7, at 4 pm. The Colorado Coalition for Retirement Security is reviewing the changes and will make a statement next week. See 2010 Legislative Proposal
Colorado Coalition Presents its Position
The Colorado Coalition made the following statement regarding the PERA legislative proposal. Friends of PERA is one of the groups in the Coalition.
Statement
The PERA Proposal
The PERA Board of Trustees has developed a legislative proposal to improve PERA’s funding. The proposal calls for a gradual increase in contributions to the pension fund paid by employees and employers, a reduction in the COLA, and other changes in retirement eligibility and benefits.
The proposal would put PERA well on the way to full sustainability with a near 100 percent funded level in 30 years. See the details of the proposal by going to www.copera.org and watch the Shareholder meeting web report.
Certainly, the PERA Board of Trustees and staff receive our grateful appreciation for the hard work they have put into the objective of ensuring PERA’s sustainability. FOP truly believes that they have our best interests in mind.
The Friends of PERA is part of a coalition of public employee and retiree groups called the Colorado Coalition for Retirement Security. See www.securePERA.org. The Coalition has been studying PERA’s proposal and has met with PERA and other interested parties on several occasions.
After reviewing the information PERA has provided the Coalition, we fully realize that major changes must be taken. However, we are concerned that most of the cost towards correcting the PERA problem during the first five years will be coming from retirees through the reduction in the amount of the COLA. It is clear that by indexing the COLA, the COLA will most certainly be zero at some point and for the foreseeable future, the largest increase would be two percent.
We are working with the Coalition to meet a position we can support. Using the formula PERA proposes, the COLA would not be any higher than 2% for more than 30 years.
We would prefer that the Board and Legislature provide some assurance that they will periodically (five year intervals) review PERA’s investment returns, the funding level, and compare the COLA paid versus the CPI for that period, and make appropriate adjustments if possible.
The Coalition is also discussing other aspects of the proposal.
Colorado Coalition for Retirement Security
A coalition of public employee/retiree groups, originally founded in 2006, reactivated earlier this year and is working to address problems in the funding of PERA’s defined benefit plan. Friends of PERA is no at the Coalition’s table. Go to www.SecurePERA.org for more information. The Coalition hired a public relations specialist to develop the website, monitor media reports, initiate contact with the media on our behalf, and other responsibilities.
The Coalition relies on funding from its member groups to operate. FOP contributed $1,500 to the Coalition. We encourage you to consider making a donation to Friends of PERA if you have not done so in the past few months.
At the last Coalition meeting, the State Treasurer, PERA’s CEO and General Counsel, and the President of the Senate met with us to discuss possible legislation. The Coalition has communicated with the PERA Board of Trustees and executive staff of its concern about the long term sustainability of PERA and that it wants to protect the retirement security of all PERA members – retirees, active and inactive members, and future members. Retirement security means a system which provides an adequate, predictable, and sustainable retirement benefit for life. We see and understand the imminent threat that exists from PERA’s current financial status, we understand what caused it, we understand that correcting it is a shared responsibility, and we understand that there are only a few options available that immediately address the funding problem. We told the Board that we would support system changes that entail sacrifice by our members as long as those changes reflect a shared responsibility and as long as those changes have a substantial effect on solving the fiscal problem. By shared responsibility, we mean that all parties – employers, current and future employees, and retirees – have a role in being part of the solution. Any proposed fix should not unduly burden any one group over the others. Nor should it unduly benefit one group at the expense of the others.
NIRS report reveals role of pensions in reducing poverty
Excerpt: Defined benefit pension income plays a critical role in reducing the risk of poverty and hardship for older Americans. Poverty rates among older households lacking pension income are about six times greater than those with such income.
The study finds that pensions reduce – and in some cases eliminate – the greater risk of poverty and public assistance dependence that women and minority populations otherwise would face, The Pension Factor reveals. Read the full report.
Major Issues in 2009 State Pensions and Retirement Legislation
August 11, 2009 - Ronald Snell
The principal theme in pension legislation in 2009 was the need to make future pension costs manageable in the light of states' straitened fiscal circumstances and the enormous losses most retirement trust funds have experienced. Reductions in various forms appeared in a number of states. Some states enacted early retirement incentives with the goals of reducing the size of the state workforce. Some states protected employees who will be subject to mandatory furlough days (required days off without pay) from loss of retirement benefits for those days. Read the full report.
Legislative Hearing with CU professor
A CU professor presents a confusing report about deferred compensation in retirement to a legislative hearing. more…
PERA’s Finances Sobering, Board Looks at Options
PERA's 143-page 2008 Comprehensive Financial Report has all the "bad and the ugly" included. The net investment loss in 2008 was $10.5 billion and about $2.7 billion were paid out in benefits. Employers and members contributed about $1.5 billion. The rate of return was -26% compared to a benchmark of -27.7%. more…
Planning for PERA's Future
You can find lots of info on PERA's website. This link takes you to a section on the site that has information about the actuarial, benefit and investment studies and the legislative timeline. Worth reading! http://www.copera.org/pera/about/future.stm
“Ask Meredith” column on PERA web site has some answers
This Q & A blog has lots of questions & answers from Meredith Williams, the PERA Executive Director. It’s worth reviewing! http://www.copera.org/pera/about/ask.stm
E-mail to DPS Retirees by John MacPherson
A member of the Denver Public School Retirement System Board of Trustees for 15 years, John sends news to DPS Retirees. You might find this interesting. (7/6/09)
