Colorado PERA to Discuss State Pension Reforms Monday

If adopted, PERA could become 100% funded within 30 years.

The $44 billion Colorado Public Employees’ Retirement Association (PERA) will conduct a community meeting in Grand Junction on Monday to discuss a state pension reform package approved in September.

The package will cut the annual cost-of-living-adjustments (COLA) of PERA retirees hired before 2007 from 2% to 1.5%—a cap for those hired after 2007. Employee contributions will also increase from 8% to 11% of their pretax salary to the pension fund in 2020. Workers hired after 2020 would contribute 10%. The retirement age will also be raised from 60 to 65.

In addition, the proposal will also raise costs for taxpayers 2% in 2020. According to the Denver Post, taxpayers currently contribute 20.15% to the pension.

In March, the PERA Board of Trustees lowered the actuarial assumption to 7.25%. The pension is currently 58.1% funded. According to the Denver Post, it would take nearly 80 years to pay off the pension’s $32 billion unfunded liability.

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If the Colorado legislature adopts the reforms, the PERA would be on track to become 100% funded within 30 years.

Should the law fail to pass, PERA would not face insolvency, however, another US economic recession could bring the fund down to that level.

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Kentucky Retirees Grow as Special Pension Session Is Pushed Back

Special legislative session may begin in early November.

Kentucky’s floundering pension system is experiencing another thorn in its side, as an alarming number of public employees have decided to retire in the midst of preparations for a pension reform plan set to be enacted this fall.

In September and October, Kentucky Retirement Systems (KRS)—a plan that could become insolvent within five years if no action is taken—saw 1,423 workers announce their retirements. Last year, only 1,018 employees retired in the same period.

The Teachers’ Retirement System (TRS) has also received 120 applications for November retirement, up 64% from last year’s 73 November 1 retirees.

This retirement spike comes at a time where Gov. Matt Bevin and lawmakers have struggled to arrange a special legislation session to discuss state pension reform. Originally, the meeting was to take place in October, but according to Kentucky New Era, the session may instead begin in early November. However, the publication reports that some leaders within the legislature’s Republican majority said that a final pension reform framework could be released to the public this week.

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In the meantime, Bevin and legislators have been telling teachers and public employees that there is no need to retire over reform-related concerns, as any reforms passed during the session will not take effect immediately. Bevin and company have assured employees that there will be a window after the special session to retire under the same terms as today.

“I believe, and appreciate, the governor and the legislative leaders’ commitments to giving employees time to make an informed decision,” Brent McKim, president of the Jefferson County Teachers Association, said in an interview with the Kentucky New Era. “But I guess there are some people who are taking what they think is a ‘better safe than sorry’ approach.”

In an August 28 report, financial consulting agency the PFM Group, made recommendations to include in the reform, some of which caused controversy for Bevin and legislative leaders. One such recommendation was to cut past cost-of-living increases from the benefit checks of current retirees, which the governor and lawmakers said would not be part of the final reform.

The PFM Group also recommended raising the retirement age for public employees, as well as swapping traditional pension plans for most current and future state and local government workers to a 401(k)-style plan.

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