Colorado Retirement Board Endorses Reforms

In an attempt to reach full funding faster, the Colorado Public Employees Retirement Association’s (PERA) board of trustees voted in favor of a raft of changes that would reduce retirement benefits and require public employees and taxpayers to contribute more.

The recommended changes, which are intended to reduce the overall risk profile of the plan and improve its funded status, include benefit reductions for current and future members and retirees, as well as contribution increases for members and employers.

“The recommendations from the PERA Board reflect our commitment to ensuring the long-term health of the fund,” said Timothy O’Brien, board chairman of the PERA. “We understand that these recommended changes will not be easy, but we believe shared impact across the membership and with employers are absolutely necessary.”

The package of changes, which must be approved by the Colorado general assembly, includes recommendations that will significantly alter the benefit provisions and contribution structure of the plan. The proposal incorporates three major changes:

1) Benefits Reduction:

The number of years used to calculate the highest average salary would be raised to five years from three for most participants. For new hires starting in 2020, and for members with less than five years of service credit as of January 1, 2020, more years of salary will be considered to calculate an average salary used to determine the total retirement benefit.

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The proposal would also reduce the cost of living adjustments (COLA). The 2% annual increase for most current retirees would be lowered to 1.5%. For members who joined after 2006, the annual increase, which is based on the CPI, would be cut to 1.5% from 2%. It also suggests suspending the annual increase for two years for current benefit recipients, while future retirees would have a three-year waiting period before their annual increase begins.

Additionally, the new rules would change the age of eligibility for full-service retirement benefits to 65 for new hires starting in 2020. For state troopers, the minimum age for full-service retirement eligibility would be raised to 55.

2) Increase Contributions into the Fund:

The changes also call for an increase in employee contributions for members hired before Jan. 1, 2020, by an additional 3% above current contribution rates. They also seek to increase employee contributions for members hired on or after Jan. 1, 2020, by an additional 2% percent, and raise employer contributions by an additional 2%.

3) Ensure the Equitable Alignment of “Input” and “Output:”

The package would change the definition of PERA-includable salary so that PERA contributions would be made on gross pay rather than net pay. It would also change the definition of full-time service accrual. Under the Board’s proposal, PERA future members will earn service credit for part-time work based on the percentage of full-time employment they are actually working.

The board also suggested instituting an automatic mechanism by which employer and employee contributions, as well as annual increase amounts, will adjust based on the financial condition of the fund.

“PERA will be working with members of the general assembly to ensure the board’s proposal receives serious consideration in the 2018 legislative session,” said PERA Executive Director Gregory Smith. “These changes impact every member, whether they are still working or retired, and will require difficult sacrifices.”

Tags: Board Meeting, Colorado Public Employees Retirement Association, Pension, Pension Reform

The real estate sector worldwide improved its sustainability performance in 2017, according to GRESB, a firm that gauges the ESG performance of real assets.

For North America, the average GRESB score for 2017 rose to 64, from 59 in 2016, the Amsterdam-based GRESB reports. Scores were based on input from 204 firms, with total assets under management of $2.3 trillion. The region performed better than the global average, and also saw the best annual improvement of all regions.

In North America, property companies cut down their energy consumption by 2.5%, carbon emissions by 2.9%, and water use by 1.3%.

The sector’s average global GRESB score for 2017 was up three points to 63, from 2016’s 60. Publicly traded firms continued to do better than private entities, and the office sector did better than other property sectors on sustainability measures. The global survey included 850 real estate-sector participants, with a total of 77,000 assets, representing more than $3.7 trillion in value.

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These firms’ efforts to conserve energy are on the path set out in the “Sustainability Development Goals” that the United Nations supports, according to GRESB.

Among the global highlights:

These firms reduced their “like-for-like” power consumption by 1.1%, equivalent to that consumed by about 80,000 US homes.

Their “like-for-like” carbon emissions were down 2.2%, equivalent to the emissions of 113,000 cars.

They cut their water consumption by 0.5%, saving the amount of water that 999 Olympic swimming pools would consume.

They also diverted the equivalent of 399,008 truckloads of landfill waste.

Sander Paul van Tongeren, co-founder and managing director at GRESB, noted, “We are delighted to see an increase in the number of participants and assets across all regions for eight consecutive years. It’s encouraging that, once again, GRESB participants were able to lower energy, water, and carbon emissions. We hope that the commitment and meaningful actions taken by the 850 GRESB participants serve as an example to others and help to drive improved sustainability performance more broadly across the market.”

Tags: ESG, GRESB, Real Estate, Sustainability