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Latest
PERA News
This section
contains current items of interest to PERA members and retirees and the
general public. For other news regarding PERA, you also may want to view
the PERA News Archives. Any questions or
comments regarding this information may be directed to PERA via e-mail.
Colorado PERA Announces Board Election Results
Colorado PERA members re-elected Scott Noller, Maryann Motza, and
Carole Wright and elected Carolyn Jonas-Morrison and Marcus Pennell to the 16-member Board of Trustees.
Noller and Pennell were elected to School Division seats, Motza and Jonas-Morrison to State Division seats, and Wright to a Retiree Division seat. Noller, Pennell, Motza, and Wright will serve four-year terms. Jonas-Morrison will serve a one-year term.
In the School Division election, a total of 17,502 votes were cast. Noller received 5,882 or 33.6 percent of the votes cast. Pennell received 4,675 or 26.7 percent of the votes. In the State Division election, 5,023 votes were cast. Motza received 59.6 percent of the votes cast; Jonas-Morrison received the remainder. Because Motza received the majority of the votes, she was elected to the four-year term. In the Retiree Division, Wright received nearly 66 percent of the 17,762 votes cast.
Noller is an Assistant Principal in Colorado Springs School District #11 and has served on the Board since 2001.
Pennell is a physics teacher in the Jefferson County School District. He previously served on the Board from 2003 to 2007.
Motza is the Social Security Administrator for the State of Colorado and has been a member of the PERA Board since 2005.
Jonas-Morrison is the Dean of the Math and Technology Division at Pikes Peak Community College.
Wright, a retired teacher from Aurora Public Schools, has served on the Board since 2005.
By State law, the management of the Public Employees’ Retirement Association is vested in the Board of Trustees while the General Assembly sets contribution rates and benefit levels.
In May 2009, the Denver Public Schools Division seat was added to the Board with the passage of Senate Bill 09-282. Andrew Raicevich was appointed to fill the seat, effective May 21, 2009, as a non-voting ex officio member. He is a retired Assistant Superintendent from Denver Public Schools and his current term expires December 31, 2009.
In addition to the DPS seat, the Board is composed of 15 other Trustees, including three Governor-appointed Trustees and the State Treasurer who serves as a voting ex officio member of the Board.
Colorado PERA Adds Fort Morgan to Listening Tours
Fort Morgan has been added to the Listening Tours Schedule in August. Please review the Schedule of Listening Tours for more information.
Colorado PERA Life Insurance Open Enrollment Extended
The life insurance open enrollment period has been extended until June 15 this year due to a delay in mailing life insurance open enrollment materials to Colorado PERA members. Members may enroll online using a PERA PIN or by completing and returning the paper enrollment forms to Unum by June 15, 2009.
If you do not enroll during an annual open enrollment period, you may apply for coverage at any time while you’re an active PERA member, but evidence of insurability will be required.
Upcoming Hearing on Colorado PERA Rules
Each year, Colorado PERA has the opportunity to update the administrative regulations that guide how PERA law is applied in practice. The process for updating the Rules provides for public comment on the proposed changes. The Public Hearing on PERA’s proposed changes to its Rules will take place at 10:30 a.m. on June 19, 2009, during the monthly PERA Board of Trustees Meeting held at 1301 Pennsylvania Street in Denver. If you would like to comment on these proposed Rules changes, please plan on attending the hearing on November 21. You can review information on attending Board meetings on the Board of Trustee meeting page.
Summary of Proposed Rules
Long-Term Care Insurance Enrollment Period Begins
Colorado PERA is pleased to announce that its long-term care insurance program is now available through MetLife (Metropolitan Life Insurance Company). MetLife is a recognized leader in the long-term care insurance industry and has consistently earned high marks from insurance industry rating agencies for financial strength and claims-paying ability.
PERA has negotiated an initial offering period (open enrollment) through October 31, 2009, for active members. The initial offering extends through October to accommodate members such as school employees who are not at work during the summer months.
Eligible employees applying on or before October 31, 2009, can take advantage of easier health qualifications by answering only five health questions on the application.
Retirees, inactive members, and family members of members and retirees are also eligible to apply for long-term care insurance with MetLife. Applications can be made at any time. A simplified underwriting process applies, and rates are discounted.
To help educate PERA members and retirees about long-term care insurance, PERA has selected Long Term Care Financial Partners (LTCFP) as its educational partner. LTCFP will be presenting a comprehensive educational program to help PERA members and retirees understand their options and determine if long-term care insurance should be a part of their own financial plans.
Please review the schedule of the upcoming long-term care seminars. PERA and LTCFP are also in the process of mailing information about the program and upcoming meetings to members and retirees at their home addresses.
Note that PERA members and retirees with existing long-term care policies, purchased either through PERA’s program or individually, may want to attend an educational seminar and/or meet with an LTCFP representative. LTCFP can help compare the existing policy to options now available through MetLife. No existing policies can be automatically transferred to MetLife, but new policies could be purchased to replace existing policies.
For more information, interested PERA members and retirees may—
Colorado PERA and the Denver Public Schools Retirement System
Senate Bill 09-282 establishing the Denver Public Schools Division at PERA effective January 1, 2010, was signed by Governor Ritter on May 21, 2009. We will be posting more information over the coming weeks and months and other written communications are also being developed. Denver Public Schools Retirement System (DPSRS) has posted responses to frequently asked questions on their Web site. That information is available here: www.dpsrs.org/docs/PERAMerger/MERGERFAQS052109.PDF
See the April issue of PERA’s Legislative Update for more information.
Colorado PERA Shareholder Meetings
Similar to town-hall meetings, PERA executives will again travel around the State during the months of October and November to present information to PERA’s “shareholders” and the public about current PERA issues as well as review PERA’s financial position. After a briefing about PERA, a question-and-answer session will follow.
View the 2009 Shareholder Meeting Schedule
Colorado PERA and Placement Agents
Colorado PERA has received several inquiries from our membership and from media asking about the use of placement agents in the investment process. News about public pension funds in other jurisdictions in which placement agents used fees paid to them to contribute to political campaigns has been prominent in the national press lately, so we would like to explain how the process works at Colorado PERA.
While placement agents are used in the private equity and real estate asset classes at PERA, PERA does not hire nor pay placement agents. PERA does not pay placement agents to find investment opportunities and operates under an open door policy in which any investment manager can present investment ideas to PERA staff. Where PERA has made investments in which placement agents were used by the investment manager or general partner, PERA requires these fees to be disclosed.
PERA’s established governance and investment processes protect PERA from situations like the ones being reported in the news.
Colorado PERA Listening Tours Schedule
Colorado PERA Trustees and executives will travel throughout Colorado during August to get member, retiree, and the public's input on a legislative proposal to ensure PERA's sustainability.
Schedule of Listening Tours.
Colorado PERA Hires New Director of Internal Audit
Colorado PERA hired David Mather as the new director of internal audit.
Most recently, Mather worked at Jefferson Wells in Denver as the engagement manager in internal audit and controls. Prior to that, he was the finance audit director at American Capital in Bethesda, Maryland.
Mather replaces John Spielman who retired in 2008.
PERA Meets with Legislative Audit Committee – April 2
On April 2, Colorado PERA met with the Legislative Audit Committee of the Colorado General Assembly. PERA's Executive Director, Meredith Williams, addressed the Committee regarding PERA's plan for developing legislation in 2010. PERA gave the Committee copies of planned 2009 Actuarial, Benefit, and Investment Studies; a timeline for the development of the 2010 legislation; and a schedule of 2009 Board meetings, listening tours, and shareholder meetings. PERA also responded to questions from legislators.
Colorado PERA Responds to Media Inquiry on Employee Compensation
Colorado PERA is frequently asked to provide information on issues that appear in the national media to lend a local perspective to what’s happening in other places. As the news of investment incentives paid to large companies’ employees has been in the national media so much recently, Colorado PERA was contacted to provide information on incentive payments made to PERA employees.
For some background, in 2003, the Colorado PERA Board of Trustees approved a Total Compensation Philosophy Statement that guides how PERA employees are paid. The Board’s statement recognizes that PERA’s employees are PERA’s primary asset and the principal source of PERA’s competitive advantage. Base pay for PERA employees is determined by using surveys of the market's average pay for similar jobs – much like PERA employers such as the State, school districts, and local units of government establish salaries for their employees.
Colorado PERA has 252 staff positions, of which, approximately half are eligible for some type of incentive payment. These eligible staff are investment professionals and other administrative and operational directors, managers, supervisors, and technicians.
On behalf of our membership, PERA directly manages over 60 percent of investments using in-house investment professionals. By using this approach, PERA saves over $20 million in investment management fees for the stock and bond portfolios per year. PERA investment staff are required to exceed Board-established benchmarks in order to be eligible to receive an incentive. PERA outperformed these market benchmarks by $252 million in 2006 and $493 million in 2007. A key component of investment professional compensation is performance incentive pay. Accordingly, in 2006 and 2007, PERA’s investment professionals exceeded the Board established market benchmarks and became eligible for incentive pay.
Total investment performance incentives paid for 2006 and 2007 performance was $540,000 and $722,000, respectively. Incentives are paid over a two-year period and ranged from a high of $66,371 to a low of $2,888 and averaged $12,860 for the 21 employees eligible for these incentives in 2006. In 2007, 25 PERA investment employees were eligible for incentive pay and received payments ranging from $70,413 to a low of $3,895. These incentives averaged $14,443. Again, these payments were made over two years. Investment incentives do not exceed a maximum of 35 percent of base salary. For every dollar of investment performance incentives paid, PERA’s investment professionals added $467 in 2006 and $683 in 2007.
PERA also benchmarks the performance of managerial, professional, and technical staff. Over 80 employees are eligible for performance incentive pay. PERA has contracted with an independent third party specializing in benchmarking administrative costs and service quality for defined benefit pension plans worldwide. The firm, Cost Effectiveness Management Benchmarking Inc. (CEM Benchmarking) is the world’s leader in measuring and benchmarking service performance and the cost value of that service for both public and private pension systems. In 2007, (the last period available for analysis) Colorado PERA ranked first within the entire universe of 77 leading international defined benefit pension systems in terms of value, quality of service, quality, and overall cost for these services. PERA is a high quality, low cost provider of retirement services. PERA had adjusted costs that were 34 percent below the median cost of the universe. If PERA’s expense structure mirrored the median plan, PERA’s costs would have been approximately 50 percent higher or $8.5 million more.
Incentives paid to PERA’s managerial, professional, and technical staff totaled $477,061 for 2006 and $535,452 for 2007. Incentives ranged from a high of $48,806 to a low of $1,000 and averaged $7,228 for the 66 of 78 eligible staff who received them for 2006. For 2007, 72 of 84 of eligible staff received incentive pay and were awarded payments ranging from $53,399 to a low of $1,000. These incentives averaged $7,437.
With the Board’s focus on the current economic conditions and the corresponding impact on the PERA trust fund, the Board has directed PERA staff to take steps to address the changing circumstances we all face. Accordingly, there will be no 2008-related performance incentives paid in 2009.
Colorado PERA is sensitive to the issue of employee compensation and we realize that these are difficult economic times for our members, retirees, employers, and taxpayers of the State of Colorado. We will continue our work as a prudent steward of the retirement dollars for our membership, now over 430,000 strong.
New Tax Withholding Tables
New federal tax withholding tables will be in effect starting with the April benefit payments to PERA benefit recipients. The new tables, prescribed by the Department of the Treasury, reflect changes resulting from the American Recovery and Reinvestment Act of 2009, and will likely reduce the amount of federal income tax withheld from PERA benefit payments.
These new tables will result in less withholding because they reflect one of the key provisions of the economic stimulus package, namely the “Making Work Pay” tax credit. Taxpayers can receive this benefit through a reduction in the amount of income tax that is withheld from their paychecks; however, pension plan distributions (from public or private plans) are not considered to be earned income for purposes of qualifying for the new “Making Work Pay” credit. This may result in too little money being withheld from a PERA benefit payment.
All PERA benefit recipients are encouraged to review their April 2009 year-to-date federal income tax withholdings to determine if the amounts being withheld going forward need to be modified.
Benefit statements will be sent to all PERA benefit recipients in April since benefit amounts will be changing as a result of these new tax withholding tables.
Please review the Taxes on PERA Benefits booklet for more information and which also includes a PERA Withholding Preference Form to change withholdings from PERA benefits. PERA retirees and benefit recipients with a PERA PIN, may change withholdings online through the secured pages of the PERA Web site.
(PERA is providing this for information purposes only. Please consult a tax adviser for information specific to your situation.)
Colorado PERA Cancels Meetings
Colorado PERA's meetings scheduled for March 26, 2009, in Colorado Springs are canceled due to a blizzard warning issued by the National Weather Service with predictions of snowfall accumulations up to 15 inches and hazardous driving conditions for the next 24 hours. The Colorado PERA Group Workshop and Purchasing Service Credit meeting were scheduled for 4:30 p.m. and 6:30 p.m. at the Hilton Garden Inn, 1810 Briargate Parkway, in Colorado Springs. The decision to cancel the meetings was made in the best interests of the safety of Colorado PERA staff and members who would have to travel to the meeting. We regret any inconvenience caused by this cancellation. Please check the PERA Web site’s Meeting and Appointment Scheduler for additional meeting dates in the Colorado Springs area. For answers to questions, please contact the Colorado PERA Customer Service Center at 1-800-759-7372 or 303-832-9550.
PERA Denver Office Relocation Update
Effective Monday, March 30, 2009, Colorado PERA's Denver office will be located at 1301 Pennsylvania Street. The new location is one block east of PERA's current location at 1300 Logan Street. PERA's mailing address remains the same: 1300 Logan Street, Denver, CO 80203 or PO Box 5800, Denver, CO 80217. Deliveries (FedEx, UPS, etc.) after March 30 should be sent to 1301 Pennsylvania Street, Denver, CO 80203. A map of PERA's new location is available.
PERA Meets with Legislative Audit Committee – March 17
On March 17, Colorado PERA met with the Legislative Audit Committee of the Colorado General Assembly. PERA meets with various committees of the General Assembly throughout the year, and the meeting with the Legislative Audit Committee was an opportunity for PERA to provide responses to questions from elected officials and to update the committee on the overall status of PERA.
Meredith Williams, PERA’s executive director, outlined PERA’s progress on the development of a plan to address the downturn in the economy and the resulting impact on the PERA trust fund. He noted that the actuarial valuation of assets and liabilities to determine what PERA’s funded status was underway. The PERA Board, staff, and actuaries will use this information to build a comprehensive package to propose to legislators for the 2010 session. Requesting legislation during the 2009 session would be premature since any changes contemplated would be based on incomplete information.
For more details on the information presented to the Legislative Audit Committee, please review the presentation.
Colorado PERA Retirees Strengthen Colorado Economy
Colorado PERA announced new research data that shows state and local government retirees support $3.7 billion in total economic output in Colorado, according to a study released by the National Institute on Retirement Security (NIRS).
The study, “Pensionomics: Measuring the Economic Impact of State and Local Pension Plans,” finds that state and local pension funds in Colorado and other states paid a total of $2.55 billion in benefits to Colorado residents in 2006.
Colorado PERA is the state’s largest retirement plan, with over 430,000 members and retirees. A large majority of those members and retirees participate in the plan’s defined benefit program, included in the NIRS study.
The report also finds that expenditures from state and local pension benefits supported 24,101 jobs in Colorado that paid $1.5 billion in wages and salaries and $549 million in federal, state, and local tax revenues.
In Colorado, each dollar “invested” by Colorado taxpayers in state and local pension plans supported $7.00 in total economic activity in the state.
“The NIRS study demonstrates the significant stabilizing force of public pension plans in Colorado and across the nation,” said Meredith Williams, executive director of Colorado PERA.
“This study measures the magnitude of the ‘multiplier effect’ of Colorado’s public pensions across the state’s economy,” said Ilana Boivie, NIRS policy analyst and report co-author. “The multiplier effect occurs because one retiree’s spending in Colorado becomes another person’s income,” she said.
“In a time when many retirees who are dependent on 401(k) savings have to cut back on spending or even re-enter the job force, pension benefits provide a critical and steady infusion of cash into Colorado’s economy. Like the NIRS study shows, our retirees receive a modest benefit, on average, of $2,700 per month. But this benefit reverberates throughout our state, creating jobs and benefitting all of Colorado,” Williams said.
Colorado PERA Hires Deputy Chief Investment Officer
Colorado PERA hired David L. Bomberger as its new deputy chief investment officer, a new position. He began his new responsibilities in March.
Most recently, Bomberger worked for the Nebraska Investment Council as the State Investment Officer. He has more than 30 years of investment experience.
Bomberger earned a bachelor of science degree in business administration from the University of Nebraska in 1977 and a master’s degree in business administration from the University of Nebraska in 1980. He holds the designation of Chartered Financial Analyst (CFA).
“I am excited to join the Colorado PERA team. I am confident that my previous public and private plan sponsor experience will allow me to contribute to the Colorado PERA team. My family and I are looking forward to experiencing all that Colorado has to offer,” said Bomberger.
Why PERA Will Seek Legislation in 2010
PERA believes it is in the best interest of both its members and the state’s taxpayers to work towards proposing legislation in the 2010 legislative session to address the dramatic decline in the PERA investment portfolio. PERA has been working and will continue to work intensively in the meantime to put the necessary pieces in place to ensure that PERA’s 2010 legislative recommendation addresses the situation in a comprehensive and effective manner.
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PERA needs a complete picture of its assets before recommending any changes. Complete, audited information on the value of all of PERA’s investments, including assets such as real estate and private equity, will not be available until the end of May. This timing is normal for the receipt of this information each year. |
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PERA needs to have a complete picture of how any changes would impact its bottom line before recommending a specific course of action. PERA’s actuaries are currently “pricing” every component of the benefit structure of PERA. This process will be concluded in the next several months and involves a comprehensive review of all of PERA’s 431,000 members’ currently earned and benefits owed going forward (also called liabilities). To assist the Board in determining which changes to recommend, a model will be built to analyze the interaction and total impact of individual benefit changes on PERA’s funded status. |
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Together these tools will allow PERA’s Board of Trustees to propose a complete package for the 2010 legislation session rather than taking piecemeal approach that would lead to PERA returning annually to the General Assembly to seek legislation tweaking particular aspects of the system. |
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Because the stakes are so high it’s imperative that we do everything in our power to get it right. The comprehensive proposal for legislative action in 2010 will be based on accurate calculations and on a complete picture of how the changes will impact PERA’s funded status and its members. |
Brief History of PERA
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Established in 1931, before Social Security. |
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Serves as a retirement plan as well as a replacement for Social Security. Provides survivor and disability benefits in addition to a retirement benefit that averages $2,777 per month. (Most PERA members do not receive Social Security because they do not make Social Security contributions during the years they work for a PERA employer.) |
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Covers state government employees, all school district employees except Denver, judges, State Troopers, and many employees of local government. Membership at the end of 2008 was more than 430,000, which included currently contributing employees, employees who have left PERA-covered jobs, and retirees. |
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In addition to replacing Social Security, PERA serves as a retirement account for covered employees. A secure retirement is like a three-legged stool: Social Security, an employer pension or retirement account, and personal savings. PERA serves as the first two legs of this stool. |
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PERA was funded at above 100 percent at the end of only two years: 1999 and 2000. |
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Employer contribution rates were lowered when PERA reached fully funded status, saving public employers in Colorado millions of dollars. |
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Legislation passed in 2004 and 2006 will gradually restore contribution rates and these additional contributions come not only from employers (called the AED), but also employees (called the SAED). |
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In 2008, PERA paid $2.6 billion in retirement benefits and withheld $42.5 million for Colorado taxes. |
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All benefit provisions and contribution rates are contained in state law; the PERA Board of Trustees cannot change benefits or contribution rates. |
Interest Rate Change
At the November 21, 2008, Board meeting, the Colorado PERA Board of Trustees set the interest rate on member contributions to 3 percent compounded annually effective January 1, 2009. The interest rate is set by the PERA Board and is subject to change annually.
PERA Meets with Elected Officials
On January 5, Colorado PERA met with the Joint Budget Committee (JBC) and on January 14, the Joint House and Senate Finance Committee of the Colorado General Assembly. These meetings with elected officials occur every year and give PERA the opportunity to provide responses to questions from JBC members and to update both committees on the overall status of PERA.
Meredith Williams, PERA’s executive director, outlined PERA’s plan going forward which includes an actuarial valuation of assets and liabilities to determine what PERA’s funded status was at the end of 2008. The PERA Board, staff, and actuaries will use this information to build a comprehensive package to propose to legislators for the 2010 session. Requesting legislation during the 2009 session would be premature since any changes contemplated would be based on incomplete information.
With the worldwide decline in the financial markets, like other investors, the value of PERA’s assets has declined. However, perspective on the magnitude of the decline has been missing from recent media reports on the health of PERA. The portfolio’s preliminary, unaudited return for 11 months ended November 30, 2008, was negative 24.8 percent. For comparison purposes, the S&P 500 index was down 37.7 percent, and the Wilshire 5000 declined 38.3 percent during this same time frame. What is yet unknown is the value of PERA’s non-publicly traded assets such as private equity and real estate. Only after PERA’s holdings in these asset classes are audited and compared to what PERA owes in current and future benefit payments, will a complete picture of PERA’s funded status be known. This comparison of assets to liabilities is performed every year and results are mailed to members and retirees in the Summary Annual Financial Report in late June.
As 2009 progresses, work will continue to determine what potential changes to contributions and to the future accrual of benefits might be feasible and necessary for the Legislature to consider in 2010. PERA members and retirees will be kept informed of any proposed changes via Web site postings and information in the Member and Retiree Reports.
For more details on the information presented to elected officials in January, please review the presentations below.
JBC presentation
Joint House and Senate Finance Committee presentation
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