The continued health of PERA is vital for the security of members and the economic stability of communities throughout Colorado. However, changes to external conditions continue to be challenging and have increased PERA’s risk level for retirees, members, taxpayers, and communities across the state. To remain sustainable, it is important that PERA remain resilient and able to withstand major ebbs and flows of the market.
Among the factors influencing PERA’s funded status are a population living longer and a financial market yielding lower returns on investments. Between 2000 and 2014, life expectancy of the PERA population increased by around one year to the
age of 78. Even though it may not sound like a big gain, the impact is much greater when considered for the entirety of the PERA membership.
In addition to people living longer, financial markets are evolving. While PERA has achieved a 9.8 percent return on investments over a 35-year time period, the next few decades may not yield the same type of returns as experienced in the past, which is why the PERA Board lowered the expected rate of return to account for those expectations.
Since its inception in 1931, PERA has had to adapt as new circumstances and situations emerge. PERA’s prior experience has shown that the time to plan for any changes is before a crisis hits. While PERA is in a very different situation than in 2008, the time to act is now.
Given the significance of PERA to Colorado, PERA has embarked on a statewide outreach effort known as PERAtour to inform and listen to its members, retirees, employers, and taxpayers about reducing PERA’s risk profile. This outreach provides ample opportunities to be a part of the conversation and discussion about guiding principles and potential changes.
PERA issues impact not just our members and retirees, but communities across Colorado. Given the signficant footprint of PERA, it is important to have a variety of voices involved in a conversation about potential changes to the plan that will ensure PERA can maintain a sustainable retirement for Colorado’s public employees.