In the News: Assumption Changes

April 12, 2017

In late 2016, the Colorado PERA Board of Trustees made the following actuarial assumption changes:

  • Reduced the long-term inflation expectation to 2.4 percent from 2.8 percent and reduced the long-term investment return assumption to 7.25 percent from 7.5 percent.
  • Adopted new mortality tables that more accurately reflect the actual experience of the PERA membership.

Additionally, PERA is working to develop a solution to address the changing demographics in the Judicial Division. 

PERA regularly conducts a review of demographic assumptions and as part of its ongoing review of economic assumptions, the Board heard long-term investment return projections from nationally renowned financial investment professionals. 

The assumption changes is working to lengthen the time it will take for PERA to reach 100 percent funding—a goal of 2010’s Senate Bill 1. 

Actuarial Assumptions

In order to develop projections for PERA’s funded status and the cost of funding, actuaries make a series of assumptions. In addition to investment rate of return and mortality, other assumptions include average salary increases for all members and population growth, to name a few. The combination of all assumptions help PERA analyze its financial footing.