Retirement insights from a Colorado PERA perspective

A distant view shows a mountainous landscape with sloping peaks, green trees in the foreground, and a cloudy sky above.

In this story:



<ul>
<li>More than 3,000 PERA members and retirees took part in two town hall meetings</li>



<li>Topics of discussion included PERA’s financials, state funding, investments, and Social Security</li>



<li>Read summaries of questions/answers and view clips from the events</li>
</ul>



<hr class="wp-block-separator has-css-opacity"/>



This year’s town hall meetings with PERA Executive Director Ron Baker and Chief Investment Officer Amy C. McGarrity, which featured new ways for members and retirees to connect, drew more than 3,000 live participants across the web, phone, and social media. Many more have since watched the events online.



The conversation centered on PERA’s recently released 2020 Annual Report but also touched on topics such as state funding, green energy investments, and Social Security.



Below is a summary of some of the questions and answers from the events. For full recordings of the town halls, visit <a href="https://www.copera.org/about/pera-town-hall" target="_blank" rel="noreferrer noopener">copera.org/townhall</a>.



<h5 class="wp-block-heading">How are PERA’s investments doing?</h5>



While 2020 was turbulent for investors, it ultimately was a strong year in the markets. PERA’s total fund return for the year was 17.4%. The 10-year annualized return is 9.4%. PERA’s funded ratio at the end of 2020 was 62.8%.



More information is available in PERA’s <a href="https://content.copera.org/how-its-made-peras-financial-report/" target="_blank" rel="noreferrer noopener">Annual Report</a>.



<h5 class="wp-block-heading">What is PERA doing about the Windfall Elimination Provision and reductions in Social Security benefits?</h5>



Executive Director Ron Baker discussed PERA’s efforts to work with Colorado’s congressional delegation on this issue and the challenges with changing the WEP at the federal level. Watch the clip below for more:



<figure class="wp-block-video"><video controls poster="" src="https://peraontheissues.com/wp-content/uploads/2021/07/WEP.mp4"><track src="https://peraontheissues.com/wp-content/uploads/2021/07/WEP.en_US.vtt" label="WEPvtt" srclang="en"/></video></figure>







<h5 class="wp-block-heading">Will member contributions be going up again?</h5>



Member contribution rates increased by 0.5% on July 1 for all members except those in the Local Government Division due to the scheduled increases established in 2018’s Senate Bill 200. This is the third and final year of the three-year phase-in of the 2% rate increase for member contributions.



In addition, because of changes to PERA’s liabilities (<a href="https://www.copera.org/what-to-know-about-peraplus-401k-457-dc-plans-in-2022" target="_blank" rel="noreferrer noopener" class="broken_link">learn more about this here</a>), the <a href="https://content.copera.org/thousands-participate-in-peras-interactive-town-hall-meetings/" target="_blank" rel="noreferrer noopener">Automatic Adjustment Provision</a> will go into effect next year. That means member contributions will increase by 0.5%, and the annual increase for benefit recipients will decrease by 0.25%, in July 2022.


<div class="wp-block-image">
<figure class="alignright size-large"><a href="https://content.copera.org/wp-content/uploads/2021/07/AAP-slide.jpg"><img decoding="async" loading="lazy" width="1024" height="576" src="https://content.copera.org/wp-content/uploads/2021/07/AAP-slide-1024x576.jpg" alt="" class="wp-image-44048" srcset="https://content.copera.org/wp-content/uploads/2021/07/AAP-slide-1024x576.jpg 1024w, https://content.copera.org/wp-content/uploads/2021/07/AAP-slide-300x169.jpg 300w, https://content.copera.org/wp-content/uploads/2021/07/AAP-slide-768x432.jpg 768w, https://content.copera.org/wp-content/uploads/2021/07/AAP-slide.jpg 1280w" sizes="(max-width: 1024px) 100vw, 1024px" /></a><figcaption class="wp-element-caption">Click image to enlargen</figcaption></figure></div>


“We understand how difficult that is to hear,” Baker said. “For our active members, that is more money out of your pocket, and for our benefit recipients, that is less money in your pocket in increases. The reason we need to do this is so we continue to have a strongly funded system.”



<h5 class="wp-block-heading">Will retirees receive an annual increase this year?</h5>



Yes, the <a href="https://www.copera.org/retirees/annual-benefit-increases" target="_blank" rel="noreferrer noopener">Annual Increase</a> (AI) paid in July 2021 will be 1.25% for most retirees. The AI amount for eligible PERA benefit structure retirees hired on or after January 1, 2007 will be 1.2%.



<h5 class="wp-block-heading">Did the state make its $225 million direct payment to PERA this year?</h5>



The state paid its $225 million direct distribution to PERA on July 1, 2021. While the direct distribution from 2020 will not be paid, the Legislature underscored its commitment to PERA and the retirement security of hundreds of thousands of Coloradans by creating a cash fund to pay for future contributions to PERA.



<h5 class="wp-block-heading">Why doesn’t PERA divest from fossil fuels and invest in green energy instead?</h5>



PERA invests in a wide variety of asset types with the goal of securing the best possible risk-adjusted returns for its members. Hear more from Chief Investment Officer Amy C. McGarrity in the clip below:



<figure class="wp-block-video"><video controls src="https://content.copera.org/wp-content/uploads/2021/07/investments-video-cover.png"><track src="https://peraontheissues.com/wp-content/uploads/2021/07/Divestment.en_US.vtt" label="DivestmentCaptions" srclang="en"/></video></figure>







<h5 class="wp-block-heading">I’m counting on PERA for my retirement income; do you have my back?</h5>



<figure class="wp-block-video"><video controls poster="" src="https://peraontheissues.com/wp-content/uploads/2021/07/Stability.mp4"><track src="https://peraontheissues.com/wp-content/uploads/2021/07/Having-your-back.en_US.vtt" label="HaveMyBackCaptions" srclang="en"/></video></figure>



“This organization, and I think more importantly, the General Assembly, has your back,” Baker said. “The PERA Board absolutely has your back; they are members and also governor appointees. All of us in this organization work very diligently to ensure that we’ll be here for the long term as well.”



To watch the town hall events in full, visit <a href="https://www.copera.org/about/pera-town-hall" target="_blank" rel="noreferrer noopener">copera.org/townhall</a>.

Thousands participate in PERA’s interactive town hall meetings

In this story:



<ul>
<li>Four PERA Trustees were reelected to the Board</li>



<li>The Board will also gain a new Trustee, Ashley M. Smith</li>



<li>The 2020 Annual Report was approved and released by the Board</li>



<li>Investment returns topped 17% last year, exceeding the fund’s benchmark</li>



<li>The Annual Report announced that the automatic adjustment provision will go into effect in 2022</li>
</ul>



<hr class="wp-block-separator has-css-opacity"/>



PERA’s Board met on June 18. The meeting included the announcement of results from the recent Board election as well as the approval and release of the 2020 Comprehensive Annual Financial Report (Annual Report).



<h4 class="wp-block-heading">Board Election Results</h4>



Four PERA <a href="https://www.copera.org/recap-of-pera-boards-june-2021-meeting" target="_blank" rel="noreferrer noopener" class="broken_link">Trustees</a> have been reelected to PERA’s <a href="https://www.copera.org/recap-of-pera-boards-june-2021-meeting" target="_blank" rel="noreferrer noopener" class="broken_link">Board</a>. PERA’s Board announced the following results at their meeting on June 18:



<ul>
<li>Suzanne E. Kubec was reelected to represent the State Division</li>



<li>Tina Mueh and Marcus A. Pennell were reelected to represent the School Division</li>



<li>Julie Friedemann was reelected to represent retirees in the School, Local Government, and Judicial Division</li>
</ul>



Each Trustee was elected to serve a four-year term, ending in June 2025.



In addition to the above results, Ashley M. Smith was appointed to represent the State Division. Smith fills the seat vacated by Dave Hall’s departure from the Board.



<h4 class="wp-block-heading">Annual Report Released</h4>



Every year, the Board releases a report that summarizes PERA’s investment performance, funded status and membership information for the year before. The Annual Report the Board released last week covers the 2020 calendar year.



The Annual Report showed that PERA had a strong investment year, returning 17.4%, net of fees. This beat the fund’s benchmark of 14.1%. The total fund was valued at $58.3 billion, up from $51.7 billion at the end of 2019.



The Annual Report also announced that the automatic adjustment provision will go into effect in July 2022. While 2020’s investment returns were positive, it is one of many factors used to calculate a plan’s funded status. Changes to PERA’s actuarial assumptions and the impact of the pandemic on PERA’s membership increased PERA’s liabilities.



You can read more about the Annual Report <a href="https://peraontheissues.com/colorado-pera-board-releases-2020-annual-report/" target="_blank" rel="noreferrer noopener">here</a>.



<h4 class="wp-block-heading">Other Updates</h4>



<ul>
<li>The Board elected Suzanne E. Kubec to serve as Vice Chair, filling the seat vacated by David Hall following his departure from the Board. </li>



<li>The following updated membership statistics were shared with the Board:</li>
</ul>



<figure class="wp-block-image size-large"><img decoding="async" src="https://content.copera.org/recap-of-pera-boards-june-2021-meeting/"" class="wp-image-4495"/></figure>

Recap of the PERA Board’s June 2021 Meeting

In this story:



<ul>
<li>The PERA Board approved and released the 2020 Comprehensive Annual Financial Report</li>



<li>In 2020, the total fund’s investment portfolio returned 17.4%, net of fees</li>



<li>The total fund was valued at $58.3 billion, up from $51.7 billion at the end of 2019.</li>



<li>The Annual Report also announced that the automatic adjustment provision (AAP) will go into effect in 2022</li>



<li>The primary drivers of the AAP going into effect were the updates to PERA’s actuarial assumptions and the impact of the pandemic on PERA’s membership</li>
</ul>



<hr class="wp-block-separator has-css-opacity"/>



The Colorado PERA Board of Trustees approved the release of the <a href="https://www.copera.org/colorado-pera-board-releases-2020-annual-report" target="_blank" rel="noreferrer noopener" class="broken_link">2020 Comprehensive Annual Financial Report</a> (Annual Report) during its Board meeting on June 19.



The Annual Report is a detailed summary of PERA’s investment performance, funded status and membership information for the 2020 calendar year.



“This report reflects the ways in which we met the challenges faced in a highly unusual year,” said Ron Baker, PERA’s Executive Director. “Last year was a tough year for so many people, and at PERA our focus remained on members and retirees.”



<h4 class="wp-block-heading">Global equities fuel strong investment return</h4>



For the year ending Dec. 31, 2020, the total fund’s investment portfolio returned 17.4%, net of fees, significantly above its benchmark of 14.1%. The 10-year annualized return is 9.4%. PERA’s funded ratio at the end of 2020 was 62.8%. The total fund was valued at $58.3 billion, up from $51.7 billion at the end of 2019.



Returns by asset class are shown below alongside the benchmark for each asset class:



<figure class="wp-block-image size-large"><img decoding="async" src="https://content.copera.org/colorado-pera-board-releases-2020-annual-report/"" class="wp-image-4488"/></figure>



<h4 class="wp-block-heading">Automatic adjustment provision goes into effect in 2022</h4>



While the investment returns were positive last year, it is important to remember that investment performance is one of <a href="https://peraontheissues.com/determining-peras-funded-status-part-art-part-science/" target="_blank" rel="noreferrer noopener">many factors</a> used to calculate a plan’s funded status.



In 2020, the Board reviewed PERA’s actuarial assumptions through a process known as an Experience Study, which takes place every four years. That review resulted in <a href="https://peraontheissues.com/2020-experience-study-preparing-for-a-secure-future/" target="_blank" rel="noreferrer noopener">changes</a> to assumptions used to calculate PERA’s funded status. The changes reflect that members are living longer and the workforce is growing more slowly than previously expected.



These updates to PERA’s actuarial assumptions, in addition to the impact of the pandemic on the membership, increased PERA’s liabilities. These increases in liabilities mean the automatic adjustment provision will be triggered in 2022.



Beginning July 1, 2022, employer and member contributions will increase by 0.50 percentage points of salary. The annual increase will be reduced by 0.25 percentage points.



“We understand the changes we’re announcing today are difficult for our members and retirees,” Baker said. “However, the impact is clear: This change will help PERA stay on track to reach its goal of keeping PERA secure for its members now and in the future.”



PERA’s annual report is available <a href="https://www.copera.org/colorado-pera-board-releases-2020-annual-report" target="_blank" rel="noreferrer noopener" class="broken_link">here</a>. Highlights are also available in an interactive format at <a href="https://content.copera.org/colorado-pera-board-releases-2020-annual-report/" target="_blank" rel="noreferrer noopener">www.copera.org/snapshot</a>.

Tag Archives:

Thousands participate in PERA’s interactive town hall meetings

Recap of the PERA Board’s June 2021 Meeting

Colorado PERA Board Releases 2020 Annual Report

Subscribe to PERA On The Issues