On June 4th, Governor Hickenlooper signed SB18-200 Modifications to PERA Public Employees’ Retirement Association to eliminate unfunded liability. With the help of strong bi-partisan sponsors Senators Tate and Guzman and Reps. KC Becker and Pabon this legislation’s success was a product of great compromise and an important step forward to addressing the state’s $32 billion pension liability. BBMK was instrumental in securing the passage of this legislation on behalf of Secure Futures Colorado and the Retirement Security Initiative as well as other interested clients.
Highlights of the bill include:
- Increased legislative oversight with representation from qualified private sector citizens. This new oversight committee is in addition to the governing Board of PERA.
- A DC option provision will be available to all state employees (it was previously available to only certain categories of state employees) and all local employees.
- SB200 appropriates $225 million annually from the general fund to be transferred to PERA to pay down the debt.
- Changes to contribution rates:
- Employee contribution rates will increase by 2%
- Employer contribution rates will increase by ¼%
- For new employees, the contribution rate will be based on gross pay rather than net pay
- Both rates can increase by up to an additional 2% if the plan is not on pace to be fully funded by 2049. If the plan reaches a 120% funded level, then contribution rates will decrease.
- Changes in benefits
- Retirement age increases to 64 for all divisions
- Highest annual salary calculation increases to 5 years
- Annual Cost of Living Adjustment (COLA) is capped at 1.5%, and there will be a 3-year time out on all COLA’s. COLA’s will also decrease if the plan is not on pace to be fully funded by 2049