Colorado Small Biz Blog

PERA Reform - Sort of. SB10-001 by Sen. Brandon Shaffer (D) and Rep. Andy Kerr (D)

MODIFICATIONS TO THE PUBLIC EMPLOYEES' RETIREMENT ASSOCIATION NECESSARY TO REACH A ONE HUNDRED PERCENT FUNDED RATIO WITHIN THE NEXT THIRTY YEARS

Status: 02/23/2010 Governor Action - Signed

SB001 raised the retirement age to 60, decreased the COLA from 3% to 2%, increased the number of years to average highest income from 3 to 4 (for purposes of determining the annual retirement benefit); the employers' (taxpayers) contribution level went up; the employees contribution level stayed the same or dropped; changed the surviving spouse benefit to require a minimum number of years on the job ,and reduced benefits for those who retire before the retirement age.

The plan anticipates a continued high rate of return on PERA investments.

SB001 goes a long way to solve the $30Billion anticipated deficit in the Fund, but the real solution is to restructure the program from a Defined Benefit to a Defined Contribution. The challenge is finding enough money to keep the extraordinary promises made to retirees while allowing younger employees to have a portable, private property right in their retirement account.

At its heart, there is a basic issue of fairness regarding PERA. How much paid retirement do private sector workers owe their public sector-working neighbors? Public sector workers are paid more than private sector workers and Defined Benefit plans in the private sector are virtually non-existent. By 2019, Social Security will only 70% of earned benefits. Why should the full responsibility for retirement benefits fall to entrepreneurs and wage earners?