Colorado Public Employees' Retirement Association, Denver, proposed a number of reforms to reduce the $43 billion pension fund's risk profile and improve its funded status, including benefit reductions for current and future participants, and contribution increases for employers and employees.
The proposals, made Friday, require the approval of the Colorado General Assembly, said a news release from the pension fund.
Among PERA's benefit recommendations, the retirement age for most new hires would be raised to 65 starting in 2020, up from 60 now; for state troopers, the retirement age would be raised to 55, from 50. The annual cost-of-living adjustment for current and future retirees would be capped at 1.5%, from 2% now for most retirees. Additionally, for current retirees, the waiting period to receive a COLA increase would be extended to two years after retirement, up from one year, and for future retirees, the waiting period would be extended to three years. The COLA changes would be effective on the date legislation is passed.
Regarding contribution levels, current workers would contribute an additional three percentage points of their salary, totaling 11% for most workers; employees hired on or after Jan. 1, 2020, would contribute an additional two percentage points, totaling 10% for most workers.
Employer contributions also would increase by two percentage points.
PERA is also proposing "an automatic mechanism" by which employer and employee contributions and COLA amounts would adjust based on the pension fund's financial condition, according to the release. Specifics are under discussion, a fund spokeswoman said in an email.
The recommendations are expected to reduce PERA's liabilities by $4.5 billion and bring the pension fund to full funding in 30 years, the spokeswoman wrote.
As of Dec. 31, PERA faced $32.2 billion in unfunded liabilities, according to its most recent annual report.
The Colorado Legislature next convenes in January.