Bill includes changes to employee and employer contributions, retiree COLAs
The Colorado Senate on Wednesday introduced legislation to improve the funded status of the Colorado Public Employees' Retirement Association, Denver, and lower its overall risk, said a news release issued by the $43 billion pension system.
Sponsors of the bill include state Sens. Jack Tate and Kevin Priola, both Republicans; state Sen. Cheri Jahn, an independent; House Majority Leader KC Becker and state Rep. Dan Pabon, both Democrats. The bill, SB 18-200, has been assigned to the Senate Finance Committee, and a hearing is expected to be scheduled soon.
The bill includes a set of automatic adjustment provisions that would go into effect to ensure that PERA remains on the path to full funding in 30 years. These provisions would increase employee and employer contributions, and modify the annual cost-of-living adjustment for retirees to offset any deviation from the 30-year funding time frame.
The immediate impact for current participants would be a phased-in employee contribution increase over the next few years to 11% of pay, from the current 8%, starting in July 2018. Increases in the employer contributions would range from 1 percentage point to 2 percentage points. The current annual COLA for benefit recipients who began membership prior to Jan. 1, 2007, is 2%. For 2018 and 2019, the bill reduces the COLA to zero. For each year thereafter, the bill changes the COLA to 1.25%.
The bill would also require PERA to report to an interim legislative committee to ensure progress is being made toward full funding. This committee would also have the power to consider and recommend legislation regarding PERA to the full General Assembly.
In addition, the bill would allow new employees hired from all divisions to choose between the PERA defined contribution plan and PERA's hybrid defined benefit plan.
The full copy of the bill is available on Mr. Tate's website.