Colorado Gov. John W. Hickenlooper signed into law on Monday a pension reform bill designed to reduce the risk profile and improve the funded status of the Colorado Public Employees' Retirement Association, said a news release from the $49 billion pension fund.
The new law will increase the contribution rate for most participants by an additional 2% of pay phased in beginning July 1, 2019, totaling 10% for most participants by July 1, 2021; require a three-year delay before receiving a cost-of-living adjustment; set the COLA cap at 1.5% (the current annual COLA for participants who started receiving benefits prior to Jan. 1, 2007, is 2%); increase the highest average salary calculation for non-vested members in most divisions (for those with fewer than five years of service credit as of Jan. 1, 2020) to five years; increase the highest average salary calculation for members in the judicial division who do not have five years of service credit as of Jan. 1, 2020, to three years; and redefine PERA-qualified salary to include sick leave payouts.
The law will also direct the state to allocate $225 million each year to the Denver-based pension fund to reduce the unfunded liability (PERA was 58.1% funded as of Dec. 31, 2016, according to the most recent information on the pension fund's website); and establish an automatic adjustment provision designed to fully fund PERA in 30 years.
"We understand that these changes will not be easy, but we believe shared impact across the membership and with employers was absolutely necessary," said Timothy M. O'Brien, PERA chairman, in the news release. "The PERA retirement system is stronger because of the comprehensive modifications enacted by the Colorado General Assembly and signed into law by Gov. Hickenlooper."
Senate Bill 18-200 passed the Senate on March 29. On May 1, the bill passed in the House after modifications to the bill were made. However, the Senate did not concur with the House amendments and members of both chambers were named to a conference committee. On May 9, the General Assembly passed the bill by a vote of 34-29 in the House and 24-11 in the Senate.