Although it’s unlikely to garner widespread support, a new proposal to shore up Colorado PERA from gubernatorial candidate (and State Treasurer) Walker Stapleton at least stakes out the far edge of what’s likely to be proposed and debated during the upcoming legislative session.
Stapleton wants to lower the projected rate of return on state retirement fund investments from the current 7.25 percent to as low as 5 percent, eliminate cost of living raises indefinitely, and raise the retirement age.
The plan lacks specifics — it would take an actuarial analysis (a robust sort of financial study that PERA outsources to a private firm) to determine how long retirees would have to forgo cost-of-living raises to shore up the fund. But one thing is clear: If his suggestions were followed, it would represent the most dramatic overhaul of PERA of any proposal to date.
The short-on-details proposal also — no surprise here — deeply unpopular with retirees.
The plan drew a swift rebuke from Lynea Hansen, executive director of Secure PERA, which represents public-sector retirees and workers. By setting the rate of return lower and eliminating the taxpayer contributions proposed by the PERA board, retirees and employees would be left to shoulder the bulk of the $50 billion load.
“We’re happy to see he finally has a proposal,” Hansen said. “Up until now, our rallying cry has always been ‘Tell us what you think should happen,’ and what he thinks should happen is employees and retirees should be screwed over.”
Despite this year’s robust financial markets, which will almost certainly yield PERA a one-year bonanza, Stapleton’s call to reduce the assumed rate of return tracks with what experts have advised PERA.
But the problem PERA faces is that lowering the rate of return puts it into an even deeper hole. As a result, the board has heeded the dubious advice of its own actuarial consultants and left the rate of return significantly too high.
Stay tuned for further developments. PERA will be one of THE issues during the 2018 sessions.