The problem with PERA
Senate Minority Leader Josh Penry finds himself in unfamiliar territory these days. He’s under attack from conservatives — for cosponsoring a bill that attempts to repair the financial problems of Colorado’s Public Employees Retirement Association fund.
But Penry has not suddenly abandoned his conservative principles. Rather, he has grasped both the political and economic realities regarding the state-backed retirement fund.
PERA was relatively sound until the stock market crashed in 2008. Then, like nearly every other retirement fund in the country, the value of its assets tumbled.
Some conservatives in and out of the Legislature are crying foul. A few say PERA should drop its pension plan altogether for all new employees and go entirely to 401(k)-style retirement benefits.
But, as Penry told The Daily Sentinel, that would leave no stream of income from new public employees to pay the pensions of existing retirees and those soon to retire. To make up the difference, the state would have to come up with billions of dollars of new revenue.
Without a bipartisan solution, PERA could collapse and leave the state with $30 billion in liabilities. SB 1 is a reasonable compromise to prevent that from occurring.