Good news for public retirees’ fund

Return for 2013 will be 'north of 13 percent,' executive director says

The retirement system that covers Colorado’s public employees will see a return “north of 13 percent” in 2013, the executive director said Tuesday.

The Colorado Public Employees’ Retirement Association return last year still is to be audited, so a final figure is unavailable, Greg Smith, executive director and CEO, told the Daily Sentinel editorial board.

The association — which has 103,000 beneficiaries, including more than 3,200 in Mesa County — still has unfunded liabilities of $23 billion, but is working on plans to eliminate it in 30 years, well under the 60-year schedule it previously anticipated, Smith said.

The association was last fully funded in 2000.

“Unfunded liabilities” refers to the amount, at any given time, by which future payment obligations exceed the present value of funds available to pay them.

The $23 billion liability is based on an 8 percent annual average return on PERA’s investments. Last year, the association lowered its earnings estimate to 7.5 percent, which in turn will increase the unfunded liability to $26 billion or $27 billion, Smith said, noting that the numbers are still being worked out.

Colorado Treasurer Walker Stapleton, a frequent critic of the association, said Tuesday the 2013 return was “great news for taxpayers. However, we cannot expect a 13 percent return year after year.”

That reasoning explained why the PERA board lowered its projected rate of return to 7.5 percent last year, Stapleton said.

Smith, previously the general counsel for PERA who took over after his predecessor’s retirement, said that the association has seen its assets rise from $7 billion in 1988 to $39.9 billion at the end of 2012.

Over the last 30 years, PERA has averaged a 9.4 percent annual return on its investments, including 2008, when the financial world was shaken and PERA was hammered with a 25 percent loss on the value of its portfolio, he said.

With that in mind, PERA asked the Legislature to take several actions, including reducing cost-of-living increases to current beneficiaries and raising the retirement age to 60 for most members.

PERA distributes an annual average of $36,000 apiece to beneficiaries across Colorado, or about $3.7 billion in total in 2012.

In Mesa County, PERA beneficiaries collected $109.2 million in 2012.

The association’s beneficiaries in Delta County that year received $23.2 million, meaning that benefits there amounted to 10 percent to 15 percent of all payrolls in the county.

In Garfield County, beneficiaries collected $24.3 million and in Montrose County, $28.8 million. In Rio Blanco County, beneficiaries collected $5.1 million.


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