The news last week wasn’t wonderful for those who have retired with a pension from the Colorado Public Employees Retirement Association and those who hope to retire with a PERA pension.
Cost-of-living increases will be capped at 2 percent and could be lower, based on recommendations unanimously approved by the PERA Board of Directors. New retirees will have to wait longer to see a cost of living increase if the recommendations are adopted. Both employers and workers will have to contribute an additional 2 percent to the pension funding through graduated increases beginning in the next few years. And people who hire on now and in the future will have to work longer before they are eligible for a PERA pension.
Even so, the measures unanimously recommended by the PERA board last week are far better than the potential alternative.
That alternative is the very real possibility that, without action of the sort recommended by the PERA board, the retirement funds that serve teachers, most state employees and many local-government workers could be bankrupt in 15 to 20 years. The 2008 market meltdown that hammered so many groups and individuals gutted 26 percent from PERA’s assets — more than $10 billion.
With the proposal announced last week, PERA is addressing its long-term funding issues head on, and in a responsible manner.
But the plan must be approved by the Legislature, where there is always a tendency for political grandstanding. In this case, some lawmakers may seek to reduce the pain that the plan would cause existing PERA retirees. But, in so doing, they would endanger the retirement organization’s long-term health.
The changes in the PERA program were unanimously recommended by the association’s diverse 15-member board. The Legislature should quickly adopt those recommendations to protect the state’s public-employee retirees.