Proposal caps public retirees’ living cost raise
Retirees from the Colorado Public Employees Retirement Association would see cost-of-living increases capped, and new employees would have to work longer before they retire, under an association proposal.
The state, school districts and other governments also will be on the hook to increase their contributions to the system, Meredith Williams, executive director of the association, said Thursday.
The association pays out $237 million annually to about 82,000 retirees and last year saw the market value of its holdings take a $10.5 billion hit, which left liabilities exceeding assets by $26 billion.
“Our ability to maintain the long-term stability of the fund has to be in question after 2008,” Williams said.
The board unanimously approved the plan that is to be made available today to all members of the Legislature.
Under the proposal, cost-of-living increases would be capped at 2 percent annually, and pensions could be reduced, depending on whether the Denver-Boulder consumer-price index falls.
The cap could be adjusted, depending on the association’s year-end funding status. The cap could rise if the association is in a strong position, and it would be required to drop if it falls below certain levels.
The proposal also calls for new employees and employees with fewer than five years in the system to reach a combined 90 years of age and years of service before they can retire. Currently, the retirement number is 80.
The plan also includes an assumption of lower investment earnings than in the past.
Even with an optimistic 10 percent rate of return and with no other changes, the association’s fund for school employees would run out of money soon after 2039. A pessimistic 7 percent return would move that date up to 2029.
The measures the association is asking the Legislature to approve are expected to help eventually, in 30 years, bring its assets and liabilities back into line, Williams said.
It also would offer retirees some hedge against inflation and the possibility employers might not have to pony up as much as anticipated.
It doesn’t hold out the possibility of great benefits to anyone, however, Williams said.
“This does the job,” he said. “No more, no less.”
The association board wants the entire package approved because it’s made of interdependent elements. “Changes to one part of the proposal could jeopardize the viability of the entire package,” the association says on its Web site, copera.org.