PERA Receives A’s for Service Delivery and Cost

Your low cost, high service performance is particularly impressive given your ‘tough’ peer group.”

That’s what CEM Benchmarking, an international firm that analyzes pension fund service delivery, noted about Colorado PERA after comparing PERA to its peer group of 13 U.S. pension plans and to a larger universe of 72 plans around the world.

Colorado PERA is included in a peer group of 13 U.S. plans including Ohio PERS, with a membership of 1,065,000 down to TRS Louisiana, with 188,000 members. PERA is in the middle of this group, with 567,000 members as of July 2016.

The range of U.S. pension plans varies from CalSTRS and CalPERS in California to North Carolina RS and Utah RS. Global pension plans studied include ABP and PFZW in The Netherlands to the Ontario Pension Board and the British Columbia Pension Corporation in Canada, Abu Dhabi RPB, and numerous other plans in several countries.

For 2015, PERA’s administrative costs were well below the average of both the 13 funds in its peer group and the 72 pension funds evaluated across the globe. PERA’s annual pension administration costs were $52 per active member per year (or annually), inactive member, and retiree, or $8 below the peer average of $60 per year.

Source: CEM Benchmarking presentation to the Colorado PERA Board of Trustees, September 2016.

The reasons for PERA’s lower than average costs included higher employee productivity and lower costs for information technology and economies of scale. PERA had 3.5 full-time employees (FTE) per 10,000 members, below the peer average of 4.5.

PERA’s overall service score, measuring the customer service PERA provides its members and retirees, was 90 out of 100. Only five funds out of the 72 measured had higher service scores than PERA.

Source: CEM Benchmarking presentation to the Colorado PERA Board of Trustees, September 2016.

Between 2012 and 2015, PERA’s total service score increased five points.

Source: CEM Benchmarking presentation to the Colorado PERA Board of Trustees, September 2016.

“CEM’s independent, third-party analysis of PERA’s operations confirms what members and retirees tell me about PERA’s customer service delivery. It’s important that Colorado PERA members, policymakers, and taxpayers know that PERA continues to receive high marks when we are compared to our peers in the United States, as well as around the world,” said Greg Smith, PERA’s executive director. “And we do it at a comparatively low cost, too, which is important to everyone’s bottom line,” he concluded.

The results of the CEM Benchmarking study further demonstrate the strong commitment of PERA to deliver exceptional service for PERA members and retirees. PERA provides this level of service at a low cost, protecting the retirement savings of its members and continuing to be one of Colorado’s best investments for members, retirees, and taxpayers across the state.

Tom Scheibelhut, Managing Principal, CEM Benchmarking, presenting at Colorado PERA Board of Trustees meeting, September 2016

How to tell if you should move in retirement

Retirement Roundup: a digest of timely information and insight about finance, investing, and retirement.

How to tell if you should move in retirement | U.S. News & World Report

Moving into a less expensive home in retirement can improve your retirement finances. You may also be able to move closer to good health care options or the leisure activities you desire. While moving to a new town can create problems as you have to re-establish a support system of friends, neighbors and services, several reasons might be convincing enough to make moving look like a good decision.

Three myths about why people don’t plan for retirement | The Wall Street Journal

While there has been improvement in many areas of personal finance, one indicator remains stubbornly low: Only 39 percent of respondents to the latest National Financial Capability Study (NFCS) had tried to figure out how much they need to save for retirement (two percentage points more than in 2009), even though 56 percent said they worry about running out of money in retirement. Access to retirement accounts is useful, but it is not enough to ensure robust levels of savings. Understanding myths about retirement planning can help us consider retirement savings more holistically, taking into consideration the many financial decisions that workers face, including how to manage debt.

Here’s how much the average American family has saved for retirement | CNBC

The mean average retirement savings for an American family is $95,776, according to a report from the Economic Policy Institute (EPI). But because nearly half of families have no retirement account savings at all, while some super savers are pulling up the average, the median savings – those at the 50th percentile – may be a better gauge. The median retirement savings for all families in the U.S. is just $5,000. When families with zero savings are left out of the average, the median for families with some savings is $60,000.

How to prevent forced retirement from ruining your golden years | Time-Money

Involuntary retirement – or the possibility that you may be forced to stop working sooner than you wanted – is a common problem, and one that can wreak significant havoc with your post-career lifestyle. Of retirees polled for the Employee Benefit Research Institute’s 2016 Retirement Confidence Survey, 46 percent said they left their jobs before they had planned, usually because of a health issue or company downsizing or restructuring. Three steps to consider while still working may not completely protect from the risk of retiring earlier than planned, but they can reduce the possible damage.

How to improve your spouse’s chances of a well-funded retirement | Los Angeles Times

Three key decisions about retirement benefits can help couples make their money last – or dramatically increase the chances that the survivor will end up old and broke. How to take retirement benefits, which payout option to choose, and when to claim Social Security are decisions that can protect a mate who outlives a spouse from a big drop in income and lifestyle because of shortsighted decisions about claiming benefits.

How to save for retirement while paying for a child’s college | U.S. News & World Report

Typical investors have two long-term goals: retirement and kids’ college expenses. Ideally, families would estimate how much savings each goal will require and then put aside enough each month to reach both targets on schedule. But that’s tough to do. So which goal should come first? Kids can delay college to work and save, work while in college, go to a cheaper school or live at home, or get college benefits from the military. The biggest issue is that you can borrow for college, but you can’t borrow for retirement.

Why working longer is good for your health | NextAvenue

A small but growing group of scholars is reaching the conclusion that, in many cases, work is good for our health as we age. Healthier, older people can work longer and working longer maintains their health. Data from the U.S. and other industrial nations increasingly shows that most people around age 65 are healthy enough to work (if they can find employers who’ll let them or they work for themselves). What’s more, studies have found that the mental demands of a job can be a force for staving off cognitive decline, an insight summarized by the catchphrase “use it or lose it.”

2016 Colorado Ballot Issues

Should the minimum wage be raised in Colorado? Should unaffiliated voters be allowed to vote in primary elections? How about changing the requirements to put constitutional amendments on the ballot in the first place?

These and other questions will be answered by Colorado voters in November. In fact, nine statewide measures will be on the ballot, plus numerous measures in localities across the state. Colorado PERA will not be taking a position on any of the ballot measures, but still monitors issues that have the potential to affect our members.

There were seven successful proposals added to the ballot via the signature-gathering process (citizens who are trying to get an issue on the ballot must submit 98,492 voter signatures) and two measures referred by the Colorado General Assembly.

Here is a brief summary of each ballot measure with links (where available) for you to become informed prior to casting your ballot (need to update your voter registration?). Information has been compiled from the Colorado Secretary of State’s Amendments and Propositions on the 2016 Ballot website and the Colorado Legislative Council’s Ballot Information Booklet (Blue Book).


Amendment T – No Exception to Involuntary Servitude Prohibition

Referred to the voters by the State Legislature

Text of legislative bill (PDF)

Amendment T proposes amending the Colorado Constitution to:

  • Remove language that currently allows slavery and involuntary servitude to be used as punishment for the conviction of a crime.

Argument For

The section of the Colorado Constitution that allows slavery and involuntary servitude as punishment for a crime should be updated because it represents a time in the United States when not all people were seen as human beings or treated with dignity. Removing the language reflects fundamental values of freedom and equality, and makes an important symbolic statement.

Additional information from supporters is available online.

Argument Against

Amendment T may result in legal uncertainty around current offender work practices in the state. Prison work requirements provide structure and purpose for offenders, while enabling skill building and helping to reduce recidivism. Community service programs allow offenders to engage with the community and make amends for their crimes. Such practices have a place in the correctional system, and legal challenges resulting from the passage of Amendment T could put the application of these practices in jeopardy.


Amendment U – Exempt Certain Possessory Interests From Property Taxes

Referred to the voters by the State Legislature

Text of legislative bill (PDF)

Amendment U proposes amending the Colorado Constitution to:

  • Eliminate property taxes for individuals or businesses that use government-owned property for a private benefit worth $6,000 or less in market value beginning with tax year 2018; and
  • Adjust the $6,000 exemption threshold to account for inflation beginning with tax year 2019, and every two years thereafter.

Argument For

Amendment U reduces the administrative burden of collecting a tax that in many cases costs more to collect than it brings in to local governments. For example, the majority of possessory interests in the state are for agricultural leases, many of which are charged less than $10 in property taxes. The cost of administering this tax — mailing notices, maintaining tax rolls, and collecting and enforcing the tax — often exceeds this amount.

Argument Against

Amendment U provides an unfair tax break for businesses and individuals who use government-owned land for their private financial benefit, and puts a greater tax burden on others to pay for local government services. These property taxes should continue being collected uniformly from all taxpayers. A small tax bill does not justify exempting businesses or individuals from paying the tax on the private benefit they enjoy on government land.


Amendment 69 – Statewide Healthcare System

(Proposed Initiative #20)

Amendment 69 proposes amending the Colorado Constitution to:

  • Establish ColoradoCare, a statewide system to finance health care services for Colorado residents;
  • Create new taxes on most sources of income, redirect existing state and federal health funding to pay for the services and administration of ColoradoCare, exempt ColoradoCare from constitutional limits on revenue, and require approval by Colorado residents for future tax increases;
  • Establish a board of trustees, initially appointed and then elected, to oversee the operations of ColoradoCare; and
  • Allow the board to terminate ColoradoCare if the waivers, exemptions, and agreements from the federal government are not sufficient for its fiscally sound operation.

Arguments For

  1. Amendment 69 creates a more equitable health care payment system that provides coverage for all Coloradans. All people should have access to affordable health care regardless of their ability to pay. The current health care system leaves many people uninsured or unable to access care due to insurance denials or high deductibles. ColoradoCare prohibits deductibles and may reduce financial barriers to needed care. The measure helps ensure that individuals and families will not face financial ruin when accessing needed health care services.
  2. Amendment 69 offers a means to control health care costs and improve patient outcomes. In the United States, health care costs are higher than in any other industrialized country. Under Amendment 69, health care costs could be controlled by lowering administrative costs, adjusting payment rates to health care providers, and reducing the amount of unpaid care provided by health care providers. By creating a centralized system for health care records, ColoradoCare may improve the coordination of care and create cost savings by more efficiently sharing information between providers, monitoring medical conditions, and reducing diagnostic testing.
  3. ColoradoCare provides a more transparent system that serves the interests of Coloradans, instead of the interests of private corporations. The current private health insurance system is profit-motivated, which contributes to rising health care costs. ColoradoCare offers an alternative that shifts incentives toward improving patient care by allowing Coloradans to elect health care decision-makers. Under Amendment 69, Coloradans also have control over tax increases for ColoradoCare, increasing local control over health care costs. Unlike private insurance companies, ColoradoCare board meetings are subject to open meetings laws, which allows Coloradans to monitor decisions made by the board.

Additional information from supporters is available online.

Arguments Against

  1. Amendment 69 imposes new taxes, which may harm the Colorado economy by burdening taxpayers and eliminating jobs. The tax increases under this measure will nearly double state government spending, which currently totals $27 billion for the entire state budget. In the initial years, taxpayers will pay about $2 billion a year into a system without receiving any direct benefits. Many individuals and businesses will pay more with the new taxes than they currently pay for health care. Additionally, taxpayers must pay the new taxes even if they do not utilize the services offered through ColoradoCare. Under Amendment 69, higher taxes and an uncertain economic climate could discourage businesses from operating in Colorado. Finally, ColoradoCare may cause private health insurance businesses to downsize or leave the state, leaving many people unemployed.
  2. Amendment 69 offers no guarantee that ColoradoCare will improve patient care, expand access, or reduce health care costs. Coloradans may never receive the benefits promised under ColoradoCare if federal approval is not granted or revenues are not sufficient. The measure does not specify critical details of how ColoradoCare will be implemented, and has no required implementation date. The measure concentrates control for making important decisions and spending billions of taxpayer dollars in a 21-member board with limited accountability and no required health industry experience. ColoradoCare may not solve fundamental problems of rising health care costs and limited access. If the state fully transitions to ColoradoCare and it fails, it could take years to re-establish a private health insurance market and government programs, and taxpayers will have paid billions of dollars for a failed system.
  3. ColoradoCare may limit consumer choice and strain the health care system. Health care providers may be unwilling to serve ColoradoCare patients if reimbursements are too low, or they may choose to leave Colorado due to uncertainties in the health care market. This could reduce options for patients and increase wait times to receive services. Also, the health care system could be further burdened by people coming to the state to receive health care without adequately contributing to the taxes that pay for their care. If the system fails to control costs, health services covered by ColoradoCare may be reduced. Additionally, private health insurance may not be available or affordable if Amendment 69 passes. This could leave people with limited options for accessing alternative coverage or needed care, forcing some people to leave the state.

Additional information from opponents is available online.


Amendment 70 – State Minimum Wage

(Proposed Initiative #101)

Amendment 70 proposes amending the Colorado Constitution to:

  • Increase the state minimum wage from $8.31 to $9.30 per hour beginning January 1, 2017;
  • Increase the minimum wage annually by $0.90 per hour beginning January 1, 2018, until it reaches $12.00 per hour on January 1, 2020; and
  • Adjust the minimum wage each year based on cost-of-living increases on January 1, 2021, and thereafter.

Arguments For

  1. Colorado’s current minimum wage is too low to provide a basic standard of living for some workers. Full-time workers making the minimum wage in Colorado earn approximately $17,285 annually, or about $300 per week after taxes, and some rely on public assistance to make ends meet. While the minimum wage has increased only 21 percent since 2007 (when the last voter-approved increase in the minimum wage went into effect), prices for basic necessities such as health care and housing have increased more steeply. For example, the overall average rent price in the Denver metro area has increased about 37 percent, from approximately $946 in 2007 to about $1,292 in 2015.
  2. Raising the minimum wage may help businesses. Higher wages may improve employee productivity and morale and reduce turnover. This is especially important for businesses that pay the minimum wage, as they tend to have very high turnover. Hiring and training new employees can be very costly for businesses. Lower turnover translates into more experienced, more productive workers and significant cost savings.

Additional information from supporters is available online.

Arguments Against

  1. Increasing the state minimum wage may actually hurt the very employees that the higher wage is meant to help. If Amendment 70 passes, some workers earning the minimum wage may face lay-offs, reduced hours, or fewer benefits. Also, workers seeking minimum wage employment may have a harder time finding work if businesses make fewer minimum wage jobs available. Finally, businesses may choose to raise prices. Because low-wage workers spend a higher percentage of their income on basic necessities like food, they are particularly vulnerable to rising prices.
  2. Increasing the state minimum wage may hurt small and family-owned businesses, particularly in rural communities where the cost of living is lower and economic recovery has been slow compared with urban areas. Businesses in rural communities have a harder time absorbing increases in costs and may struggle to pay higher costs if the minimum wage increases, which may further distress the economy in rural Colorado.

Additional information from opponents is available online.


Amendment 71 – Requirements for Initiated Constitutional Amendments

(Proposed Initiative #96)

Amendment 71 proposes amending the Colorado Constitution to:

  • Require that a certain number of signatures be gathered from each state senate district (currently there are 35 state senate districts)to place a constitutional initiative on the ballot; and
  • Increase the percentage of votes required to adopt a constitutional amendment, except for proposals that only repeal part of the state constitution.

Arguments For

  1. It should be difficult to change the constitution because it is a foundational document for the state. Because the current requirements for proposing and adopting constitutional and statutory amendments are the same, the constitution has seen the addition of detailed provisions that cannot be changed without an election. Amendment 71 is expected to encourage citizen-initiated changes to law in statute by making it harder to amend the constitution. Statutory changes allow the Legislature to react when laws require clarification or when problems or unforeseen circumstances arise.
  2. Requiring that signatures for constitutional initiatives be gathered from each state senate district ensures that citizens from across the state have a say in which measures are placed on the ballot. Due to the relative ease of collecting signatures in heavily populated urban areas compared to sparsely populated rural areas, rural citizens currently have a limited voice in determining which issues appear on the ballot.

Additional information from supporters is available online.

Arguments Against

  1. Amendment 71 makes it too difficult for citizens to exercise their right to initiate constitutional changes. Sometimes the will of the people or issues of broad public interest are not adequately addressed by the political process. While statutory changes may be amended or repealed without the approval of the voters, the power to amend the Colorado constitution lies solely with its citizens. It is critical to preserve the current process and to protect the rights of citizens to change the constitution.
  2. Requiring proponents to collect signatures statewide for proposed constitutional changes makes the process of placing an amendment on the ballot even more difficult and costly. Amendment 71 unduly restricts ballot access for average Coloradans, leaving an important democratic tool accessible only to those able to bear the higher costs associated with a complicated signature-gathering process.

Amendment 72 – New Cigarette and Tobacco Taxes

(Proposed Initiative #143)

Amendment 72 proposes amending the Colorado Constitution to:

  • Increase the state tax on a pack of cigarettes from $0.84 to $2.59;
  • Increase the state tax on other tobacco products from 40 percent to 62 percent of the price; and
  • Distribute the new tax money for medical research, tobacco-use prevention, doctors and clinics in rural or low-income areas, veterans’ services, and other health-related programs.

Arguments For

  1. Higher prices for cigarettes and tobacco products have been shown to deter smoking and tobacco use, especially among children and young adults. When cigarette taxes were last increased in 2005, the number of cigarettes consumed per person in Colorado fell by 12.6 percent. Tobacco use is a leading cause of preventable diseases like cancer, heart, and lung disease, contributing to 5,100 deaths in Colorado per year. Reducing smoking and tobacco use will improve the health of Colorado residents.
  2. Dedicating cigarette and tobacco tax revenue to health care and research is an important way to offset the health care burden and cost tobacco use places on the state. Tobacco use increases direct health care costs in Colorado by an estimated $1.9 billion annually, with additional health care costs related to secondhand smoke. The revenue from the proposed tax increase will fund health programs, research, and benefits for Colorado veterans, people with mental health diagnoses, and rural health care providers.

Additional information from supporters is available online.

Arguments Against

  1. Amendment 72 is a $315.7 million tax increase. The measure creates a constitutional requirement that revenue from the new taxes be spent on specific programs, even if these programs are ineffective at reducing the cost of tobacco use. Unless voters approve another constitutional change, the spending priorities in the measure will receive taxpayer funding indefinitely. As tobacco use declines, Amendment 72 will lock in state spending on unnecessary programs even when new needs are identified in the state budget.
  2. Tripling the tax on cigarettes impacts low-income tobacco users the most. Recent studies have shown that people with lower incomes are more likely to use tobacco products and less able to afford a tax increase. Nationally, more than a quarter of people in poverty smoke cigarettes, and tobacco users with low incomes spend about 14 percent of their household income on tobacco products. Because these products are addictive, tobacco users may continue using tobacco even after taxes are increased. Low-income tobacco users who are unable to quit will subsidize programs that benefit non-tobacco users, taking money out of already tight household budgets.

Additional information from opponents is available online.


Proposition 106 – Medical Aid in Dying

(Proposed Initiative #145)

Proposition 106 proposes amending the Colorado statutes to:

  • Allow a terminally ill individual with a prognosis of six months or less to live to request and self-administer medical aid-in-dying medication in order to voluntarily end his or her life;
  • Authorize a physician to prescribe medical aid-in-dying medication to a terminally ill individual under certain conditions; and
  • Create criminal penalties for tampering with a person’s request for medical aid-in-dying medication or knowingly coercing a person with a terminal illness to request the medication.

Arguments For

  1. Proposition 106 expands the options and supports available to a terminally ill person in the last stage of life. Under the measure, a terminally ill individual may consult with a physician and benefit from medical guidance in deciding whether and how to end his or her life. The measure allows a mentally competent individual to peacefully end his or her life in the time, place, and environment of his or her choosing after voluntarily requesting and self-administering the medication. Proposition 106 also provides protections from criminal penalties for physicians and family members who choose to support a terminally ill individual through the dying process.
  2. Proposition 106 seeks to balance the choice of a terminally ill person to voluntarily end his or her life with the state’s interest in promoting public safety. It establishes safeguards by creating criminal penalties and ensuring that an individual’s physician, family members, and heirs are not the only witnesses to requests for medication. The measure protects the individual by prohibiting any other person, including a physician, from making the decision to request medical aid-in-dying or from administering the medication. Further, by requiring that at least two physicians examine the individual and document his or her prognosis and mental capabilities, the measure establishes a process to ensure that an individual is capable of making an informed decision to end his or her life.
  3. Access to medical aid-in-dying may provide a sense of comfort to a terminally ill person by authorizing medication as insurance against suffering and the potential loss of dignity and autonomy. Proposition 106 is similar to options available in Oregon, Washington, Vermont, Montana, and California, that respect the end-of-life concerns of terminally ill people. Oregon’s experience shows that the majority of persons requesting medication cited concerns about losing autonomy and dignity at the end of their lives. Once the medication is requested, it is up to the individual to decide when and if to take it. In Oregon, for example, of the 1,545 people who requested the medication since 1997, approximately one third chose not to use it.

Additional information from supporters is available online.

Arguments Against

  1. Encouraging the use of lethal medication by terminally ill people may send the message that some lives are not worth living to their natural conclusion. People who are in the final stages of life are often in fear of the dying process. The availability of medical aid-in-dying may encourage people to make drastic decisions based on concerns about the potential loss of autonomy and dignity, not realizing that modern palliative and hospice care may effectively address these concerns. Services such as pain and symptom management, in-home services, and counseling can help individuals navigate the end of their lives while minimizing suffering. Promoting medical aid-in-dying may lead to a reduced emphasis on treatment and development of new options for end-of-life care.
  2. Proposition 106 creates opportunities for abuse and fraud. The protections in the measure do not go far enough to shield vulnerable people from family members and others who may benefit from their premature death. Proposition 106 allows a family member or heir to be one of the witnesses to a request for the medication, potentially subjecting the individual to coercion. The measure does not require that a physician have any specific training in order to make an assessment of the individual or require independent verification that the medication was taken voluntarily or under medical supervision. Proposition 106 fails to ensure that the lethal medication will be stored in a safe location, potentially placing others at risk or leading to its misuse.
  3. Proposition 106 may force physicians to choose between medical ethics and a request to die from a person for whom they feel compassion. The measure compromises a physician’s judgment by asking him or her to verify that an individual has a prognosis of six months or less to live, yet fails to recognize that diagnoses can be wrong and prognoses are estimates, not guarantees. The measure also requires that the physician or hospice director list the terminal illness or condition on the death certificate, which requires these professionals to misrepresent the cause of death.

Additional information from opponents is available online.


Proposition 107 – Presidential Primary Election

(Proposed Initiative #140)

Proposition 107 proposes amending the Colorado statutes to:

  • Establish a presidential primary election in Colorado that allows participation by unaffiliated voters.

Arguments For

  1. A presidential primary serves Colorado voters better than the caucus system. The current caucus system is confusing and inaccessible to many voters. Caucuses can be crowded, held at inconvenient times, and conducted by inexperienced volunteers. A presidential primary election eliminates the logistical difficulties of conducting caucuses. Under Proposition 107, a presidential primary will give voters several weeks to cast their ballots by mail or at a vote center, and the election will be conducted in the same manner as all other elections by experienced county election officials.
  2. All registered voters in Colorado should be allowed to participate in the selection of presidential nominees, even if they are not affiliated with a political party. Unaffiliated voters make up more than one-third of all registered voters in the state. Proposition 107 gives these unaffiliated voters a role in selecting presidential nominees and may increase voter participation.
  3. Proposition 107 protects voter confidentiality by allowing voters to select presidential primary candidates using a secret ballot. The current caucus system requires voters to publicly declare their candidate preference, which can discourage participation by many voters who do not wish to make their preference known.

Additional information from supporters is available online.

Arguments Against

  1. Proposition 107 shifts costs to taxpayers, as the state and counties will be required to spend at least $5 million every four years to conduct a presidential primary election. Under a caucus system, taxpayers save money because caucuses are conducted and funded by the political parties. Taxpayers should not be required to pay the costs of nominating contests for political parties. The measure also places an administrative burden on counties to conduct an additional election every four years.
  2. Political parties are private organizations that have the right to select presidential candidates without influence from people who choose not to affiliate with the party. Under current law, unaffiliated voters who wish to participate at a caucus can declare their party affiliation ahead of time and attend. Presidential candidates are national leaders representing the members of their party. It is important to preserve the rights of members to select their own candidates, rather than have them chosen by persons not affiliated with the political party.
  3. Proposition 107 eliminates the valuable role caucuses play in selecting presidential candidates. Caucuses encourage voters to debate and discuss candidates and important issues affecting Colorado and the nation. During presidential election years, caucuses provide a unique opportunity for voters to be active participants in the political process.

Proposition 108 – Primary Elections

(Proposed Initiative #98)

Proposition 108 proposes amending the Colorado statutes to:

  • Change the primary election process in Colorado to allow unaffiliated voters to vote in a nonpresidential primary election of a single political party; and
  • Allow political parties to opt out of holding a primary election and instead choose to nominate candidates by assembly or convention.

Arguments For

  1. Proposition 108 gives unaffiliated voters, who are Colorado taxpayers, the opportunity to vote in publicly financed primary elections. Unaffiliated voters make up more than one-third of all registered voters in the state. Proposition 108 gives unaffiliated voters a role in selecting candidates for the general election and makes voting in primary elections easier and more accessible for these voters.
  2. Allowing unaffiliated voters to participate in primary elections results in candidates who better represent all Coloradans. In a closed primary, voter participation is typically low and the candidates selected often appeal to a small number of their party’s more active members. Opening the primary election to more voters has the potential to increase voter turnout and allow for candidates who are more responsive to a broader range of interests.

Additional information from supporters is available online.

Arguments Against

  1. Political parties are private organizations that have the right to select their own candidates without influence from people who choose not to affiliate with the party. Under current law, unaffiliated voters who wish to vote in a political party’s primary election can easily change their party affiliation at any point prior to the election.
  2. Proposition 108 increases costs for taxpayers and may create voter confusion by requiring that a separate ballot be mailed to all unaffiliated voters. Producing and processing a separate combined ballot for unaffiliated voters creates administrative and financial burdens for some counties, especially smaller or rural counties. The combined ballot for unaffiliated voters also increases the likelihood of voters improperly marking their ballots and their vote not being counted.

Federal legislation could hurt institutional investors and Main Street retirees

Earlier this summer, the House Financial Services Committee passed the Corporate Governance Reform and Transparency Act (H.R. 5311) by a vote of 41-18, sending the bill on to the full House of Representatives for a vote on a date still to be scheduled.

The bill aims to tighten regulation of proxy advisory firms. It would require proxy advisory firms to provide companies advance copies of their recommendations and most elements of their research. Previewing the analyses would allow a company to lobby the firms to change their recommendation. The bill would also require proxy advisers to resolve complaints through an ombudsman. This could create higher costs for institutional investors with no clear benefits.

Proxy-voting advisory firms, such as Institutional Shareholder Services (ISS) and Glass Lewis, provide data, analysis, and customized recommendations to help investors exercise their ownership right to vote as shareholders. Investors hold an important responsibility to keep corporate boards of directors and management accountable through their proxy vote. [Read more from PERA on the Issues about proxy voting.]

Critics of H.R. 5311, including ISS and the Council of Institutional Investors (CII) (of which PERA is a member), argue that the legislation would undermine proxy-voting firms and weaken public company corporate governance in the U.S. Proxy advisers would be pushed to serve corporate interests at the expense of shareholder interests.

In an editorial calling for the defeat of the legislation, Pensions & Investments argued that “enacting the measure would raise costs significantly, harming proxy advisory firms and the ability of new firms to enter the market.”

“If the [Council of Institutional Investors] believed the bill would enhance corporate governance and performance, its membership would turn out in support of the legislation,” the editorial continued.

Gary Retelny, president CEO of ISS, wrote in a blog post for the Harvard Law School Forum on Corporate Governance and Financial Regulation that “members of the House Financial Services Committee delivered a blow to institutional investors, and, by extension, those on Main Street who invest their retirement hopes, college savings, pension dollars, and other hard-earned money in public companies.”

“The [Securities and Exchange Commission] has long taken the position that proxy advisory firms should be regulated as fiduciary investment advisers and the U.S. Labor Department recently confirmed that proxy advisers provide fiduciary investment advice,” Retelny continued.

“However, H.R. 5311… would sever the fiduciary bond between proxy advisers and investors. The bill would effectively grant a veto to company executives who do not like a proxy adviser’s report or opinion on issues on which shareholders vote (such as the CEO’s pay). The bill would allow corporations to block the distribution of any proxy advisory report or opinion with which they disagree,” Retelny concluded.

[Read about the PERA Board of Trustees’ support for a Department of Labor rule that would strengthen fiduciary standards for investment advisers.]

To follow H.R. 5311 as well as other federal and state legislation that might impact Colorado PERA or other institutional investors and public employee retirement plans, visit our Legislation page of PERA on the Issues.

House Committee Argues the WEP Is Unfair

Earlier in August, we reported on the postponement of consideration of federal legislation that would have replaced the current formula used in the Windfall Elimination Provision (WEP).

The House Ways and Means Committee, chaired by Congressman Kevin Brady (R-TX), recently published a blog post, “The WEP is Unfair – and Here’s Why” arguing that because of a “flawed policy” known as the Windfall Elimination Provision, public employees who have paid into Social Security for part – but not all – of their careers are treated unfairly. The teachers, firefighters, police officers and others who work for public employers sacrifice fairness just because of the nature of their service careers.

Three specific reasons are cited by the Committee that demonstrate the unfairness built into the flawed formula:

  1. The benefits for workers who choose to serve their communities are calculated differently than other workers.
  2. For some, the WEP is not based on their entire earnings history.
  3. For those who choose to serve their communities, the WEP makes it harder to plan for their retirement.

The Bipartisan Policy Center, in a letter to the committee, called for replacing the WEP with a provision that would “proportionally scale Social Security benefits based on the ratio of covered earnings to total earnings,” creating a more equitable distribution of Social Security benefits.

Additional information on how Social Security benefits are calculated and how the WEP applies is available here.

Ways and Means Chairman Kevin Brady (R-TX) and Rep. Richard Neal (D-MA), who together first introduced H.R. 711, want to hear how the WEP has impacted public employees as they work on a solution to treat all workers fairly. To share your story, contact them at WEP.feedback@mail.house.gov.

Four retirement expenses that may catch you by surprise

Retirement Roundup: a digest of timely information and insight about finance, investing, and retirement.

Four retirement expenses that may catch you by surprise | Forbes

You’ve worked hard over the years and saved money wisely in order to secure a successful retirement. But even the best-made plans for a sound retirement can face obstacles. No one likes to be caught off-guard when it comes to saving for the future, so consider taking steps now to avoid retirement expenses that may catch you by surprise.

Please stop telling me not to retire! | CNBC

When did retirement become a dirty word? Many Americans have begun proclaiming the end of retirement. The message apparently is forget retirement, keep working, 80 is the new 65. But retirement is a hugely significant event that provides new opportunities to create, to learn and to live. It’s a beginning for new accomplishments, not an end.

How to retire without a mortgage | Time-Money

Though a house may represent one of the largest assets in an investor’s portfolio, hanging on to a home – especially one requiring mortgage payments – may drain the budget. Planning for future mortgage expenses today can go a long way toward securing retirement income tomorrow. A few tips may make the goal of a mortgage-free retirement easier to achieve.

Employers offer older workers flexible retirement | CNBC

With the growth rate of older workers in the labor force more than three times that of all workers, employers and employees are finding ways to be more flexible about retirement. A fluid approach, known as phased retirement, is already happening at the U.S. Department of Defense where it was announced in June that civilian employees would be allowed to partially retire while remaining on the job part-time. The private sector also provides phased retirement, with about 30 percent of large employers offering workers some flexible retirement option. And informal arrangements are even more common.

Senior housing a remedy for loneliness | Squared Away Blog

Though the vast majority of Baby Boomers have said that they want to age in their homes as long as possible, by the time old age hits, the elderly often learn that isolation is bad for their psyche and their health. Senior living communities can provide activities to promote health and exercise, new social circles, and even the chance to forget about home maintenance and utility bills.

The 401(k) is wreaking havoc on retirement | Bloomberg

The shift from pensions to 401(k) plans is making retirement inequality much worse – and education is what separates the haves from the have-nots, according to a paper presented to the American Sociological Association in August. University of Kansas sociology professor ChangHwan Kim and U.S. Social Security Administration researcher Christopher Tamborini wrote that the shift for private sector workers away from traditional pensions and toward 401(k)-style plans is creating “double disadvantages for the less educated.”

PERA’s Best Practices – Governing a $44 Billion Fund

PERA’s Trustees have a duty to act as fiduciaries for members by law when fulfilling their responsibilities. The complex nature of managing a $44 billion investment fund and administering benefits for over 500,000 members means the Trustees must establish rules of governance to ensure that each decision is made in the best interests of PERA’s members and benefit recipients. The PERA Board of Trustees adopted a Governance Manual to provide a sound framework for the Board’s mandate to set policy and oversee the programs and operations of PERA.

The National Conference on Public Employee Retirement Systems (NCPERS) and the Government Finance Officers Association (GFOA), two leading associations in the public pension field, both encourage having a governance manual. The GFOA asserts that “a good governance structure establishes the framework for effective plan administration.”

An article from the Network for Sustainable Financial Markets regarding pension fund governance cites a study showing that “good governance is associated with increased returns.” The study found that pension funds that are better governed outperformed poorly governed funds by 2.4 percent during a period preceding 2003.

PERA’s Governance Manual was first developed in 2001 and is updated on a regular basis as changes in governance standards change. At the time, PERA was one of the first public retirement systems to adopt an overarching, comprehensive governing document. The PERA Board is a policy board, meaning that decisions about the everyday operations of PERA are delegated to the professional staff at PERA – whether it is the investment of the trust fund dollars, or the administration and provision of benefits – under the policy guidelines set forth by the Board of Trustees.

The manual includes charters for the Board, committees of the Board, officers of the Board, and the Executive Director. The charters describe the roles and responsibilities of these decision-making bodies that are involved in the governance and management of PERA. By incorporating various requirements from PERA’s governing statutes and rules, the Board is sure to comply with its fiduciary duties required by law.

The manual also includes governance polices adopted by the Board regarding communications, education, ethical conduct, and performance evaluation. These policies provide specific guidance to the Board and senior management on how they are to undertake their duties, and set out the expectations of the Board concerning its own conduct and that of individual Trustees.

If you would like to learn more about the policies that guide the operation of and decision-making for PERA, we invite you to explore the Governance Manual. Additional policies and documents that assist the PERA Board and staff in fulfilling their duties may be found in the Colorado PERA Statement of Investment Policy, the Colorado PERA Defined Benefit Pension Plan Funding Policy, the Total Compensation Philosophy Statement, and the Board’s Statement on Divestment.

Colorado PERA provides retirement and other benefits to more than 547,000 current and former teachers, State Troopers, corrections officers, snow plow drivers, and other public employees who provide valuable service to all of Colorado. PERA is a vital and stable contributor to Colorado’s economy, distributing $3.7 billion in 2015 to retirees who live in Colorado. PERA is one of Colorado’s best investments.