Dedicated to serving the PERA membership

Seeking Candidates for 2018 Board Election

The Board of Trustees of Colorado PERA is a group of 16 professionals who are responsible for overseeing PERA’s investment program and the administration of PERA’s benefits. (However, the Colorado General Assembly, with the approval of the Governor, has responsibility for changing PERA benefits or contributions.) All Trustees serve as fiduciaries and as such must act in the best interest of all members and retirees.

State law describes the responsibilities of the Board and the process for Trustees to be selected.

Twelve Trustees are elected by PERA members and retirees, three Trustees are appointed by the Governor and confirmed by the State Senate, and the State Treasurer serves as an ex officio Trustee. The Board of Trustees meets at least five times per year and is responsible for adopting the rules and policies for the administration of PERA. Elected Board members serve without pay, but are reimbursed for necessary expenses.

In May 2018, Colorado PERA will hold an election for the following seats on the Board of Trustees:

  • One School Division position
  • One State Division position (must work for a higher education employer)
  • One Local Government position

Candidacy packets may be obtained January 2, 2018, through February 28, 2018, by sending an email to election@copera.org or by writing to:

Colorado PERA
Internal Audit Division
1301 Pennsylvania Street
Denver, CO  80203-5011

To be placed on the ballot, a candidate must fulfill the requirements explained in the candidacy packet. Requests for candidacy packets should include the candidate’s name, PERA Division of membership, mailing address, email address, and daytime telephone number. Candidates will be subject to a background check. State Division members must also indicate whether they are a participant in the PERA Defined Benefit or Defined Contribution Plan and for which higher education employer they work.

More information on serving as a Trustee.

Details on current Trustees may be viewed here.

Retirement Roundup: a new plan for reforming the Windfall Elimination Provision?

A digest of timely information and insight about finance, investing, and retirement.

Rep. Kevin Brady: It’s Time to Fix the WEP Teach the VoteIn a recent editorial, U.S. Rep. Kevin Brady wrote about the inherent unfairness of the Windfall Elimination Provision or “WEP.” “It’s unfair to public servants in Texas and across the nation, including places like California, Massachusetts and Ohio,” Brady said. “I’ve been working to repeal and replace the WEP for a decade. This is something we must do for our teachers, firefighters, police, and other public servants. You probably know the history: When Social Security was created in 1935, state and local governments were excluded from participating due to Constitutional concerns. Later, the law changed to allow state and local governments to offer Social Security to their employees. I think we can all agree that our teachers, police, and firefighters deserve better,” Brady added.

Legislation to combat elder financial abuse advances in Senate |InvestmentNewsLegislation that would give financial advisers civil liability protection when reporting suspected financial abuse of seniors advanced in the U.S. Senate on Tuesday. The Senior Safe Act was approved by the Senate Banking Committee as part of a larger bill that would reform regulation of credit unions, community banks, and small regional banks. The Senate action follows approval of a companion elder-abuse bill by the House Financial Services Committee in October.

What’s the largest Social Security retirement check someone can get? |The Washington PostLooking at your Social Security statement regularly should be a key part of your retirement planning. This means not just waiting until a few years before you retire to check what’s on your benefit. Retirement planning should begin the day you start working full-time. Knowing how much you can expect from Social Security (assuming there aren’t major changes by the time you do retire) should be part of determining how much you need to save and invest for retirement.

Retirees found some expenses in retirement higher than expected |PLANSPONSOR
In a survey of Baby Boomers, Capital Group found that, among those who are retired, 60 percent say that life post-employment is better than they had anticipated. Thirty percent say it meets their expectations, and 10 percent say it is worse than they expected, with many in this group blaming finances or health. Others point to lifestyle issues, such as boredom, loneliness, or the fact they miss work. However, despite many saying retirement is surprisingly better, Boomers face a myriad of costs that are surprisingly higher, starting with those for health care; 43 percent of Boomers say health care costs are higher than anticipated. Other unexpectedly high expenses are: travel (40 percent), taxes (34 percent), food (25 percent) and utilities (23 percent). By comparison, only 11 percent of retired Boomers say they spend more than they had hoped to to support dependents, a mere 9 percent say credit card debt is a problem, and only 9 percent say housing costs exceed those anticipated.

Supporting adult children could cost you $227K in retirement |ForbesIf you’re not careful, lending your adult children a financial hand can have significant consequences later on. It could cost you as much as a quarter of a million dollars out of your retirement nest egg, new research has found. Some 80 percent of parents of children 18 and older are covering, or have covered, at least a portion of their adult child’s expenses, according to a recent survey from NerdWallet. That includes helping pay for groceries (56 percent), health insurance (40 percent), rent or housing (21 percent), cell phone bills (39 percent) and car insurance (34 percent). However, if parents took the money they were spending on their children and put it toward retirement, they’d have about $227,000 more to tide them over, the report says.

How digital tools and behavioral economics will save retirement | Harvard Business Review
In Shlomo Benartzi’s work as a behavioral economist, he’s thought a lot about how nudges can drive lasting behavior change. In the domain of retirement savings, he and Nobel laureate Richard Thaler devised a program called Save More Tomorrow back in the mid-1990s that used nudges to help people make better decisions about their long-term financial future. That program invites employees to gradually increase their savings rate over time, and it has been a success: according to Mr. Benartzi’s latest estimates, it has boosted the savings rates of as many as 15 million Americans. Read more about Behavioral Economics in this week’s PERA on the Issues article, “Nobel Prize puts spotlight on behavioral economics, retirement plan policy.”

Nobel Prize puts spotlight on behavioral economics, retirement plan policy

The news is full of stories about Americans failing to adequately save for retirement. (MarketWatch, Fortune, and CNBC offer a few recent examples.) And national research has confirmed that Americans are uneasy about their retirement security. Why is it so hard to save enough to feel confident about retirement? A recent Nobel Prize winner offers important insight for those interested in protecting Americans from poverty in their retirement years.

In October of this year, the Royal Swedish Academy of Sciences awarded its Nobel Prize in Economic Sciences to Richard Thaler, a professor in behavioral science and economics at the University of Chicago Booth School of Business. In awarding the prize to Thaler “for his contributions to behavioural economics,” the Royal Swedish Academy of Sciences noted that he incorporated psychologically realistic assumptions into economic decision-making.

“People are complicated beings,” the Academy wrote. Thaler’s research has considered three psychological traits that systematically influence how people make economic decisions – limited rationality, perceptions about fairness, and lack of self-control. Thaler has shown how these “human traits” affect individual decisions as well as outcomes of financial markets and his work has had critical impacts on how workplace retirement savings programs are designed.

“In his applied work, Thaler demonstrated how nudging – a term he coined – may help people exercise better self-control when saving for a pension, as well in other contexts,” the Academy continued.

Along with Cass Sunstein, a law professor at the University of Chicago, Thaler has argued that both public and private institutions should try to nudge individuals in the right direction to avoid the temptation of irrational decisions. Simple changes such as how a default option is defined can make it more likely for people to save for retirement, participate in organ donation, or even eat more vegetables. When employees are automatically enrolled in a retirement savings plan, or drivers are asked to participate in organ donation any time a license is up for renewal, even the worst procrastinators can prepare for retirement or help save a life.

The PERA defined benefit (DB) plan is the retirement savings default option for public employees in Colorado. Public employees are automatically enrolled and contribute a set percentage of pay each pay period to fund a retirement account, thus alleviating the need to determine individual risk tolerance and the inertia associated with selecting how assets will be invested.

PERA members are also encouraged to save in addition to the PERA DB plan by participating in the voluntary PERAPlus 401(k) and 457 Plans. These plans use white label funds where the need to choose an investment allocation from a lengthy menu of brand-name investment products is simplified. Participants in the PERAPlus plans may also elect to participate in a target retirement date fund with premixed portfolios based on a future retirement date. Both the white label and target retirement date fund options use features that eliminate the pitfalls Thaler sees as hurdles to achieving investment success.

More and more retirement plans are using “auto-enrollment” and “auto-escalation” options to encourage participation, which should lead to successful retirement outcomes. The theory behind these features addresses the problem of investment inertia that many Americans have in their approaches to retirement saving.

Back in 2003, Thaler and Sunstein wrote a review of Michael Lewis’ Moneyball for The New Republic. Lewis’ book (which then became a movie) was about the low-budget success of the Oakland Athletics and their general manager, Billy Beane.

Thaler and Sunstein pose a question: Why did it take Billy Beane, a first-round baseball draft pick out of high school who abruptly quit the game after 301 at-bats and a disappointing .219 batting average, to change how baseball teams were managed?

“The problem is not that baseball professionals are stupid,” Thaler and Sunstein wrote. “It is that they are human.”

“Most people, including experts…tend to rely on simple rules of thumb, on traditions, on habits, on what other experts seem to believe,” they continued. “Even when the stakes are high, rational behavior does not always emerge.”

More recently, Lewis (of Moneyball fame) wrote a book called The Undoing Project about Amos Tversky – who is Richard Thaler’s mentor. In The Undoing Project, Lewis chronicles the work of Tversky and Daniel Kahneman and their collaboration in the field of behavioral finance and economics.

The stakes may not get much higher than saving enough for retirement. Hopefully the attention that Thaler’s work has received as a result of the Nobel Prize will continue to inspire baseball executives, policy makers, and retirement workers to avoid their own poor instincts and implement systems that make good decisions the easy decisions.

Read more about the work of Richard Thaler in “Easy money or a golden pension? Integrating economics and psychology,” a Popular Science background from The Royal Swedish Academy of Sciences.

Read more from PERA on the Issues on the topic of behavioral finance here, here and here.

Retirement Roundup: Baker named interim PERA Executive Director

A digest of timely information and insight about finance, investing, and retirement.

Colorado PERA Board of Trustees Names Interim Executive Director Colorado PERAThe Board of Trustees of Colorado PERA named Ron Baker as Interim Executive Director effective December 15, 2017. Mr. Baker joined PERA in 1994 and was appointed to his current position as Chief Administrative Officer in 2013. “I want to thank the Board for their confidence in me–it’s truly humbling to assume this role at this difficult time,” Mr. Baker said. “We will continue to work guided by the example set by Greg in serving the 560,000 current and former Colorado public employees who rely on PERA,” he concluded.

Lack of Financial Literacy Remains Historic American Challenge |PLANSPONSORA new analysis published by Martha Brown Menard, who conducts financial-services user experience research for Questis, dissects both successful and unsuccessful financial education programs, with an aim at discovering what approaches work best in what circumstances. Setting the stage for her recommendations, Menard suggests financial stress among U.S. employees is reaching “epidemic proportions.” She cites survey data to the effect that 75 percent or more live paycheck to paycheck, personal savings rates are at their lowest since 2007, and non-mortgage debt levels are higher now than during the Great Recession.

5 ways the tax bill will affect your retirement |MarketWatchThe $1.2 trillion tax overhaul that passed on Wednesday will affect your retirement in a number of ways. The tax plan no longer includes lowering contribution limits on retirement accounts or nixing traditional individual retirement accounts in lieu of Roth individual retirement accounts (which would have shifted when retirement savers pay taxes on their savings), but it does address individual retirement accounts and increases the standard deduction (by almost double), which could affect the way people itemize their charitable donations. These changes would be for next year’s taxes, to be filed in 2019 — 2017 tax returns are due on April 17.

Asked About Retiring, They Have a Simple Answer: Why? |The New York Times
On most mornings, Jack B. Weinstein rises at 5:30 to exercise. At 7:00, a car takes him from his home in Great Neck to Cadman Plaza in Brooklyn, where he is a senior Federal District Court judge for the Eastern District of New York. Once at the courthouse, Judge Weinstein has coffee and gossips with colleagues. By 9:00, he’s at work hearing motions, reviewing filings and  sentencing defendants. In the afternoon, he tries cases. None of that is so unusual. But Judge Weinstein is 96 — decades past the age when most Americans choose to stop working. “Retire? I’ve never thought of retiring,” he declares. Judge Weinstein was first appointed to the bench more than 50 years ago and is still in the thick of hot-button issues in the courts. “I’m a better judge, in some respects, than when I was younger. I don’t remember names. But I listen more. And I’m more compassionate. I see things from more angles. If you are doing interesting work, you want to continue.”

Four ways to change 401(k) plans for the better |MarketWatchOver the past few months, 401(k) plans have been in the news a lot. At one point, Republicans floated the idea of drastically lowering the maximum that employees could contribute. And this week, President Trump asked once again how everyone’s 401(k) plans are doing as a result of the rising stock market. But what these plans need even more than a bull market is a way to get more people to participate in them, some experts suggest. Yes — 401(k) account balances and stock market performance are tied to one another, but not everyone has access to these defined contribution plans, and few who do invest in them.

Lawsuit claims Houston misled voters on $1B pension bonds | Houston Chronicle
Mayor Sylvester Turner misled voters into approving a $1 billion pension bond referendum last month, a new lawsuit alleges, claiming that city officials plan to use the bonds’ passage to sidestep a voter-approved limit on the property tax revenue Houston can collect. Turner’s office flatly denied that reading of the Proposition A ballot language, calling the wording “boilerplate” and saying the city has not and will not sidestep the revenue cap as a result of the vote on the mayor’s landmark pension reform package or any of the prior bond issuances that included the same phrasing. A local businessman and former Houston housing department director, James Noteware, sued the city Friday in state district court, contesting the Nov. 7 election on the grounds that the ballot language was “materially misleading.”

Best of PERA on the Issues 2017

Looking back on the year, it was clear that PERA was top of mind—and for good reason. Stories covering the Legislature, the PERAtour community outreach effort, and the Board’s recommended package of changes to the plan dominated PERA on the Issues in 2017. Of course, there was also plenty of Windfall Elimination Provision (WEP) coverage. Here are some of this year’s highlights:

Top Topics
Similar to last year, Legislation was the top category readers visited on the site. This was the best place for up-to-date information on the 2017 legislative session, and the Proposed Legislation Status story was, by far, the single most-visited story. However, articles on the first and second rounds of PERAtour and the Board’s recommended package of changes to lower the fund’s risk profile led the way. There was also plenty of interest in the federal legislative landscape with new bills before Congress to repeal the WEP.

You’re Part of the Conversation
Posting comments is a great way to participate in the ongoing conversation about PERA. This year’s post with the most comments didn’t have quite enough participation to pass the all-time most-discussed post—that honor goes to a 2015 post on WEP—but the 2017 Proposed Legislation Status article did generate a whopping 74 comments. This is in keeping with last year, when the most commented post was 2016 Proposed Legislation Status.

2018 is Right Around the Corner…
It’s clear that 2018 will be a big year for people interested in PERA-related legislation. With the Board’s recommended package likely to be a top issue at the Capitol, you can count on getting the latest updates via the PERA on the Issues blog and newsletter. If you (or a friend) aren’t signed up already, do it today.

In addition to local issues, there are several bills pending before Congress—including legislation to repeal the WEP. If Congress decides to take up new issues like reforming Social Security and Medicare, there will be impacts on current and former public employees. You can rest assured that PERA will be there every step of the way to monitor, analyze, and report back on these important developments.

Finally, we’d like to thank you, our readers, for making PERA on the Issues one of the go-to sources for information about retirement, health care, finance, and other policy areas that are important to PERA’s 560,000-plus members. On behalf of everyone here at PERA, we wish you a safe and healthy holiday season.

Sources of PERA’s unfunded liabilities

A lot has been written lately about PERA’s unfunded liability – or the difference between the projected amount of money needed to pay the PERA benefits earned to date and the amount of money currently available to pay these benefits.

At the end of 2000, the PERA trust funds had more assets than were projected to be needed to pay current and future benefits to members and retirees in the plan at that time. However, since 2000, PERA’s unfunded liability has grown and the funded status has declined. The following tables show the various causes of the $32 billion shortfall that the Board’s legislative recommendation is intended to address. If adopted, the Board’s recommendation would return PERA to full funding over the next 30 years.

The last column on page 2 shows the totals for all causes of growth in the unfunded liability between 2001 and 2016. The bulk of the increase can be attributed to (1) less than anticipated investment income ($14.8 billion), (2) changes in plan assumptions and methods ($10.6 billion), and (3) contribution deficiencies ($4.6 billion).

Note that changes in plan provisions had a positive effect on the funded status ($9.3 billion), largely due to the impact of Senate Bill 1 (SB 1) passed in 2010 that immediately reduced pension liabilities at the end of 2009. Even though PERA is still benefiting, and will continue to benefit, from the SB 1 changes which lowered the rate at which new PERA members earn benefits, the combined negative impact of other causes more than offset the positive impact of those changes.


Note: numbers in parentheses are positive (or gains) and dollars are represented in millions.