Month: March 2023

PERA Board Discusses Board Election, Legislation at March Meeting

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The PERA Board of Trustees met on Friday, March 24 for its second regular meeting of 2023.

The meeting began with public comment and Board committee reports from the day before, followed by an update on the upcoming Board election and reports from PERA staff.

Board election

Four seats on the Board are up for election this year, and members interested in serving as a PERA trustee were able to submit their candidate packets in January and February.

Of those four seats, three received enough qualified candidates to hold an election in May: Seats in the School and Local Government divisions, and a retiree seat. As the sole candidate for the Judicial division seat, the Trustees appointed Hon. Rebecca R. Freyre to another four-year term in that seat.

Ballots will go out to active members in the School and Local Government divisions, as well as retirees in the State, Local Government, and Judicial divisions in early May, and the Board will announce election results at its June 16 meeting.

Legislative update

PERA Public and Government Affairs Manager Michael Steppat and Chief Investment Officer and Chief Operating Officer Amy C. McGarrity provided the Board with an update on legislative activity at the State Capitol. The Colorado General Assembly got underway in early January, and so far, lawmakers have introduced more than 450 bills.

There are three bills pertaining to PERA that are still under consideration in the legislature: SB23-056 aims to fully recompense PERA for the state’s missed 2020 payment of $225 million to PERA; SB23-016 would require PERA to include in its annual Investment Stewardship Report a description of climate-related investment risks, impacts and strategies; and SB23-163 would reclassify wildlife officers and parks and recreation officers employed by Colorado Parks and Wildlife as safety officers for the purpose of determining their PERA benefits.

The Board also discussed HB23-1016, which would provide a temporary tax credit of $700 for public service retirees in Colorado. That bill was introduced in January as is currently awaiting consideration by the House Appropriations Committee.

Four other PERA-related bills have been postponed indefinitely.

READ MORE: 2023 Proposed Legislation Status

The current legislative session will wrap up by May 8.

Strategic planning

The Board continued its work developing a new strategic plan that will guide the PERA Board and staff into the future. As part of that process, Trustees reviewed a SWOT (strengths, weaknesses, opportunities, and threats to the organization) analysis and discussed the results of that process. The SWOT analysis will help inform the Board’s work of identifying goals to pursue over the next half-decade and beyond.

The Board will continue working on a draft plan throughout the year.

The Board’s next scheduled meeting is June 16.

News You Should Know: Will Private Sector Pensions Make a Comeback?

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Could Defined-Benefit Pension Plans Make a Comeback? | Morningstar

Decades ago, it was much more common for workers in the private sector to have access to defined benefit retirement plans. Today, they’re largely only available to public employees. However, some experts say the time is right to consider reopening some of those closed or frozen plans, especially as companies struggle to hire and retain employees.

Biden Issues His First Veto on Retirement Investment Resolution | CNN Politics

President Joe Biden issued the first veto of his presidency this month, vetoing a congressional resolution that would have overturned a Department of Labor rule allowing — but not requiring — retirement plans to consider financially relevant environmental, social, and governance (ESG) factors in their investment decisions. Click here to read about PERA’s integrative approach to investment stewardship and ESG.

Consumer Confidence is Up Despite Current Bank Troubles — Will It Last? | Marketplace

Recent turmoil in the banking industry, rising interest rates and other financial issues haven’t had much effect on personal spending so far. But there are some signs that that could soon change, with recent polling showing some declines in consumer sentiment about the economy.

100-Year-Old Sisters Share 5 Top Tips for Leading a Long, Happy Life | CNBC

Shirley Hodes and Ruth Sweedler are 106 and 103, respectively, and still going strong. What are the key ingredients for living so long? There’s no secret sauce here, but some simple reminders about living a healthy life.

News You Should Know is a digest of news from publications around the nation about finance, investing, and retirement.

News You Should Know: Colorado Considering New Tax Credit for Teachers

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Colorado May Pay Back Teachers Who Buy Their Classroom Supplies | The Colorado Sun

Public school teachers often dip into their own pockets to pay for classroom supplies and other needs, and a bill under consideration in the state legislature aims to provide some financial relief. The bill, HB23-1208, would provide a tax credit of $1,000 to teachers who teach for a whole school year.

Goldman Analysts No Longer Expect Fed Rate Hike in March After SVB Failure | Reuters

The recent failure of Silicon Valley Bank and other banks is raising questions about the Federal Reserve’s efforts to rein in inflation. Federal Reserve Chair Jerome Powell had said his agency would continue to raise interest rates, but analysts say it’s now less likely the Fed will do so at its March 22 meeting.

Eli Lilly Cuts Price of Insulin, Capping Drug at $35 Per Month | NPR

Eli Lilly, one of several major drug companies that produce insulin, says it will reduce the prices of some of its older versions of the drug later this year. The company said it will cut the list price of Humalog and Humulin by 70 percent in the fourth quarter. Lilly is also setting a $35 cap on monthly out-of-pocket costs for people with insurance.

10 Most Underestimated Retirement Living Expenses | AARP

If you’re nearing retirement, it’s likely you’re thinking about how your expenses might change when you’re no longer working. This list from AARP explains the top 10 expenses retirees face, including some that people tend to overlook.

News You Should Know is a digest of news from publications around the nation about finance, investing, and retirement.

Checking in on Legislative Activity So Far This Year

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Winter is nearly over (according to the calendar, at least), and state lawmakers in Denver are more than halfway through the 120-day Colorado General Assembly. In Washington, DC, senators and representatives from across the country are well into their own legislative work in Congress.

Some of that important legislative work pertains to public employees and their retirement benefits. Here we discuss key actions lawmakers have taken so far in 2023, as well as what may still be ahead.

Colorado legislation

So far this session, state lawmakers have introduced more than 400 bills, seven of which apply directly to Colorado PERA.

Four of those bills have been postponed indefinitely. That means the bill is no longer under consideration and these will not make it to the House or Senate floor for a vote. This can happen if lawmakers decide a bill needs more work or doesn’t have the support to pass.

Several other bills remain under consideration and are working their way through the process in the state legislature. Included in those bills is SB23-056, which aims to fully recompense PERA for the state’s missed 2020 payment of $225 million to PERA. Legislators passed a bill last year that aimed to make up that payment, and Gov. Jared Polis signed it into law. This new bill aims to pay PERA the remaining shortfall of $35.05 million.

Other bills currently under consideration include SB23-016, which would require PERA to include in its annual Investment Stewardship Report a description of climate-related investment risks, impacts and strategies, and HB23-1176, which would create a new defined contribution plan for members of PERA’s School and Denver Public Schools divisions.

READ MORE: 2023 Proposed Legislation Status

As we saw last year, legislative work can continue all the way up to the last minute of the session, so there’s still plenty ahead. That includes the Long Bill, which lays out the State’s budget and spending for every state department and program for the next fiscal year. The Long Bill will be introduced in the Senate in late March. All legislative activity for the current session will wrap up by May 8.

Federal legislation

Lawmakers in Washington, DC have been working on bills affecting public employee retirement.

While Congress passed the package of retirement-related legislation collectively known as SECURE Act 2.0 in late December, many of its dozens of provisions don’t take effect until 2023 or 2024. Those include an increase in the age that retirees must start taking their annual required minimum distributions (RMDs) and new types of penalty-free distributions from retirement accounts.

READ MORE: What’s in SECURE 2.0?

Congress is also tackling an issue that comes up every session: Social Security’s Windfall Elimination Provision and Government Pension Offset. The two provisions of federal law can reduce Social Security benefits for members of Colorado PERA, which serves as a substitute for Social Security. While lawmakers have introduced bills addressing the WEP and GPO in every session of Congress in recent years, the bills never make it to a floor vote for full consideration, with lawmakers citing the cost as a key reason.

So far this year, lawmakers have re-introduced last year’s Social Security Fairness Act, which seeks to repeal both the WEP and GPO. Last year, we saw multiple similar bills, with some aiming to modify the WEP and GPO calculations rather than repealing them. It remains to be seen whether lawmakers will introduce other bills on the topic this year.

READ MORE: Bill to Repeal WEP/GPO Reintroduced in Congress

As always, PERA On The Issues will continue to track these topics and others that come up throughout the year. You can subscribe to our biweekly email newsletter to stay in the loop, as well as sign up for the PERA Ambassador email list to be informed about important legislative activity.

What Roles Do the General Assembly and Board Play at PERA?

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In our recent quiz about PERA benefits, there was one question that seemed to trip a lot of people up, and it had to do with the PERA Board of Trustees:

Which of the following is the PERA Board of Trustees responsible for setting?

  • A: Employee and employer contribution rates
  • B: Annual benefit increase amounts
  • C: Benefit eligibility requirements
  • D: All of the above
  • E: None of the above

The correct answer is E: None of the above. While the Board is tasked with overseeing PERA operations, it isn’t directly responsible for setting many of the benefits that members receive.

PERA governance and operations are split between three main entities: The state legislature, the PERA Board, and PERA staff.

The legislature and state law

The state legislature established PERA as an instrumentality of the state in 1931. PERA and its benefits continue to be governed under Title 24, Article 51 of the Colorado Revised Statutes, also known as PERA Law.

State statute lays out in detail the various provisions that determine who receives PERA benefits, when, and how much they receive, including:

  • Contribution amounts
  • How service credit can be accrued and purchased
  • Benefit options and eligibility
  • Annual benefit increases

Because the legislature is responsible for setting benefits, any changes to PERA benefits must also happen at the State Capitol. Change happens when lawmakers bring forth a bill, which then makes its way through the legislative process with a majority vote in the House and Senate, along with the governor’s signature. Neither the Board nor PERA staff have the power to change any of the provisions set in statute.

So far this year, lawmakers have introduced more than a half-dozen bills pertaining to PERA and its members. Click here for the latest on where those bills stand.

The legislature also conducts routine oversight of PERA. Various legislative panels meet regularly with PERA leadership and staff, including the Legislative Audit Committee, the House and Senate Finance Committees, the Joint Budget Committee, the Pension Review Commission and the Pension Review Subcommittee.

The PERA Board of Trustees

The PERA Board is made up of 16 members: three Trustees appointed by the Governor and confirmed by the Senate; four members from the School Division; three members from the State Division; one member from the Local Government Division; one Judicial Division member; two PERA retirees; a non-voting representative from the DPS Division; and the State Treasurer as an ex officio, voting member. As fiduciaries, the Board has a responsibility to act in the best interests of PERA members.

While the legislature sets benefits and other important plan provisions, the PERA Board is responsible for administering those benefits and overseeing PERA operations and management. The Board’s Governance Manual, which adheres to best practices in public pension governance, defines these responsibilities. They include:

  • Setting rules and policy for PERA administration
  • Establishing organizational priorities and strategies
  • Overseeing PERA’s investment program

The Board also reviews and releases various important reports each year. That includes the Annual Comprehensive Financial Report (ACFR), which provides details about PERA’s financial status, funded status and membership statistics. The ACFR will be available following the Board’s June meeting.

PERA staff

While the legislature and Board establish policy and rules, PERA staff are responsible for administering plan benefits and managing day-to-day operations. PERA currently employs approximately 300 people who work every day to meet the goals set out in the Board’s strategic plan. Some of those duties include:

  • Processing employee and employer contributions
  • Managing PERA’s investments
  • Distributing retirement payments and other benefits
  • Member communications and education

Providing retirement and other benefits to nearly 650,000 members is a big job, and it’s one we take seriously. The state legislature, PERA Board, and PERA staff all play important roles in making sure Colorado’s public employees will be able to receive reliable retirement income today and for generations to come.