DENVER – Colorado Treasurer Walker Stapleton remains at odds with members of the state’s retirement benefits board over the stability of the system.
Stapleton’s comments come after the Public Employees’ Retirement Association released a report earlier this month stating that it is making progress toward becoming fully funded.
Much of the report revolved around state legislation passed in 2010, following the start of the economic downturn. The compromise that was reached at the time included workers taking a hit on their annual cost of living adjustment, while employers increased contributions.
In the first report since the 2010 reform legislation, the PERA board said it saved about $15 billion in unfunded liability. PERA’s unfunded liability was estimated at $24 billion in 2014.
“If the reforms contained in SB1 had not been enacted, PERA’s unfunded liability would be $15 billion greater, with PERA being projected to run out of money by 2035,” said Greg Smith, executive director and chief executive of PERA.
Stapleton, a Republican, has long been critical of the PERA board and its reforms, suggesting that the board should have taken more aggressive actions, including lowering the projected rate of return on investments, which currently stands at 7.5 percent. He also has advocated for lowering cost-of-living raises and increasing the retirement age.
“It’s incumbent on Colorado to not assume lollipops and rainbows from an investment-return standpoint; instead to have conservative investment assumptions so we can properly fund the plan for future generations,” Stapleton told The Durango Herald on Tuesday.
He worries about long-term stability under a high projected rate of return, suggesting that managers should consider more conservative profit projections.
As of December 2014, PERA is projected to reach fully funded status in about 38 years if it realizes a 7.5 percent long-term rate of return, compared to 30 years under the originally assumed 8 percent long-term rate of return.
Stapleton questions whether the report reflects actual progress, pointing out that in 38 years, profits might diminish, leaving the state vulnerable.
“The report that was put out is, unfortunately, an internal piece of propaganda for PERA, which is misleading to PERA members in particular, and taxpayers in general,” he said.
A typical retiree receiving a $3,000 monthly benefit as of Jan. 1, 2010, will sacrifice the equivalent of about seven years of retirement payments over a 25-year retirement, according to the report.
“Colorado’s largest retirement system has the resources it needs now and into the future to deliver the benefits earned by the hardworking public workforce that keeps Colorado moving forward,” the PERA report states.
