An update on PERA
Changes are coming to the state’s defined-benefit retirement plan. Here’s how it’ll affect MSU Denver.
December 11, 2018
More than 1,300 Metropolitan State University of Denver employees are actively participating in Colorado’s Public Employees’ Retirement Association. And as elected officials are aiming to close the program’s $32 billion funding shortfall with the passage of SB 200 in the past legislative session, we looked into what that might mean for you.
“The change we’re seeing is driven by the fact that PERA is a defined-benefit plan – when you retire, you’ll get your pension payments according to length of service and average salary,” said Jinous Lari, budget director for MSU Denver. “Overall, it’s positive as it’s a way to ensure this retirement plan is sustainable, that it’s stable and available to those who are paying into it.”
Changes will take place starting next July 1; the University is increasing contributions to the state system by a quarter of 1 percent, while PERA-participating employees will see a staggered, incremental increase of about 2 percentage points over three years (from 8 percent to 10 percent).
The bill also raises the minimum retirement age for new hires to 64, averages the five years of highest pay to determine the benefit and caps the cost-of-living adjustment at 1.5 percent.
PERA’s plan is to restore to full funding within 30 years, Lari said.
“The state is underfunded when it comes to retirement; that puts pressure on everyone to contribute more,” said George Middlemist, associate vice president for administration/CFO and interim president for administration. “It’s challenging, but we’re constantly evaluating the financial impacts to do what’s best for our employees.”
Another one of the positive elements he noted was the state’s setting aside of $225 million to help bridge unfunded liability; this has been designated for recurring annualized allocation from the state’s budget.
“It’s good that the cost isn’t just being passed along to employees and employers,” Middlemist said.