In 2014, the Urban Institute graded public pensions around the country on a series of criteria including financial health. Colorado received a D in the funding ratio category.

This grade comes after the Colorado Legislature enacted a package of pension reforms in 2010—commonly referred to as Senate Bill 1—that many hoped would solve PERA’s funding woes.

According to the latest data, Colorado has underfunded PERA to the tune of $25.8 billion. That means there’s a roughly $26 billion difference between PERA’s assets and what it owes to current and future retirees. That gap is larger than the entire annual state budget.

Colorado Governor Ritter

The 2010 legislative reforms in Senate Bill 1 improved PERA’s financial outlook. The changes in Senate Bill 1 included:

  • Reducing the automatic cost of living adjustment (COLA) for PERA members from 3.5% to 2% or inflation (whichever is lower)

  • Raising the retirement age by 3-5 years for employees hired in 2011 or later

  • Eliminating the ability of those who have worked for a public entity for fewer than five years to retain a 50% match from their public employer if they choose to cash out their PERA account prior to reaching retirement status

  • Increasing mandatory contributions to the plan by employers and employees by 4.5% and 5.5% of salary respectively

Unfortunately, these changes might not be enough to provide a secure and sustainable retirement to PERA members.

Senate Bill 1 also left in place the current formula that leads to back-loaded retirement benefits. As a result, many public servants still risk their retirement security if they move between the private and public sectors or between states over the course of their careers.

Learn more about retirement security for Colorado’s public servants >>

Run-Down Ron

Ron always enjoyed teaching and mentoring high school students but, after 21 years in Colorado schools, he wants to train to become a chef. However, Ron knows that if he sticks it out for nine more years at his school, his PERA benefits will increase exponentially. Ron remains in the classroom, counting down the days until he reaches his maximum benefits.

Visit our PERA Member Profiles page to read more about these illustrations.

Years teaching in Colorado classrooms: 21

Ron’s lifetime benefit if he leaves now: $139,054

Ron’s lifetime benefit if he teaches 9 more years: $515,567

Ron earns $376,512 less if he leaves now