Colorado’s rising public pension costs are threatening workers’ retirement security and funding for essential public services. The Colorado Public Employees’ Retirement Association (PERA) is only 61 percent funded, and the state owes public workers at least $25.8 billion in retirement benefits they have already earned.
A new report, Risky Retirement: Colorado’s Uncertain Future and Opportunities for Reform, published by the Laura and John Arnold Foundation, shows that PERA’s growing problems are mostly the result of irresponsible decisions by the state, rather than economic events.
- Eighty-one percent of the increase in the state’s pension debt is due to the state’s failure to make sufficient pension payments on a regular basis.
- Colorado is relying on a risky investment strategy. Two-thirds of its investments are allocated to volatile assets such as equities, real estate, and alternatives.
- The state’s current funding plan will cause PERA to remain in a precarious financial position for decades.
The report authors also outline a series of reforms that would help to improve PERA’s financial stability. Measures include developing a credible plan to pay down the pension debt and adopting a funding policy that will protect state in the event of an economic downturn.