Benefits June 9, 2008

CO Governor Signs Bill Allowing Retirement Systems Merger

June 9, 2008 (PLANSPONSOR.com) - Colorado Governor Bill Ritter on May 28 signed a bill establishing ground rules for a proposed merger of the Denver Public Schools Retirement System (DPSRS) into the Colorado Public Employees Retirement Association (PERA), the Denver Business Journal reported.
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A newsletter on the DPSRS Web site said the Denver Public School district is the only public school district in the state that is not a member of PERA. Previous attempts to merge the systems have failed because they required an upgrade of DPSRS benefits to match PERA benefits, which proved to be too costly.

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The current law does not require an upgrade of DPSRS benefits, but makes DPSRS a separate tier within the PERA School Division, the newsletter said.

Benefit provisions of the bill, according to DPSRS, include:

  • There would be no subsidy between DPSRS and PERA, or DPS and PERA.
  • DPS and the charter schools would become “affiliated employers” within PERA. They, and all their employees, including hourly employees, would make contributions to PERA.
  • There would be no reduction of benefits, including no reduction in annual benefit increases, for DPSRS retirees and beneficiaries and no involuntary reduction of benefits for DPSRS active members.
  • All existing DPS hourly employees and new DPS employees would begin to accrue PERA retirement benefits under the most recent PERA benefit “tier”, as of the effective date of merger.
  • DPS retirees who are employed by a PERA affiliated employer at the time of merger could remain so employed by that employer without incurring an offset against their retirement allowance. Otherwise, post-retirement employment will be subject to PERA’s annual hours/days limitations and benefit offset requirements.
  • Increased availability of retiree health care programs would be considered for DPSRS retirees, but no additional premium subsidies would be provided.
  • Increased portability of retirement benefits for active members of DPSRS and PERA would be considered by the parties.

The effective date of the legislation is January 1, 2009. It requires an actuarial valuation be completed by August 1, 2009, to determine single up-front payment of the amount of assets DPSRS must provide to PERA in order to “prevent a subsidy” to either system and to “equalize the funding status” of the two systems.

Text of the legislation is here .

The DPSRS newsletter can be found at www.dpsrs.org .

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