Under the new law (Senate Bill 1), retirees will get no cost of living increase this year instead of the normal 3.5% increase, which would save the Colorado Public Employees Retirement Association (PERA) $80 million, according to the Associated Press. Next year they would get the lesser of inflation or 2% and, after that, annual increases could be no higher than 2%.
The retirement age for new employees will rise from 55 to 60, and contributions will increase by 2% for both employees and their government employers.
Ritter said the cuts “are difficult but necessary,” according to the AP. PERA’s assets fell from $41.4 billion in December 2007 to $29.5 billion in July 2009, although PERA estimates that it will have a 15% rate of return when all its investments are counted from 2009.