Sponsored by Colorado Senator Dave Owen and state Representative Brad Young, the measure (SB 257) passed out of the Legislature in May after a series of negotiations between the Board of Trustees of theColorado Public Employees’ Retirement Association (PERA) and Owens, according to information posted to the PERA Web site .
According to PERA, the bill:
- Establishes a choice of a DC plan for new state employees hired on or after January 1, 2006. State employees (excluding Higher Education) hired after that date would be able to select an expanded state DC plan, a new DC plan offered by PERA, or the existing PERA defined benefit offering. New hires would have 60 days to decide which plan to join. The default plan would be the PERA defined benefit plan.
- Increases employer contributions to PERA by 0.5% of salary each year beginning January 1, 2006, to reach a total of 3% of salary by 2012
- Increases the employer contribution rate in the School Division by an additional 0.4% of salary beginning in 2013, to reflect this Division’s higher cost
- Requires employer contributions to be paid for a PERA retiree working for a PERA-affiliated employer, beginning July 1, 2005.
The PERA Web site material said Colorado becomes the fifth state to offer an optional retirement plan to broad groups of public employees. In recent years, Florida, South Carolina, Ohio, and Montanahave established such for many public employees.
In 1997, Michigan joined the District of Columbia in providing only a defined contribution plan for its general employees; teachers and most other non-state employees in Michiganand teachers and public safety personnel in DC continue to participate in a DB plan. Approximately 90% of all state and local government employees have a defined benefit plan as their primary retirement benefit.
Florida officials, in particular, have long struggled with getting employees to actively decide whether to go with a DC or DB option and unleashed a variety of programs in recent months including meetings and new literature to help make that happen (See Fla. State Workers DC Plan Still a Tough Sell ).