PERA told the Legislative Audit Committee of the Colorado General Assembly that the division should be fully funded 11 years later, the Rocky Mountain News reported.
Before the recent legislative reform bill, PERA said it expected its state and school division to be 51% funded by 2034 based on an expected return of 8.5% each year.
The reform measure, among other things, gave the fund a schedule to eliminate its total unfunded liability by 2051 and diverted 0.5% of employees’ annual raises for six years to help pay off the liability. The plan’s total deficit was trimmed by $300 million last year to $12.5 billion; it emerged as a critical issue in the recent Colorado legislative session (See CO Officials Bang Out PERA Reform Deal ).
State Treasurer Mike Coffman said it will take more than 40 years for a full fiscal turnaround. He said he remains concerned that all of PERA’s projections rely on 8.5% annual returns which is almost 1% higher than PERA’s investment advisers think is realistic.
The pension plan has more than 380,000 current and former state employee members who do not earn Social Security benefits while in PERA, meaning it is the primary retirement source for members. PERA was 73% funded last year, up from 71% at the end of 2004.
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