Reforms are needed to overcome an $11 billion funding shortfall at the state’s largest public pension plan, but any legislative fixes could face tough slogging this session, one legislator warned Thursday.
“This will be a hard thing to sell, but if we don’t do it, it will be disaster. It won’t be easy to get done,” said Republican Sen. Jack Taylor of Steamboat Springs.
Taylor was responding to proposed reforms that Meredith Williams, executive director of the Colorado Public Employees Retirement Association, outlined before the Joint House and Senate Finance Committee on Thursday.
PERA’s board seeks legislation to create a two-tiered pension plan that would use contributions from future hires to shore up benefits due current members. PERA oversees just under $35 billion in assets on behalf of more than 360,000 members.
Future hires, primarily state and school-district employees, would receive benefits at about four-fifths the level of current PERA members and make only a slightly smaller contribution of their paychecks, 7 percent instead of 8 percent.
“I don’t feel good in my role of saying to new people that your benefit won’t be as good,” Wil liams testified. “It will still continue to be an incredibly attractive retirement benefit.”
Another reform would adjust future contributions from employees and employers, as well as benefits, whenever the plan dropped below 90 percent funding to prevent a shortfall from taking root in the new tier.
PERA faces a competing bill from House Minority Leader Joe Stengel of Littleton. His bill would shift future employees to a defined-contribution plan, give the state treasurer greater oversight over PERA affairs and restructure PERA’s board of trustees.
Stengel said he opposes the creation of a two-tier system.
“They are trying to put rouge on a pig,” Stengel said. “That is not fair to new hires. It is a Ponzi scheme.”
Staff writer Aldo Svaldi can be reached at 303-820-1410 or asvaldi@denverpost.com.
