DENVER — Cuts in retirement benefits are now on the table as the state’s public employee retirement fund seeks to deal with a $12 billion plunge in assets since the beginning of the year.
Officials with the Colorado Public Employees Retirement Association say immediate cost-saving measures included canceling a planned merger with the Denver Public Schools’ pension and dropping the interest for money left behind by people leaving the pension system from 5 percent to 3 percent.
Legislative approval would be needed for additional cuts that could include suspending cost-of-living increases for retirees for one year and freezing cost-of-living increases for new retirees for one year.
“The choices are not going to be pleasant,” executive director Meredith Williams said Friday.
Officials last month were hopeful they could survive the downturn without cuts, but the fund has lost $2 billion since then.
The state’s largest public pension has 429,000 members.
Assets are at $29 billion, down from $41 billion on Jan. 1.
PERA started the year with investments able to fund 75 percent of its $52.5 billion in long-term liabilities.
Critics of PERA said the retiree benefits are too “rich” and dependent on a legislative bailout should problems arise.
“The problem they have is that even if their investing staff hits every benchmark, their benefit levels are so high that they’re just treading water,” said former state Sen. Mark Hillman, a Republican from Burlington who sat on the PERA board for a year.
“And then a year like this throws a millstone around their neck.”‘ The move to wrap Denver Public School’s $3.2 billion in assets into PERA was seen as a cost-saving move for the smaller plan.
“A merger as originally contemplated just flat doesn’t make sense,” Williams told the board.
Colorado’s other large pension funds are bracing for the possibility of increases in contributions or benefit cuts. The Fire & Police Pension Association ended September with $3 billion in assets.
Executive director Bill Morris said it will also considering reducing or eliminating the cost-of-living increase in its largest sub-plan for 2009.
