DENVER—Colorado’s largest public pension plan lost $13 billion in one year, or 30 percent of its assets’ value, amid the economic downturn, and managers say painful changes are needed to help it meet its obligations to retirees.
The Colorado Public Employees Retirement Association is paying nearly $2.7 billion in benefits each year while collecting $1.3 billion in contributions from state employers and workers.
The 25-year return on the fund’s assets and investments had been 10.8 percent annually through 2007, but losses last year dropped that return to 8.9 percent.
PERA Executive Director Meredith Williams said he’s asked the staff to put a price on every possible change, including eliminating cost-of-living increases, changing the retirement ages, and altering benefit formulas. PERA has at least 431,000 members and beneficiaries.
Changes would require legislative approval. Williams suggested waiting until next year’s session before making any changes to allow the markets to calm down and allow them to gauge returns and costs.
“The best minds in the world don’t have any answers,” Williams told the Senate Joint Finance Committee Wednesday. “As I walked over here today, the Dow Jones was down 250 points.”
Williams said the fund could not return to full funding, which would allow it to meet its obligations, without any changes.
Rep. Kent Lambert, R-Colorado Springs, asked about declaring an “actuarial emergency” and making cuts now. He said he didn’t want needed changes “relegated to yet another study.”
Williams said the true extent of the losses will be known, and will be greater, when real estate and private equity holding appraisals are completed later this year.
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Information from: The Denver Post,
