Re: “,” Dec. 15 Vincent Carroll column.
Vincent Carroll’s summary of the possible solutions to the problems with the Public Employees’ Retirement Association (PERA) is the best I have read. But he and others overlook what, to me, seems a key element in deciding who should shoulder the costs of getting PERA on a sounder footing.
The PERA board is not just composed of current and retired employees. The governor appoints three of the 16 members, confirmed by the state Senate. The state treasurer is also a voting member. That
is four of 16. And the board does not set PERA’s retirement benefits. It proposes changes to the Colorado legislature. Members of the legislature also introduce bills to make changes. In 2017 there were at least six bills changing parts of PERA’s contributions and benefits. It takes legislative action to change PERA’s benefits.
So it can be argued that the taxpayers of Colorado (or at least the voters) through their elected representatives in the legislature have approved of all the steps that have gotten PERA to where it is today. Don’t they have a responsibility in this? To argue that the current employees and retirees should shoulder the burden alone absolves the taxpayers and legislature, when strictly the problem rests on their shoulders.
Richard A. Jones, Boulder
Vincent Carroll’s recent column failed to note a couple of pertinent facts. First, the inability of this state to pay decent wages to teachers due to the effects of the TABOR Amendment figures into the health and well-being of PERA. Colorado is now 38th in the nation in per-pupil funding, and this curtails a district’s ability to attract and retain teachers. The pension system was supposed to be one way to reward teachers for years of substandard wages. Second, many teachers have paid into Social Security and earned those benefits, but this state reduces these benefits significantly, unlike some other states.
A fix for PERA will be multifaceted. However, to ignore teacher retention and reduced Social Security benefits as part of the conversation is not wise.
CarolÌıC. Haworth,ÌıGreeley
I would like to receive my retirement benefits from PERA rather than Social Security. Trouble is, defined-benefit plans are unsustainable. They will eventually be replaced with defined-contribution systems. Historically, most pensions put their assets in bonds designed to preserve capital. These financial instruments have low returns, while PERA chases 7.5 percent returns. When the market eventually corrects, PERA is sure to go upside-down. Putting plan assets into hedge funds, real estate and equities has turned PERA into a casino. If beneficiaries assume taxpayers will continually bail them out, they are in for a surprise. A scenario where employees contribute 10 percent and the employers contribute 20 percent still won’t work if retirees take more out of the plan than they contribute. This whole notion of retiring in your 50s at 70 percent of your salary and living off the plan for another 30 years is lunacy.
FrancisÌıM.ÌıMiller, Parker
The source of the PERA problem can be identified by having all the participants look into the mirror. For decades now, PERA members have elected board members who promised them the world without asking “How?” How can you guarantee a return on investment that would make Bernie Madoff blush? How is it that I can start withdrawing from the system so young? How is it possible my retirement benefits are so generous? And finally, how are we, PERA members, going to fix the problem we caused?
Bob Fechtner, Westminster
The Colorado Public Employees’ Retirement Association fails for five reasons, all related to the conflicts of interest of the decision-makers:
1) PERA decision-makers are all self-interested beneficiaries (including the judiciary) and PERA managers have fiduciary duties only to the beneficiaries without any independent voice speaking for the taxpayers who will be stuck with the tab.
) They have promised more than could ever be sustainably financed — as the annual report demonstrates.
3) The decision process makes it is all too easy to make grandiose promises now, to be financed in 30-plus years.
4) The reporting systems do not accurately display the depth of the problems as they arise.
5) No one in power speaks for the future — our children and grandchildren who will inherit this mess but can’t vote now.
PERA has its own self-serving set of checks and balances: They promise to write checks even though there will be no balances.
JamesÌıKneser,ÌıEnglewood
I would offer a tweak to the various plans now under consideration to restore the fiscal health of PERA. After anyÌıproposedÌı freeze on cost-of-livingÌıincreases expires, why not “unfreeze” inÌıphases? The bottom third of PERA recipientsÌıwould be unfrozen inÌıthe first year, the middle thirdÌıin the second year, and the top third inÌıthe finalÌıyear. I do not know how toÌıfigure out the fiscalÌıimpact of this tweak, but I’d guess it is pretty close toÌıoneÌıyear of freezing everyone. The advantages of this tweak are that it helpsÌırestore fiscal health more quickly and that it slightly shifts theÌıburden of doing so onto those most able to bear theÌıburden.
Disclosure: I am a PERAÌırecipient and, while I do notÌıknow which third I fall in, my guess is that I am in the top third.
H.ÌıPatrickÌıFurman, Boulder
The writer is an emeritus professor at the University of Colorado School of Law.
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