Samantha Fillmore is reporting on the Heartland Institute’s website that Colorado Public Employees’ Retirement Association has enacted some reform measures to help them close a huge funding gap. However, the reforms seem quite modest, at best.
It is being reported that the State’s defined contribution plan will be made available to local government members in the PERA defined benefit plan, which until now had only been available to state workers. In addition, contribution rates for those remaining in the plan will escalate from 8% to 11% of pay during the next two years.
But, it doesn’t seem that PERA employees will be mandated to now participate in the DC plan. Sure, employees participating in the DC plan will now have the option to move assets with job changes, but they are still going to be responsible for funding, managing, and dispersing this retirement benefit with no promise of a set benefit upon retirement. We wonder just how many local government employees see this as a positive change?
What isn’t addressed is how the pension assets are being managed. Are they still going to be trying to generate a return commensurate with an ROA target or will they take the prudent course and begin to manage their assets against a liability focus? Continuing to do the same old, same old doesn’t seem to reflect the reform that is needed to right this ship.