3 4-5 6
Legislative PERA and PERA Life
Update Social Security Insurance
A publication for members of the Colorado Public Employees’ Retirement Association March 2009
INSIDE Complex Issues Deserve Complete Analysis
You may have heard that some are calling for Together these tools
PERA to act now to address the impact of the will allow PERA’s
global market decline on the PERA portfolio. Board of Trustees to
They want the Colorado General Assembly to propose a complete
Board Election in May pass legislation during the 2009 session to package for the 2010
Page 6 modify the current benefit structure of PERA. legislation session
rather than taking
I’ve written here before about the importance piecemeal approach
Retirees Give Back in of PERA’s diversified portfolio and long-term
Retirement that would lead
approach to investing and paying benefits. to PERA returning
Page 7 With all the noise in the media, I wanted you Meredith Williams
annually to the General
to know why PERA believes it is in the best Assembly to seek Colorado PERA
Long-Term Care Update interest of both its members and other state Executive Director
Page 7 taxpayers to work toward proposing legislation particular aspects of
during the 2010 legislative session that the system.
addresses the situation in a comprehensive
Schedule of Colorado and effective manner. Because the stakes are so high, it’s
PERA Meetings imperative that we do everything
Page 8 PERA needs a complete picture of in our power to get it right. The
its assets before recommending any comprehensive proposal for legislative
changes. Complete, audited information action in 2010 will be based on
on the value of all of PERA’s investments, accurate calculations and on a complete
including assets such as real estate and picture of how the changes will impact
private equity, will not be available until PERA’s funded status and its members.
the end of May, after the Legislature has
adjourned for the year. This timing is Some of you have written me to suggest
normal for the receipt of this information specific changes for improving PERA’s
each year. funded status. I appreciate
your input and want to let Be sure to sign up
PERA needs to have a complete picture you know that every aspect
of how any changes would impact its for PERA Alerts and
of the PERA benefit program
bottom line before recommending a you’ll receive the
will be evaluated by PERA’s
specific course of action. PERA’s actuaries latest updates and
actuaries. This actuarial
are currently “pricing” every component of analysis will be used by information so that you
the benefit structure of PERA. This process the PERA Board of Trustees can make your voice
will be concluded in the next several to develop its legislative heard. To sign up, go
months and involves a comprehensive proposal for 2010. As to the Be Active in
review of all of PERA’s 431,000 members’ these recommendations are the Future of Your
benefits owed going forward. To assist finalized, we will be sharing Retirement System
the Board in determining which changes them with you. I invite link off the home page,
to recommend, a sophisticated model is your feedback at and click on Register
being built to analyze the interaction and Meredith@copera.org. for PERA Alerts.
total impact of individual benefit changes
on PERA’s funded status.
Listed below are a few myths that have been Myth
circulating through the grapevine about PERA. Closing PERA and having new public employees
We hope to put your mind at ease by giving you join a 401(k)-type retirement plan would save
the facts. Colorado’s public employers and taxpayers a
lot of money.
PERA is a drain on Colorado taxpayers. Reality
Research has shown that defined benefit plans
are cost effective when compared to their
In 2008, Colorado PERA paid over $2 billion in
401(k)-like sisters (see the National Institute on
benefits to retirees who reside in Colorado. From
Retirement Security research page at
these benefit payments, PERA withheld and remitted
Did You Know? $43 million to the Colorado Department of Revenue
www.nirsonline.org). Arguments against defined
benefit plans like PERA do not account for the
Members can use the PERA for income taxes. The average retirement benefit is
potential future cost to society when retirement
Alert system to write a $2,658 per month and relatively modest when it’s
account balances are insufficient to last through
understood that PERA serves as both a retirement
letter to the editor of their retirement, especially in a state where no Social
plan and a replacement for Social Security for
local paper. most members. The PERA retirement benefit is an
Security safety net exists for public employees.
Click on the Be Active attractive part of public employers’ compensation Myth
in the Future of Your packages and attracts high caliber employees who Colorado PERA doesn’t respond to negative
could make more money in the private sector. or incorrect information in the media.
link off the home page. Myth Reality
The PERA Board is going to change benefits and I Colorado PERA addresses factual errors in stories
Click on the Legislative won’t have enough time to plan my retirement. If appearing in the media, communicates with
Action Center icon in I’m eligible, I should go ahead and retire in 2009 key reporters, and submits guest columns to
the green box. even if I’d planned on working longer. newspapers. Of course, PERA does not control the
content of newspapers, and our side of the story
Scroll down and click on Reality
may not always get told in the media no matter
Only the Colorado General Assembly can change
the Media Guide box. what we do. PERA posts a wealth of information
PERA benefit and contribution levels. While the
in the Latest News section of the Web site and we
Search for your paper PERA Board is scheduled to receive information from
encourage members to get PERA news directly
in the drop-down actuarial analysis in 2009 that probably will result
from this source.
box under Colorado in proposed legislation to the General Assembly
during the 2010 session, any benefit structure
recommendations made will be mindful of how
Click on the Letter to they might impact member behavior. Any new law
the Editor link to write changes will also have a future effective date. Plenty
your e-mail. of advance notice of these changes will be given to
the PERA membership so they can make
an informed decision.
Denver Main Office Westminster Office Web site⁄e-mail Communications Director
1300 Logan Street 1120 W. 122nd Avenue www.copera.org Katie Kaufmanis
Denver, CO 80203 Westminster, CO 80234 Editor⁄Writer
Send forms and address changes to
Denver Main Office Hours Westminster Office Hours PERA Madalyn Knudsen
(Mountain time) (Mountain time) PO Box 5800 Staff Writers
7:30 a.m.—4:30 p.m. Monday—Friday Monday 7:30 a.m.—4:30 p.m. Denver, CO 80217-5800 Tina Cordova
Tuesday 7:30 a.m.—4:30 p.m. Lisa Fedak
Customer Service Center Hours Wednesday 1:00 p.m.—4:30 p.m. Send/e-mail comments to
(Mountain time) Layout
Thursday 7:30 a.m.—4:30 p.m. PERA Communications Division
7:00 a.m.—5:30 p.m. Monday—Thursday Cathy Heyer
Friday 7:30 a.m.—4:30 p.m. 1300 Logan Street
7:00 a.m.—4:30 p.m. Friday
Denver, CO 80203-2386
Phone Brian Bandimere
303-832-9550 or 1-800-759-7372 (PERA)
2 Colorado PERA Member Report • March 2009
Legislation Proposes to Consolidate State
DC Plans Under PERA
Senate Bill 09-66: Consolidation of State Defined This bill was amended by the Senate
Contribution Plans Under PERA Appropriations Committee and is with the Senate.
Sen. Lois Tochtrop (Thornton) and Rep. Dianne
Primavera (Broomfield) introduced Senate Bill
09-66 that would consolidate the State’s defined
contribution (DC) plans under PERA.
As recommended by the Legislative Audit
Committee, this bill would transfer the
administration of the Public Officials’ and
Employees’ Defined Contribution (State DC plan),
and the State 457 Plan to PERA on July 1, 2009.
PERA staff has been involved in discussions with all
parties on this matter.
Under current law, certain members hired by the
State on or after January 1, 2006, have the option
of joining the PERA Defined Benefit (DB) Plan, the
PERA DC Plan, or the State DC plan, administered Other Legislation Affecting PERA
by three providers: Great West, ICMA, and Hartford. Senate Bill 09-157: CU Retirement Plan
Eligible new hires after the consolidation would Eligibility PERA
choose between the PERA DB and PERA DC Plans.
Introduced by Sen. Paula Sandoval (Denver) and
As currently drafted, upon transfer to the PERA Rep. Dickey Lee Hullinghorst (Longmont), this bill
DC Plan, current participants in the State DC plan would apply to certain employees of the University
would keep their vesting schedule, which allows of Colorado. It would allow new employees who
for immediate vesting in the employer portion of are members of PERA, to choose to continue their
contributions. These grandfathered State DC plan PERA membership or join the University’s Optional
participants would not be eligible to switch to the Retirement Plan (ORP). This choice would be
PERA DB Plan in years two through five (also called irrevocable. New employees who do not actively
the “pension mulligan”). make a choice would be placed in the PERA plan.
After the effective date of transfer, all new DC This bill has been passed by the Senate.
plan participants would be subject to the vesting
schedule of the PERA DC Plan, in which employer
contributions are vested over the initial five-year
period, and would be eligible to switch to the DB
Plan in years two through five. DPSRS Update
Senate Bill 09-66 also allows certain public officials At the time this Member Report went to press,
and elected employees who were eligible to Colorado PERA, the Denver Public Schools, and
participate in the State DC plan prior to January the Denver Public Schools Retirement System
1, 2006, to elect to change between the PERA DC (DPSRS) negotiations were continuing.
Plan and PERA’s DB Plan during the annual open
If approved by the Legislature and signed into law
by the Governor, the administration of the State
of Colorado 457 Plan would also be transferred
to PERA on July 1, 2009. Great West Retirement
Services the current 457 Plan service provider,
would continue to administer the 457 Plan under
Questions should be directed to Suzanne Kubec,
State DC and 457 Plan Administrator,
Colorado PERA Member Report • March 2009 3
PERA and Social Security
Most PERA members do not pay into Q. Do I need substantial earnings
the Social Security system while to earn a Social Security
working for a PERA employer. benefit?
However, many PERA members
may have had previous private A. No. If you have $4,360 of
employment that was covered Social Security-covered wages
by Social Security or are eligible in 2009, you will earn four
for Social Security benefits as the quarters toward the minimum
spouse or widow(er) of a worker 40 quarters (10 years) that
covered by Social Security. When you need to qualify for a Social
Social Security was enacted in Security benefit. The substantial
1935, it specifically excluded public earnings requirement only applies
employees who were covered by their to the WEP.
own pension systems.
Q. How much will the WEP reduction be in
Members who are counting on a future Social the Social Security benefit?
Security benefit to supplement their PERA benefit
might be surprised to learn that their expected A. It depends on your individual situation, but
Social Security benefits may be reduced because of in no case will the reduction be more than
their PERA membership. PERA benefits are never $372 in 2009, nor more than one-half of your
reduced because the PERA retiree is also receiving a PERA benefit amount. The reduction is less in
Social Security benefit. many cases.
Social Security has two reductions that apply to Q. I was planning on receiving my
Social Security benefits received by PERA retirees— husband’s Social Security income of
the Windfall Elimination Provision (WEP) and the $520 a month. I was shocked to learn
Government Pension Offset (GPO). that if he died I would actually only
receive $96 a month of his Social
The WEP applies to your Social Security benefit if Security benefit because I’ll be a PERA
you paid into both Social Security and PERA. This is retiree. When did this go into effect?
a formula Social Security uses to reduce the Social
Security benefit payable to you based on your A. In 1983, the GPO went into effect, which can
earnings and payroll tax contributions to the Social reduce or eliminate the Social Security benefit
Security system. for spouses, divorced spouses, and surviving
spouses who also receive a pension based
The GPO applies to PERA retirees who also receive on their own work that was not covered by
a Social Security spousal or widow(er) benefit and Social Security, such as PERA. With the GPO,
it reduces the spousal Social Security benefit by the amount of spouse’s divorced spouse’s or
Refunded two-thirds of the PERA benefit or in some cases, it widow(er)’s Social Security benefit is reduced
PERA reduces the spousal Social Security benefit entirely. by two-thirds of the amount that the individual
Accounts earns from his or her PERA (or other non-Social
It is PERA’s Listed below are some commonly asked questions Security) benefit.
understanding we receive about Social Security.
that if you are Q. Will I not be eligible for Medicare if I
Q. What does “substantial” earnings receive a reduced Social Security benefit
eligible for a mean? because I’m also receiving a PERA
A. “Substantial” earnings is the earnings threshold benefit?
benefit now or in
the future, your for Social Security-covered work that is required A. You can still receive Medicare at age 65 based
benefit with Social to earn credits for future Social Security benefits. upon the Social Security work record for you
Security may The 2009 threshold for substantial earnings or your spouse even if you have a reduced or
is $19,800 per year. The substantial earnings eliminated Social Security benefit.
be reduced as a
amount is increased on an annual basis
result of refunding typically according to inflation. When a person
your PERA receives substantial earnings and pays the FICA
account. tax under a Social Security employer, credits
are earned to qualify for a future Social
4 Colorado PERA Member Report • March 2009
Q. If I’m not eligible for Social Security, will
I not be eligible for Medicare?
A. Even though you may not have earned a Social
Security benefit or qualify for a spousal Social
Security benefit, you qualify for Medicare Part A
(hospitalization coverage) at age 65 as long as
you are or were married to someone who earned
a Social Security benefit. In addition, all of the
Medicare plans in the PERACare Health Benefits
Program include inpatient hospitalization
coverage for retirees and dependents who
do not qualify for Medicare through Social
Security covered work or marriage requirements.
You do not pay any additional premium for
this coverage. Contact Social Security
Q. Is it true that I can avoid reducing my Even though PERA staff members are
Social Security benefit if I withdraw my knowledgeable about the general provisions of WEP
full PERA account when I retire instead and the GPO, the Social Security Administration
of taking monthly pension payments? determines how an individual’s Social Security
benefit will be affected. Call Social Security at
A. Although Social Security makes the final 1-800-772-1213 or TTY for the deaf and hard of
determination on this, representatives from the hearing at 1-800-325-0778.
Social Security Administration have advised
PERA that “cashing out” the account makes no More Information
difference. The Social Security benefit is subject Read the PERA & Social Security brochure;
to the adjustment, regardless of how you receive download the PDF file or order the brochure
payment of your PERA retirement funds. online at www.copera.org.
Read the Social Security pamphlets #05-10007,
Government Pension Offset, and #05-10045,
The Windfall Elimination Provision.
Windfall Elimination Provision Government Pension Offset
Affects PERA members who do not contribute Affects a PERA member who also receives a
to Social Security. Social Security spousal or widow(er) benefit.
Does not apply to members who qualified for Does not apply to PERA members who started
a PERA retirement benefit before 1986. receiving a spousal Social Security benefit prior
to July 1, 1983.
Reduces the earned Social Security benefit Reduces the spousal Social Security benefit
payable by using a formula that is based on by two-thirds of the earned PERA benefit—it
earnings and payroll tax contributions to the may completely eliminate the Social Security
Social Security system. benefit.
No reduction if there are 30 or more years Use the GPO Online Calculator to calculate
of “substantial” Social Security earnings; the your estimated Social Security spousal or
reduction is lower if there are 21 to 29 years widow(er) benefits— go to www.SocialSecurity.
of substantial earnings. gov/gpo-wep.
Use the WEP Online Calculator to estimate
your Social Security benefit if you are
affected by WEP—go to www.SocialSecurity.
Colorado PERA Member Report • March 2009 5
PERA Life Insurance
Open Enrollment April 1-May 31, 2009
Five Reasons to
PERA offers If you do not enroll during an annual open Join PERA’s Life
members a enrollment period, you may apply for coverage Insurance Program
voluntary group at any time while you’re an active PERA
decreasing-term member, but evidence of insurability will 1. Accidental and
life insurance plan be required. Dismemberment benefits
administered by are included in your
Unum. During the Coverage coverage.
upcoming annual Accidental Death and Dismemberment (AD&D)
open enrollment 2. Coverage for spouses and
benefits are included in your coverage. dependent children at no
have the chance Coverage for your spouse and dependent additional charge.
to purchase this children is included with your coverage
insurance without 3. Survivor financial
evidence of You may continue your life insurance coverage counseling services
insurability (evidence of good health). Members if you leave PERA-covered employment and are included with your
can purchase 1, 2, 3, or 4 units of this insurance. leave your member account at PERA. coverage.
Enrollment Your coverage will automatically continue if 4. Coverage may continue
you retire unless you cancel it in writing. into retirement or after
If you are not already enrolled for the
You may not begin coverage after you retire. leaving PERA-covered
maximum of 4 units, Unum will mail you an
enrollment kit at the end of March.
You may purchase additional units of coverage
You may enroll online if you have a PERA PIN. (up to 4 units) if you are already enrolled. 5. Premium payments
You may also enroll by completing and If you have any questions about the Life Insurance deduction or automatic
returning the paper enrollment forms to Unum Program, you may call Unum toll-free at
deductions from your
by May 31, 2009. 1-866-277-1649.
Upcoming Board Election in May
In May 2009, Colorado PERA will hold an election PERA members from the State and School
for seats on the Board of Trustees for the following Divisions will be sent ballots in early May. PERA
positions: retirees from the School, Local Government, and
Judicial Divisions will also be sent ballots in early
Two State Division positions, including a May. Returned ballots must be postmarked by
Higher Education position May 31, 2009.
Two School Division positions PERA will be holding elections for the seats
One retiree position (to be elected by School, currently held by Susan Beeman from the School
Local Government, or Judicial Division retirees) Division, M. Judy Chavez from the State Division
(Higher Education), Maryann Motza from the
The Board of Trustees meets at least five times State Division, Scott Noller from the School
per year and is responsible for adopting the rules Division, and Carole Wright, a retiree, all of whose
and policies for the administration of PERA. terms expire June 30, 2009.
Elected Board members serve without pay, but are
reimbursed for necessary expenses.
6 Colorado PERA Member Report • March 2009
Retirees Give Back in Retirement
Survey shows that 81 percent of PERA retirees volunteer in local communities
A new survey shows that even after retirement, entities in Colorado, including school districts,
Colorado public employees remain committed to the State, and local governments.
“These results quantify something we see every
The survey of 725 Colorado PERA retirees day—PERA retirees remain committed to their
found that 81 percent said they participate in a communities long after they leave their careers
volunteer activity at least once a month. in public service,” said Colorado PERA Executive
Director Meredith Williams.
In many cases, those volunteer commitments About This Survey
are extensive. More than one out of five of the
In late 2008, the PERA
retirees volunteer at least 16 hours per month,
more than a quarter volunteer for seven to 15 Board directed PERA staff
hours per month, and a third volunteer for one As an active PERA member, what types of volunteering to survey a statistically valid
to six hours a month. and philanthropic activities do you do in addition to sample of PERA retirees
to get input on the PERA
PERA retirees are most likely to volunteer at: your regular work as a public employee? If you are
retiree health care program
involved in such activities, let us know! The Member
A religious institution (34 percent) called PERACare. As part
Report will soon feature Colorado PERA members who of this survey, we included
A local school (18 percent) give back to their communities through volunteerism. a section on volunteerism to
A group fighting a specific disease If you are one of these members, let us know so we can gauge the level of volunteer
(16 percent) spotlight you and your good deeds! efforts performed by PERA
Their retirement community (14 percent) Write to: retirees in their communities.
Local cultural institutions (14 percent) These are the results of that
PERA Member Report Editor portion of the PERACare
Among those who don’t volunteer, many cited 1300 Logan Street Satisfaction Survey. The
the fact that they are caring for an elderly family Denver, CO 80203-2386
survey data was analyzed by
member as the primary reason. E-mail: firstname.lastname@example.org
Kuperschmidt Research on
PERA provides benefits for over 80,000 retirees, behalf of PERA.
with nearly 90 percent still calling Colorado
home. These retirees previously worked for public
In Memoriam Update
A long-time PERA Trustee, Frank At its meeting on November 21, 2008,
Taulli, died on December 5, 2008. PERA’s Board of Trustees approved the
Frank served on the PERA Board recommendation of its long-term care
from 1977 to 1996 as a Trustee program manager to add MetLife as a new
elected by School Division members. insurer beginning in 2009. MetLife is pleased
During his 19 years on the Board, to have been selected, and is working closely
Frank served as both chairman with PERA to develop a customized program
and vice-chairman. Frank was an for PERA members and retirees. Members and
elementary school principal in retirees interested in purchasing new policies
Pueblo City School District 60 and with MetLife will have the opportunity to do
had worked 40 years in public so later this year. Existing long-term care
Frank Taulli education before retiring. policies continue in force with current long-
term care insurers.
Colorado PERA Member Report • March 2009 7
PERMIT NO. 45
5/17 (REV 3--09) 200M
Schedule of Colorado PERA Meetings
MM_09:MemberReport 2/25/09 9:57 AM Page 1
In January, all PERA members were mailed a schedule
of PERA meetings that will be held from January Weather Conditions and
through July 2009. The schedule is produced and PERA Meetings
mailed twice a year to all active PERA members.
Inclement weather in your area on
Schedule of Colorado PERA Meetings
All PERA member meetings for the entire year are the date scheduled for a meeting,
available on the PERA Web site in order for members appointment, or workshop may require
to better plan their attendance at meetings throughout Colorado PERA to cancel the scheduled
the year. You may search for meetings in your area meeting. Please check PERA’s Web
without having a PERA PIN. site under Latest News or call PERA’s
Benefit Information Meetings
Customer Service Center at 1-800-759-
PERACare Information Meetings
Purchasing Service Credit Workshops 7372 or 303-832-9550 to find out the
status of the meeting.
Retirement Process Meetings
“Bailout” is Word of the Year
The American Dialect Society chose “bailout” as the word of the year at its annual
convention in January. Words or phrases selected by the Society do not have to be brand-
new, but they have to be newly prominent or notable in the past year. Other nominees for
the 2008 word of the year include the following: Barack Obama, lipstick on a pig, change,
shovel-ready, and game-changer.