1. Gregory W. Smith, Executive Director February 3, 2016
Colorado PERA Update
Gregory W. Smith, Executive Director
February 3, 2016

2. Positively Impacting Colorado’s Economy
As of September 2014 2

3. PERA Membership November 30, 2015

4. 25-Year History of Assets and Distributions In billions
Beginning Balance January 1, 1990
$9.4
Employer Contributions
14.7
Member and Other Contributions
13.4
Investment Income
50.2
Denver Public Schools’ Plan Transfer
2.8
Benefit and Refund Payments
(45.8)
Administrative Expenses
(0.5)
Ending Balance December 31, 2014
$44.2
25-Year History of Assets and Distributions – for Five Defined Benefit Trust Funds
Grown the Fund from $9.4 billion in 1990 to $44.2 billion in 2014.
For members – this means they can rely on receiving their monthly benefits that they earned and saved for.
For taxpayers – this is an incredible return on investment and ensures retirees can remain self-sufficient for their lifetime.
For our communities and businesses – this means economic certainty and stability – it’s a stable funding stream coming in to support schools, roads, and other services. It’s a stable business clientele which supports jobs. 4

5. PERA Benefit Distributions and Distributions Relative to Payroll by County Total Distributions = $3.5 Billion
$5.2 billion economic output
29,000 jobs statewide
$267 million state and local tax revenue
$5.2 Billion in Economic Output
Sustains over 29,000 jobs statewide
The $267 million in state and local tax revenue means money for schools, road repairs, water sanitation and other services we depend upon.
Annual benefit payments and percentage of payroll data from 2014 County Business Patterns and U.S. Census Bureau, calculation from Pacey & McNulty 5

6. Investment Asset Allocation November 30, 2015
Over $585 million invested in companies and properties domiciled in the State
More than 55 percent of assets managed directly by PERA staff
An additional $50 million is allocated to the Colorado Mile High Fund for private equity investments in the state

7. Investing for Long Term Annualized investment returns for periods ending December 31, 2014
7.5%
PERA return for 2014 = 5.7 percent vs. Benchmark of 5.7 percent
BNY/Mellon Medial Public Fund Universe = 6.2% for 2014
PERA annualized returns over last three years ( ) = 11.3 percent vs. Benchmark of 11.7 percent
BNY/Mellon Medial Public Fund Universe = 11.4% annualized over last three years
PERA annualized returns over last five years ( ) = 9.9 percent vs. Benchmark of 10.0 percent
BNY/Mellon Medial Public Fund Universe = 9.5% annualized over last five years
PERA annualized returns over last ten years ( ) = 6.8 percent vs. Benchmark of 6.6 percent
BNY/Mellon Medial Public Fund Universe = 6.4% annualized over last ten years
PERA’s responsibility under the law is to provide a comprehensive package of retirement benefits for public employees. PERA is fulfilling the promise to pay lifetime benefits to its members. The investment program is a key ingredient in PERA’s funding program. Based on PERA’s asset allocation, and long-term projections of inflation and investment gains above inflation, PERA’s Board, investment staff, and independent consultants believe that PERA’s investment return will average 7.5 percent per year in the future. In 2013, PERA earned 15.6 percent. Over the past 30 years, the returns have averaged 9.4 percent.
The PERA investment program is managed very carefully, with a lot of concern for diversification, risk management, and efficiency. The returns have compared well against other plans. For the 3-year period ending December 31, 2014, PERA earned an average annual return of percent compared to 11.4 percent for the median public plan. The total expense of managing the PERA defined benefit plan, including both investment and administrative expenses, was about four-tenths of 1 percent of assets in   7

8. Supplemental Savings Opportunities with PERAPlus
Allows participants opportunity to seek investment advice at no additional cost
Received GFOA’s Award for Excellence in Government Finance
Promotes the crucial concept of asset allocation in retirement investing
Makes allocation decisions easier for participants
Provides participants access to custom, easy-to-understand, and diversified PERAdvantage investment options
Employers may elect to add Roth options
Low fees maximize participant contributions 8

9. GASB Pension Standards
GASB has issued two pension statements
Statement No. 67, Financial Reporting for Pension Plans
For financial periods beginning after June 15, 2013
PERA’s first GASB 67 CAFR was December 31, 2014
Statement No. 68, Accounting and Financial Reporting for Pensions
For financial periods beginning after June 15, 2014 9

10. Five Things to Know About GASB Statement No. 68
New account standards impact accounting, not funding
No change in employer funding obligation or contribution rate
Adjusted pension reporting should not significantly impact credit ratings
PERA has partnered with employers and auditors to implement the new requirements
PERA is sustainable now and into the future, and the reforms from SB are working to return PERA to full funded status
More information, including videos, available at 10

11. Review of SB 14-214 Studies Plan Design Study
Study compares cost and effectiveness of the design of the Colorado PERA Hybrid Defined Benefit Plan to alternative plan designs in the public and private sector
The results show the reforms to the benefit provisions of Colorado PERA, contained in SB 1, created a plan design that “is more efficient and uses dollars more effectively than the other types of plans in use today.”1
The next most efficient retirement plan structure was 60 percent more costly
1 GRS Plan Design Study Report, June 2015, page 2.
Alternative plan designs are 60 percent to 140 percent more expensive – to provide the same level of benefits as PERA Hybrid Plan

12. Review of SB 14-214 Studies Plan Design Study
PERA provides better income replacement considering:
All other plan designs in use
All starting ages and career lengths
More progress toward retirement security than any other plan design considering every career path

13. SB 1 Study Report Key Findings
Item
Message 1
PERA is sustainable into the foreseeable future 2
As of 2014, SB 1 reforms significantly reversed PERA’s predicted course from running out of money to projections of full funding in approximately 38 years 3
SB 1 reforms reduced benefits for all active and retired members; consequently PERA employers and taxpayers are saving money by providing a more affordable benefit 4
Over the past five years, SB 1 reforms saved PERA approximately $15 billion in unfunded actuarial accrued liability (UAAL) 5
Over the last five years, the reduction in the Annual Increase (AI) provisions had the most significant impact on the UAAL—accounting for 90 percent of the $15 billion in savings 6
Even recognizing the AI reforms, PERA retirees retained their purchasing power over the last five-year period.
Main objectives [C.R.S. § ]
To report to the General Assembly regarding the economic impact of the 2010 legislative changes and the progress made toward eliminating the unfunded liabilities of each division of the association
To be performed every five years
First report was due to the General Assembly by January 1, 2016

14. SB 1 Study Report Key Findings
The PERA membership embraced considerable sacrifice through benefit provision changes to ensure the plan’s sustainability, representing approximately 90 percent of the burden
A typical retiree receiving a $3,000 monthly benefit as of January 1, 2010, will sacrifice the equivalent of about seven years of retirement payments over a 25-year retirement
A typical new hire with a membership date on or after January 1, 2011, generally will work longer, pay more, and receive less over a shorter period of time in retirement than an individual with a prior membership date

15. Contact Us Web address www.copera.org Social media
PERA on the Issues,
The Dime,
Facebook,
Office locations
1301 Pennsylvania Street, Denver
1120 West 122nd Avenue, Westminster
Phone number
PERA (7372) 15