State retirees to get smaller checks in ’11

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Retirees in Colorado’s state pension plan will start paying a higher price for fixing the troubled system on Jan. 1.

Under a reform plan, retirees who normally receive 3.5 percent cost-of-living increases will instead see increases equal to the rate of inflation or 2 percent, which ever is less, in 2011. After that, annual increases will be capped at 2 percent.

The bill is one of 19 measures that become law on Jan. 1.

Others include a bill that will ensure that women in Colorado won’t have to pay higher insurance rates because of their gender, a bill creating a homeowners association information and resource center and a measure increasing the rights of homeowners in foreclosures by investors.

One Response to State retirees to get smaller checks in ’11

  1. CLAWING BACK DEFERRED PAY: THE COLORADO GUIDE

    Obviously, legislators around the country are not quite as sophisticated as their counterparts in Colorado. It has never occurred to them that they could just pass a bill stating “Oh, by the way, we are no longer bound by our contractual pension obligations.” Simplicity itself! This approach makes life much easier in difficult budgetary times, and takes the burden off of GASB, state and local governments, plan sponsors and the SEC!

    Under the Colorado pension “contract breachin’ plan”. . . . . you simply seize vested, accrued, earned, contracted benefits from retirees and pension members (incredibly, with the help of your local union lobbyists . . . . toss those retired union brothers under the bus) until your unfunded pension liabilities are sufficiently reduced to raise your funded ratio. This plan also improves the status of your bonded debt (keepin’ those SEC fellas happy).

    If you’re as brazen as we are in Colorado you claim that your goal is to achieve a 100 percent funded ratio, instead of the 80 percent level that is considered well-funded in the industry. May as well go for the full 100 percent, no one understands all this pension mumbo jumbo out here in the west.

    The 100 percent goal provides lots of wiggle room for unexpected investment shortfalls, or more convenient under-funding in the future. Also, here’s another ingenious provision that we invented. If it happens that God provides you with a lame pension investment staff, they consistently underperform their benchmarks (I estimate that last year we underperformed by about a billion), and accordingly you have an investment loss for the year, no problemo, just state in the bill you enact that retiree contracted benefits will be further cut to accommodate the loss! My guess is that when pension investment staff around the country hear about this sweet no-accountability gig they are going to beat a path to Colorado PERA. Where can I get that kind of a job? To be fair, credit for finding this solution should go to the bright administrators at Colorado PERA. You can imagine how difficult it is psychologically to advocate a course of action that you yourself have earlier declared illegal, (see this excellent Denver Post article.) http://www.denverpost.com/news/ci_11105271

    We know it’s burdensome for busy pension administrators (particularly short timers) to have to tell elected officials that they really ought to make their annual required contributions . . . it’s much easier to just let those unfunded liabilities build up year after year after year, until you have a good pile, and then wipe the slate clean with a good contract breachin’!

    Our Colorado PERA pension administrators are straight shooters. They’ve been telling us for a couple years now, “We can’t invest our way out of this.” Now they’re keeping their word . . . by missing their investment performance benchmarks by wide margins.

    Meeting contractual obligations? Performing your fiduciary duty? Acting in a moral fashion? No need to fret about these things. We’ve looked into it in Colorado and dang if these things haven’t been optional all along. (Visit saveperacola.com for more info.)

    Algy Moncrief
    December 28, 2010 at 7:16 am