Senate Bill 10-001
Senate Bill 10-001, the legislative package to put Colorado PERA back on track to being fully funded, was signed by Governor Bill Ritter on February 23, 2010.
Information About 2010 Annual Increase
Effect of Senate Bill 10-001 on Benefits
History of Senate Bill 10-001 Development
Several provisions of Senate Bill 10-001 went into effect on January 1, 2011. PERA encourages members and retirees to review this information and to either call or e-mail PERA if you have any questions on how the provisions might impact you.
Annual Increase (Cost of Living Adjustment)
SB 1 changed the amount and timing of the annual increase to PERA benefits, which applies to benefit recipients under both the PERA and DPS benefit structures. The rules governing your annual increase depend on the following:- If you are eligible to retire on January 1, 2011
- Your effective date of retirement
- Your benefit structure (PERA or DPS)
- Your membership start date
- The type of benefit you are receiving (service retirement, reduced service retirement, disability retirement, or survivor benefit)
Retirees whose benefit is paid based on a retirement date before January 1, 2011, and are either retirees of the PERA benefit structure who began membership before January 1, 2007, or DPS benefit structure retirees (regardless of when membership began)
- The next annual increase will be paid in July 2011.
- Prorated increases will be paid from the month of retirement to the first annual increase payment date.
- The amount of the annual increase will be 2 percent per year unless PERA has a negative investment year, at which point the annual increase for the three years following that negative return will be the lesser of 2 percent or the average of the monthly CPI-W for the preceding calendar year.
- A negative investment year is a year in which PERA investments have a rate of return that is less than zero percent.
Retirees whose benefit is paid based on a retirement date on or after January 1, 2011, and are either retirees of the PERA benefit structure who began membership before January 1, 2007, or DPS benefit structure retirees (regardless of when membership began)
- You must receive a PERA retirement benefit for 12 months before you are eligible for an annual increase.
- Annual increase will be paid in July.
- The amount of the annual increase will be 2 percent per year unless PERA has a negative investment year, at which point the annual increase for the three years following that negative return will be the lesser of 2 percent or the average of the monthly CPI-W for the preceding calendar year.
- A negative investment year is a year in which PERA investments have a rate of return that is less than zero percent.
- You will receive a one-time lump-sum payment for the number of months you are eligible to receive an annual increase prior to the July annual increase (non-compounding payment).
- Reduced service retirees have additional requirements to meet prior to receiving an annual increase; on January 1 of the year in which the annual increase will be paid, must either reach age 60 or the age and service requirements that apply to your membership plan.
Retirees of the PERA benefit structure who began membership on or after January 1, 2007
- You must receive a PERA retirement benefit for the previous calendar year before you are eligible for an annual increase.
- Annual increase will be paid in July.
- The amount of the annual increase will be the lesser of one of the following: 2 percent, a percentage increase calculated to not exceed 10 percent of the divisional trust annual increase reserve or the average of the monthly CPI-W for the preceding calendar year.
- No negative investment year provision tied to annual increase amount.
- Reduced service retirees have additional requirements to meet prior to receiving an annual increase—on January 1 of the year in which the annual increase will be paid, must reach either age 60 or the age and service requirements that apply to your membership plan for a full service retirement (Rule of 85, 88, or 90).
Suspending Benefits
The changes listed below went into effect January 1, 2011, and apply to retirees under both the PERA and DPS benefit structures.- Any retiree who suspends retirement on or after January 1, 2011, and earns more than one year of service credit for employment with a PERA employer will earn a separate benefit segment rather than have the benefit recalculated as was previously allowed.
- When you terminate employment, if you earned one or more years of service credit while in suspension you will have the option to either refund the account or choose to receive a second benefit based upon the plan provisions in effect for your initial retirement benefit. In this case, you will be eligible immediately for a second benefit when you terminate regardless of your age.
- If you suspend your retirement and earn less than one year of service credit, PERA will refund your contributions and your original benefit will resume.
- If you suspend and return to membership on or after January 1, 2011, you must wait 12 months from the date of re-retirement in order to be eligible for an annual increase.
- You must notify PERA in writing if you intend to suspend your PERA retirement. Please see the PERA Retirement Process booklet for more information.
Working Retiree Contribution
Effective January 1, 2011, all retirees working after retirement for a PERA employer, must pay a working retiree contribution. The contribution percentage applicable to working retirees is the same contribution percentage in effect for an active member who is working for that employer.- The working retiree contribution applies to all pay that is subject to PERA employer contributions for retirees.
- The working retiree contribution does not accrue an additional benefit and retirees are not eligible for a refund of these contributions.
- The working retiree contribution does not apply to the following retirees: (1) retirees working as legislators, (2) retirees working in ORP positions, and (3) judges participating in the Senior Judge Program.
- PERA employers are unable to deduct the working retiree contribution for retirees working as independent contractors. As a result, PERA will deduct the amount due for an independent contractor from his or her monthly retirement benefit. If the amount due exceeds the amount of the retirement benefit, the retiree must remit the difference to PERA within 30 days.
Vesting Period for Employer Matching Contribution
Effective January 1, 2011, you must have five years of earned service credit to be eligible for the 50 percent matching amounts when you refund your PERA benefit structure member contribution account as noted below.- If you have five years of earned service credit when you refund your PERA benefit structure member contribution account:
- You will receive a 50 percent match on contributions and interest if you are not retirement-eligible.
- You will receive a 100 percent match on contributions and interest if you are retirement-eligible.
- If you do not have five years of earned service credit when you refund your PERA benefit structure member contribution account, you will not lose any of the matching amounts you would have received if you refunded prior to January 1, 2011:
- You will receive a 50 percent match on contributions and interest for contributions made on or before December 31, 2010, if you are not retirement-eligible.
- You will not receive a match on contributions and interest for contributions made on or after January 1, 2011, if you are not retirement-eligible.
- You will receive a 100 percent match on contributions and interest if you are retirement-eligible.
- Members in the DPS benefit structure are not impacted since that benefit structure does not provide a 50 percent match for members refunding prior to becoming retirement-eligible.
Service Retirement Eligibility
There are several changes to retirement eligibility for members hired on or after January 1, 2011—please review the charts that apply to you on the Web pages listed below.Retirement Under the PERA Benefit Structure
Retirement Under the DPS Benefit Structure
Information About 2010 Annual Increase
A major component of Senate Bill 10-001 is the change to the amount of the annual increase to benefits. The legislation provides that the amount of the annual increase applied to benefits in 2010 will be the lesser of 2 percent or the average of the CPI-W for the months in the 2009 calendar year. The CPI-W for this period actually was negative which means benefit recipients will not receive an increase to benefits in 2010. Beginning in 2011, the amount of the annual increase will be 2 percent per year unless PERA has a negative investment year, at which point the annual increase for the three years following that negative return will be the lesser of the average of the monthly CPI-W for the preceding calendar year or 2 percent.
For most benefit recipients, currently the annual increase is paid in March of every year. Under the provisions of SB1, payment of the annual increase will now occur in July.
Effect of Senate Bill 10-001 on Benefits
Senate Bill 10-001 Provisions: Impact on PERA Membership fact sheet
Senate Bill 10-001 Provisions: Impact on PERA Retirees Under the PERA and DPS Benefit Structures fact sheet
Effect of Senate Bill 10-001 on Colorado PERA Membership chart
Highest Average Salary Percentage Tables for Retirement Benefits
History of Senate Bill 10-001 Development
Comparison of Senate Bill 10-001 and the PERA Board's Proposal
Summary of Colorado PERA's Legislative Recommendations for 2010 (Supplemental Information Provided to the Legislative Audit Committee and Legislators on November 2), which included the following:
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Timeline for Development of PERA's Comprehensive Legislative Proposal
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PERA's Summary Annual Financial Report for the Fiscal Year Ended December 31, 2008
Summary of Board Recommended Legislation in 2010
Timeline for Development of PERA's Comprehensive Legislative Proposal