Public employees deserve a better pension reform

Astrong public retirement system is one of the most effective tools we have to attract and retain talented, committed state employees. It’s a promise our society makes to those who take lower-paying jobs that advance the common good: If you forgo a higher salary elsewhere to take a job teaching our kids, building our roads, or plowing our roads, we’ll provide you with a secure retirement.

In an economy where true retirement security has all but vanished, the Colorado Public Employees’ Retirement Association (PERA) is a rare gem. It does right by the workers who have served our great state by providing secure income for retirees, no matter how long they live.

A Republican proposal aimed at securing the long-term financial stability of PERA (Senate Bill 200) recently passed the state Senate. However, there are some big changes that must be made before it is signed into law. As written, it inflicts gratuitous financial pain and uncertainty on hardworking public employees who deserve better — and does so for no sound financial reason.

PERA’s current financial dilemma is, paradoxically, partly a result of some good news: Coloradans are living longer. Longer lifespans mean more retirement benefits to pay, and require that we put more money aside to ensure that PERA can weather another 2008 style financial downturn.

Blameless in all of this are employees and retirees, who have faithfully upheld their end of the bargain by serving our communities and paying into PERA (which they get instead of Social Security). That’s why it’s particularly unjust that SB 200 puts the burden solely on the backs of public employees and retirees, raising employee contributions by 37.5 percent and reducing retiree cost-of-living adjustments by the same percentage. In fact, it raises member contributions so much that it could effectively ask employees to put in more than they will get out.

Conspicuously absent is any additional contribution by employers. That’s unfair and unnecessary. Any path forward must, at the very least, share responsibility between employees, retirees and employers, especially in light of the fact that the state underfunded PERA by $4.5 billion between 2001 and 2016.

SB 200 also goes all in for an expansion of costly, risky 401(k)style retirement plans. Not only are these plans more expensive — the proposed expansion would cost the state and local school districts an extra 6 percent to 9 percent — but they’re also subject to the whims of the market, tethering employees’ retirement security to Wall Street’s booms and busts. And no matter how wisely employees invest, they’ll almost surely run out of savings if they live to a ripe old age. Poverty awaits the most elderly 401(k) savers.

Unlike a 401(k), a pension guarantees steady retirement income month in and month out. It’s also a much safer investment: since 1932, there have only been four years when PERA has received a negative return. A pension is the embodiment of what used to be a commonly accepted social obligation between employers and employees — of the ideal that no employer can thrive without the labor of their workers, and should make a long-term commitment to their well being in return.

We’ve since seen 401(k) style plans trotted out to take their place, larded with sunny euphemisms about “choice” and “markets.” In reality, this has allowed employers to wash their hands of any significant long-term commitment to the very workers who make their success possible. If your retirement account evaporates in the financial crisis du jour, or if you live long and find your savings run out, it’s your fault for not picking your investments more wisely. Never mind how aggressively you were sold on the job’s “great retirement benefits.” Never mind the security you were promised.

Senate Democrats have offered a counter proposal to provide Colorado’s workers with true lifelong security instead of “savings” that can vanish with the next economic downturn. It fairly shares responsibility between retirees, employers and employees, rather than calling on active teachers and retired snowplow drivers to pick up the entire tab, and it avoids the costly, unnecessary erosion of public pensions offered by SB 200 on ideological grounds.

The retirement security of hundreds of thousands of Coloradans is too important to fall victim to these ideological games. We must do right by our public employees. Colorado must keep its promises just as PERA members have kept theirs

for nearly a hundred years.