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Contrary to what State Treasurer Walker Stapleton would have you believe, the Colorado PERA pension plan is a good deal for the taxpayer, as well as for the local and state economy.
Absent from every plea to reform PERA is the recognition of significant and first-in the-nation legislation to ensure PERA’s longterm sustainability enacted in 2010.
Perhaps this fact would surprise you — just 3.21 percent of state and local spending in Colorado goes to pensions. PERA retirement distributions give much more to our local and state businesses. The 500,000 PERA members (about 10 percent of all Coloradans) are also Colorado taxpayers and your neighbors. These state and other public sector workers, while living with pay freezes, some up to 7 years, and with lower pay than private sector workers, will receive no Social Security unless they earned it outside of PERA. In many cases, even if a PERA retiree contributed to Social Security at some point in their working career, their Social Security benefit would be substantially reduced.
As of Nov. 2011, according to the economists Pacey & McNulty, the PERA retirement distributions provide $10.4 million in local labor income, and adds $20 million to the S.W. Mountain Region’s gross domestic product, sustaining 283 jobs, and generating $2.6 million in state and local tax revenue. Statewide, PERA retirement payments sustain 23,399 jobs and produce $231.9 million in state and local tax revenue every year.
PERA provides an automatic stabilizing effect on the state and local economy, especially in economic downturns. Converting PERA to a 401k would cost the state billions of dollars more than PERA currently costs. The billions will go to the financiers, Wall Street and mutual fund managers outside of Colorado. Careful consideration is required to understand pension information. Not only is most information not well researched, most information involves a well financed effort to force 401k plans as a way to “fix” public pension programs that don’t need fixing.
Maybe our state treasurer should do a little homework before he gives any more speeches.