- The meeting began with reflections on the past meeting. Eric Davis discussed the profound impact ongoing dedicated revenues has on the unfunded liability
- The discussion about priorities continued from the previous meeting. Under increasing assets to the pension there was a discussion about charging more for different levels of retirement plans, for instance allowing for higher contribution rates from employees who wish to retire earlier or purchasing service credits. The Treasurer’s Office pointed out that employees who purchase service credits are generally cost neutral if they are close to retiring versus the credits that are granted earlier.
- There was a discussion about the Colorado plan that allows employees who move on to other careers to continue to contribute to the Defined Benefit plan, it was pointed out that this helps the plan and may address the concern that younger employees may not plan a full career with the State or teaching.
- The discussion then turned to reducing liabilities of the funds. It was pointed out that COLA’s are volatile based on changes to CPI and can have either a positive or negative impact of the funding ratio. There was a feeling that completely eliminating the COLA was not an idea that could be supported and that was taken off the list.
- There was a discussion of tiered employee COLAS that are on pensions up to the average of around $24,000.00, providing a full COLA up the average and then tapering them off as the amount of pension increases.
- Senator Parent suggested ending the practice of taxing pensions.
- Eric Davis pointed out that it would be hard to do both progressive contribution levels and tapered COLAS because employees would be paying more in to get less out.
- There was concern that the data about the average pension doesn’t capture career employees and some feeling that more data is needed than just the average.
- The conversation turned to capping COLA’s, removing the floor and reducing the ceiling of the COLA with members not expressing support but open to seeing the modeling. There was a discussion about limits on COLA after a minimum number of years of retirement or no COLA until you reach full retirement age. Strong opposition was made by labor to extending COLA until age 67. There was also a discussion about creating a system of elective COLA’s similar to what is currently done with survivor benefits where you get a smaller pension if you decide to pass it on to survivors, in this case it would mean either a reduced benefit or increased contribution rate if you choose to receive a COLA. Then there was a continued discussion of Risk Sharing.
- There was a discussion of lump sum incentives as well as ongoing incentives for retirement eligible employees to work longer. Labor pushed back hard against mandatory efforts to increase the number of years of service. Commissioner Piecak suggested a subcommittee be formed to continue the discussion of potential incentives and Rep. Gannon agreed to reach out to national organizations to see what other States have done.
- The Treasurer’s Office reported that there are 880 employees with more than 30 years of state service and could retire and many of those have more than 35 years of service.
- The Treasurer’s Office presented information about the savings from the change for retired teachers to a Medicare Advantage plan. Rep. Copeland Hanzas called the savings significant.
- There was a discussion about why actuarial reductions don’t apply to members of Group C and a discussion about incentives to get members of Group C to work until their mandatory retirement age of 55, they can now retire with full retirement at age 50 with 20 years of service.
- There was a discussion of AFC-Average Final Compensation and why the number of years considered in the formula is different for the various groups, Group C is the average of your highest of 2 consecutive years, Group F is 3 years and Group D is only 1 year.
- Treasurer Pearce then testified before the Taskforce on her recent report about the impacts of $80 million dollars in new ongoing revenue and of one time revenue.
- There was an introduction of the attorneys who have been hired to provide legal advice to the Task Force.
The next meeting is Wednesday, September 22, 2021
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