Asset Allocation, Defined Benefit, Governance, Institutional Investors, Pension Funds, Public Funds, Retirement Income

Colorado Finalizing Latest Five-Year Plan; A/L Study Due in June

The approximately $49.5 billion Colorado Public Employees Retirement Association (PERA) is entering the final stages of an asset-liability (A/L) study that it expects to be completed by June. The study is being administered simultaneously with the implementation of a five-year “strategic” plan that is intended to be a blueprint for PERA to achieve certain aspirational goals regarding the retirement security of its membership over the next decade.

PERA conducts an A/L study every five years. It is working with John Lee at Aon Hewitt Investment Consulting on the current study, but says it is too soon to know for sure what are some action points it anticipates the study to deliver or recommend. The fund’s Board will work over the next several months to determine the new asset allocation.

Five-Year Strategic Plan

According to plan documents, the strategic plan will run 2019-2023 and includes significant developments since the previous five-year plan that ran 2013-2018.

PERA points to a successful effort to secure legislation to ensure the full funding of  the trusts within a 30-year timeframe (2018’s SB 200), it’s promotion of third-party research that conveys the impact of PERA benefit distributions on the Colorado economy, an its expansion of PERA’s ability to communicate using different platforms to reach a variety of stakeholders, as tangible achievements from its previous five-year plan.  

Colorado PERA consists of five member trust funds: State Division, School Division, Denver Public Schools Division, Local Government Division, and the Judicial Division. It also administers a Health Care Trust Fund and the Denver Public Schools Health Care Trust Fund.

Eight months in the making, the current plan focuses on the following high-level themes, according to plan documents:

  • Maintaining the integrity of PERA’s financial position and future viability, and leveraging the strength of PERA’s internal asset management capabilities;
  • Strengthening PERA’s reputation and identity by enhancing PERA’s role as a partner with its members, employers and other stakeholders;
  • Reinforcing the importance of making an ongoing investment in PERA’s employees and internal organization; and
  • Uncovering the unmet needs of members and employers in order to deliver the “best fit” product and service offering.

The plan is organized around four goals: to fortify PERA’s financial resilience and adaptability; to elevate PERA’s identity among stakeholder to that of a partner in providing valued retirement income security outcomes; to strengthen organizational health and performance; and to improve retirement security outcomes through “best fit” products, services, and education.

“In plain English, these goals are to ensure the plan is able to meet the retirement needs of the diverse PERA membership. They will also promote retirement security messages in the larger Colorado community, and ensure that PERA is delivering what members want and need across appropriate channels,” Katie Kaufmanis, PERA’s public information officer, wrote in an email response to questions from IA.

PERA, which had a funding ratio of 61.3% as of December 31, 2017 (the most recent data available), wants to be fully funded by 2048.

The Association is also seeking to boost its reputation among its members by means of a Net Promoter Score, among other measures, and to deepen employer relationships by improving the quality of its service interaction by 5% by 2020. It would like more employers to view membership in PERA as an effective recruitment and retention tool. “What gets measured, gets managed. We want to be sure that we are delivering information and services to our membership in a cost-efficient and effective way,” Kaufmanis wrote. Also, the strategic plan’s to-dos include: improved leader development and readiness and improved internal communications—“PERA’s best assets are our 300 employees who work to ensure the retirement security of more than 600,000 current and former public employees in Colorado,” Kaufmanis explained—an update of its technology and information security infrastructure, and refreshed disaster recovery and business continuity plans.

You may also like...