The Impact of PERA’s
ASSUMPTION CHANGES
On November 18, 2016, the Colorado PERA Board of Trustees voted to reduce the long-term investment
return assumption from 7.5 percent to 7.25 percent. The Board’s vote reflects a more conservative outlook
on long-term investments. The Board also reduced the long-term inflation expectations from 2.8 percent to
2.4 percent and adopted updated mortality tables that more accurately reflect the actual experience of the
PERA membership. Finally, the Board adopted different mortality tables for each division.
PERA’s financial reports and actuarial projections based
on year-end 2016 results will use the new actuarial
assumptions and mortality tables. Additionally, effective
January 1, 2017, benefits will be administered using the
new actuarial assumptions and mortality tables for all
calculations.
These changes will have the following impacts on the
administration of PERA benefits:
» Changed Option 2 and 3 benefit amounts in the PERA
benefit structure for members who retire on or after
January 1, 2017.
» Changed Option B, P2, and P3 benefit amounts for
members who retire on or after January 1, 2017.
» Reduced money purchase benefit amounts for
members who retire on or after January 1, 2017.
» Changed Highest Average Salary percentages for
members who retire with a reduced benefit (in shaded
area of charts) on or after January 1, 2017, and who were
not eligible to receive a benefit as of January 1, 2011.
» Changed the cost to purchase service credit for members
who apply to purchase on or after January 1, 2017.
Additionally, the actuarial assumptions and mortality
tables are key components in PERA’s financial reporting
and in calculating the cost to disaffiliate from PERA,
which affects PERA employers.
Mortality assumptions should appropriately reflect
PERA’s recent and anticipated plan experience and
are used to estimate the value of expected future
benefit payments.
The investment return assumption (discount rate)
is one of the key assumptions used in the actuarial
valuation for PERA’s annual financial statements.
Under the Government Accounting Standards
Board’s (GASB) Statement No. 25, “the investment
return assumption (discount rate) should be based
on an estimated long-term investment yield for the
plan, with consideration given to the nature and mix
of current and expected plan investments and the
basis used to determine the actuarial value of assets.”
This fact sheet provides general information about PERA’s assumed rate of return.
Colorado PERA membership rights, benefits, and obligations are governed by
Title 24, Article 51 of the Colorado Revised Statutes, and the Rules of the Colorado
Public Employees’ Retirement Association, which take precedence over any
interpretations in this fact sheet.
Colorado Public Employees’ Retirement Association
1301 Pennsylvania Street • Denver, Colorado 80203 • 1-800-759-PERA (7372) • www.copera.org
5/143 (REV 12-16)
December 2016