April 06, 2012 02:58 AM UTC

MY OPINION: COLORADO PERA'S MEREDITH CUTS AND RUNS.

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• by: PolDancer

The periodical Pensions and Investments has just reported that Meredith Williams, Executive Director of Colorado PERA, is resigning effective June 30 to become Executive Director of the National Council on Teacher Retirement (NCTR).

Read the full story here:

http://www.pionline.com/articl…

According to their website, the NCTR is “dedicated to . . .promoting the rights and benefits of all present and future members of the (pension) systems.” Further, the NCTR aims to “assure self-sufficiency for retirees by providing a predictable benefit that is guaranteed for life” and to “preserve and protect the guaranteed rights of plan participants to their promised benefit.”

During his tenure at Colorado PERA, Meredith Williams and the PERA Board of Trustees pursued a controversial strategy for reducing PERA’s unfunded pension liabilities . . . taking fully-vested pension benefits from retired Colorado PERA members.

According to a few members of the Colorado Senate (one a prime sponsor of the legislation that took the retiree benefits) “fully 90 percent of the PERA fix comes from benefit cuts to current and future retirees” (Senators Josh Penry and Greg Brophy).

Soon, Meredith will be sitting down with his new board of directors. I propose that he break the ice by asking the board to settle the following pressing pension reform questions:

Does Colorado’s example of taking fully-vested retiree pension benefits conform with the mission of the NCTR to “promote the rights and benefits of present and future members”?

Does Colorado’s example of taking fully-vested retiree pension benefits conform with the mission of the NCTR to seek “self-sufficiency for retirees by providing a predictable benefit that is guaranteed for life”?

Does Colorado’s example of taking fully-vested retiree pension benefits conform with the mission of the NCTR to “preserve and protect the guaranteed rights of plan participants to their promised benefit”?

. . . and a few general pension reform questions hanging in the air:

Setting aside the morality of such reforms, is the taking of fully-vested, contracted, accrued and earned pension benefits a route that should be considered by state and local governmental entities?

Why should the contractual obligations of state and local governments to corporations take precedence over their contractual obligations to public employees?

Why should state and local governments be permitted by the courts to abandon their contractual obligations in order to make discretionary public expenditures?

Should pension plan sponsors have the ability to legally alter “automatic” statutory COLAs as opposed to “ad hoc” COLAs?

Do statutory COLA provisions somehow enjoy a lesser status in the law, less weight or force in the law, relative to all other statutory DB pension provisions?

As I understand it, state and local government contributions to their defined benefit plans are a fraction of (single digits) state and local government expenditures for all other purposes. What level must this ratio reach before a public plan is in a “crisis?”

Should plan sponsors have the ability to take fully-vested pension benefits from retirees before they have impacted the partially-vested pension benefits of current employees (see Colorado PERA, SB 10-001)?

Should the federal courts weigh in on state violations of state contracts (to the benefit of the states) or should state courts be the final arbiters?

Enquiring minds.