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Colo. Treasurer: Stop the public pension gamble

Posted by Kelly Maher on May 12th, 2011
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Colorado State Treasurer Walker Stapleton testified May 5 at a U.S. House Ways and Means subcommittee meeting, echoing remarks he made to WhoSaidYouSaid before taking office, regarding the solvency of PERA, Colorado’s Public Employees’ Retirement Association.

The hearing included discussion of The Public Employee Pension Transparency Act, which The Wall Street Journal reported earlier this year “would compel states and municipalities to meet stringent standards for reporting on the finances of employee-pension funds, and would expressly ban any federal bailouts.”

Stapleton explained [at 10:46 of the video above] his concerns regarding PERA’s 8 percent projected rate of return, (which has been defended by a union-backed group, the Colorado Coalition for Retirement Security.)

“In Colorado’s case, PERA currently maintains an unfunded liability of more than $21 billion based on this 8% expectation,” said Stapleton. “Of course, if this rate of return is lowered, the unfunded liability becomes far greater, and in my view, more realistic and transparent for PERA members and Colorado taxpayers alike.

“The question is whether states like Colorado should be in the business of guaranteeing market returns. If the answer to this question is ‘No,’ as I believe it should be, than public pension plans like PERA need to start adopting rates of return in line with Treasury yields and stop the pervasive underfunding of plans. Overestimating a pension system’s expected return is essentially gambling with the financial welfare of the next generation of Americans.”

  • Post by Kelly Maher on May 12th, 2011

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