Office of Sen.

Mike Johnston
Colorado General Assembly | 200 E. Colfax Avenue | Denver, CO 80203 | 303.866.4864

FACT SHEET MEMORANDUM

SB 12-082 PERA Retirement Age Same as Social Security Sen. Harvey Staff Name: Jailyn Soto What the Bill does: A person's qualification to receive a retirement benefit from social security is based upon the person's age. Currently, the age requirement is between the ages of 65 and 67, depending on the person's birth date for full retirement and 62 for reduced retirement. A person's qualification to receive a retirement benefit from the Public Employees' Retirement Association (PERA) is currently based on the person's age, when the person started employment with a PERA employer, and the number of years of service credit the person has earned. In 2010, SB 10-001 made numerous changes in the provisions of the retirement benefits PERA offers teachers and state and local government employees. The bill created higher age and service requirements for members normal retirement. For members with less than five years of service credit as of January 1, 2011, normal retirement will be under the Rule of 85. For those who begin employment on or after that date but before January 1, 2017, retirement will be under the Rule of 88 with a minimum age of 58. For those who begin employment on or after January 1, 2017, normal retirement will be under the Rule of 90 with a minimum age of 60. SB 10-001 did not change the age and service requirements to be eligible for a reduced service retirement benefit nor did it change the reduced service retirement benefit for members who are eligible to retire as of January 1, 2011; for these members the current reduction factors will remain in place.1 The legislation did change the reduction factors used to calculate reduced benefits for those members not eligible to retire as of January 1, 2011. For these members, an actuarial reduction will be applied to the reduced service retirement benefit. SB 12-082 proposes another change to the eligibility requirements. For new PERA employee hired on or after January 1, 2013, the bill makes the eligibility requirement to receive a normal or reduced PERA retirement benefit the same as the requirement to receive a normal or reduced retirement benefit from social security at the time the employee commences employment. Colorado Context: As of December 31, 2010, PERAs membership included 201,095 active members, 91,412 benefit

See Colo. Rev. Stat. 24-51-605 (West 2011).

recipients, and 2,243 survivor benefit recipients.2 The total benefit payments to recipients amounted to $3.16 billion (including in-state and out-of-state residents) with an average monthly benefit of $2,905.3 PERA Statistics as of Dec. 31, 20104: Average Monthly Benefits: $2,905 Average Age at Retirement: 58.1 Average Current Age of Retirees: 69.7 Average Years of Service at Retirement: 23.6 National Context: Sixteen legislatures increased age and service requirements for normal retirement for state employees, teachers or both groups of employees.5 The legislation generally applies only to people hired after the effective date of the legislation, but also in a few states to non-vested employees. Most changes move the retirement age closer to 65, and increase the minimum amount of service credit a person must have to qualify for an earlier retirement age.6 In 2011, eight states (five states in 2010) increased the minimum eligibility requirements, or vesting, from five or six year vesting to eight or ten years. The only state in which vesting requirements were reduced was Rhode Island.7 Delaware changed the normal retirement age to 65 with 10 years of service, 60 with 20 years of service, and any age with 30 years of service. Florida increased the normal retirement age from 62 to 65 and increased the years of creditable service from 30 to 33 years. Massachusetts enacted changes that raised the minimum age for retirement from 55 to 60, except for public safety members. New Jersey changed the age eligibility for a service retirement benefit for new members to 65. Bill Provisions: Increases the eligibility requirements for PERA employees hired on or after January 1, 2012 For normal PERA retirement benefits, the age eligibility requirement is the same as the requirement to receive a normal or reduced retirement benefit from social security at the time the employee commences For reduced PERA retirement benefits, the age eligibility requirement is the same as the requirement to receive a normal or reduced retirement benefit from social security at the time the employee commences Fiscal Impact: No fiscal note for SB 12-082 is available at this time.

Colorado PERA Comprehensive Annual Financial Report, Fiscal Year Dec. 31, 2010 available at http://www.copera.org/pdf/5/5-20-10.pdf 3 Id. 4 Id. 5 National Conference of State Legislatures 2011 Retirement Legislation Report, available at http://www.ncsl.org/issues-research/employment-working-families/2011-pension-and-retirement-enactedlegislation.aspx 6 Id. 7 Id.