Colorado Public Pension Returns 18.1% in 2017

Strong returns and new legislation help raise funded status to 61% from 58%.

The $49 billion Colorado’s Public Employees Retirement Association (PERA) reported an 18.1% investment return for 2017, which outpaced its benchmark of 16.0%, and helped improve its funded status to 61% from 58%, while adding more than $5 billion in value to the fund.

“Necessary changes were made to the plan to better weather the inevitable ebbs and flows of the market,” Ron Baker, PERA’s interim executive director, said in a release.

In addition to the strong returns, the fund also attributed the improved funding status to changes included in new pension legislation that was signed into law by Gov. John Hickenlooper earlier this month. The legislation includes higher employee and employer contribution rates, a lower annual increase for retirees, higher retirement ages, and other benefit reductions for current and future members.

PERA also said that the timeframe for reaching full funding for each division trust returned to 30 years or sooner based upon actuarial projections, while unfunded liabilities were reduced by $3.4 billion to $28.8 billion at the end of 2017 from $32.2 billion in 2016.

“With the modifications contained in SB [Senate Bill] 200, PERA will continue to provide 587,000 members and retirees with a secure benefit,” Timothy O’Brien, chairman of PERA’s board of trustees, said in a release.

Colorado PERA’s annualized return, net of fees, for the last three, five, and 10 years is 8.8%, 9.5%, and 6.0% respectively. The 35-year annualized, gross-of-fees, rate of return for the pooled investment assets was 9.5%, and the fund’s assumed rate of return is 7.25%.

As of the end of 2017, the fund’s asset allocation was 57.7% in global equity, 21.9% in fixed income, 8.0% in private equity, 3.4% in the Opportunity Fund, and 0.4% in cash and short-term investments.

The fund also announced that Guillermo Barriga and Robert Lamb were re-elected to the 16-member board of trustees, while Ramon Alvarado was elected to serve as a representative of a higher education institution.  Alvarado will fill the seat currently held by Carolyn Jonas-Morrison, who did not seek re-election.

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