AARP believes Americans are faced with a crisis in achieving adequate and secure retirement income, and SB-200, as written, is not the answer for the Public Employee’s Retirement Association.
Tuesday, March 13, AARP volunteer advocates – increasingly known at the Colorado State Capitol as “the white shirts” – will address the Senate Finance Committee at 2 p.m. in the Senate Committee Room 357 of the Colorado State Capitol to oppose SB-200.
One area of particular concern to AARP members is the suspension and reduction in the cost of living increase. This is particularly troubling for older retirees who rely on COLAs to keep up with price increases for goods and services, including the raising costs of health care.
AARP is also concerned about the option to select a Defined Contribution (DC) plan instead of the Defined Benefit (DB) plan. Not all proposed changes to public pension plans are solutions to fixing what might be ailing the existing plan. This is the case with the use of DC plans.
The expansion of the DC option will create a significant cost increase to employers because the amount of existing DB plan liabilities must still be paid. For public employees, DC plans are inherently risky and were designed to supplement typical pension plans and Social Security; not replace them.
Colorado’s public employees do not participate in Social Security, and for many, the DB plan is their only retirement safety net. The DC plan option places the full risk and burden of saving for retirement on employees.
Finally, without the Social Security safety net, DC members could potentially increase future public assistance costs as employees retire with inadequate retirement savings.
AARP Colorado is not opposed to making changes to PERA. However, we would like change that provides solutions. AARP opposes SB-200 as currently written, but looks forward to working with the committee on legislation that helps to ensure the long term sustainability of our pension system, while preserving the financial security of Colorado’s dedicated public employees and retirees.