CO Government Employees Do Not Have Right to COLAs

The following is an update from Barclays Capital:

In February 2010, members of the Public Employees Retirement Association (PERA) in Colorado filed a lawsuit challenging that a reduction in COLA for current and future retirees from 3.5% to the lesser of inflation or 2.0%. The court determined that while PERA retirees “…have a contractual right to their PERA pension itself, they do not have a contractual right to the specific COLA formula in place at their respective retirement, for life without change.”

Colorado’s state pension plans had an unfunded liability of $21.8 billion and a funded ratio of 60% as of fiscaly year 2009, below the national average of 64%.