Colorado PERA, the state’s public pension plan, recently released its 2012 financial report, showing a 12.9 percent investment return, nearly 5 percent above the rate required for sustainability. PERA’s average return during the last 30 years is 9.4 percent, and 8.4 percent over the last 10 years (including the universally devastating losses of 2008).
State Treasurer Walker Stapleton visited Durango in March, presenting his opinions on PERA. He questioned PERA’s reliance on a projected 8 percent investment return, paraphrasing remarks by New York City Mayor Michael Bloomberg, stating, “… an 8 percent rate of return is laughable, a 7.5 percent rate of return is unachievable and a 7 percent rate of return, if somebody offers it to you, you should take it and hope their last name isn’t Madoff,” referring to convicted Ponzi scheme mastermind Bernie Madoff.
I don’t claim much knowledge of investment management, but I know that 8.4 percent, 9.4 percent and 12.9 percent are all more than 8 percent. Viewed in light of nationwide efforts to destroy public pension systems, moving them to 401(k) and similar approaches, one has to wonder what the critics of Colorado’s public pension system are trying to achieve.
The cynic in me says “follow the money,” and reminds me of a quote from a 2011 Forbes magazine article: “The only clear winners when pensions switch to 401(k) plans are bankers and brokers.” I’d rather see retired teachers, highway workers and other public employees keep that money instead of giving it to those who created our recent financial disaster.