Public pension systems are one of the biggest weapons against poverty that most people have never heard of. Nearly 26 million active and retired public employees nationwide rely on public pensions for a secure retirement. Beyond that, they are a sound investment for cities and states, ensuring retirees can cover their living expenses as they age and pumping money back into local businesses and economies. Nationally, each dollar invested in public pensions creates $8.48 in economic activity.

No pension program is perfect, but as a 20-year state employee and Colorado Public Employees’ Retirement Association (PERA) contributor, I take issue with a recent article criticizing PERA in Colorado Politics. In fact, this article is inaccurate, misleading, and harmful to workers like me who have contributed decades of service to our state. Had the author reviewed PERA’s public documents he’d have known, for example, that PERA’s 2020 financial report indicates the years to full funding for PERA, which are well within the window mandated by law – contrary to the author’s assertions. 

By peddling erroneous data, the author not only undermines his own critique, but he also does a disservice to Colorado policy makers who care about our state’s retirees. The truth is PERA’s investments have performed well for Coloradans who will depend on it for retirement, averaging over 9% returns over the last 30 years and 9.4% over the last 10 years. At the same time, the fund has reduced investment costs by tens of millions of dollars by moving asset management in-house. Now the cost of managing the investments is less than a third of 1% of the fund’s total assets – a bargain compared to the average 1%-2% management costs of 401(k)s. 

Why then is PERA raising its contribution rates and lowering retirees’ annual increases? In a word, caution – and an overabundance of it. PERA enacted these measures in part because the state is failing to invest in the public sector and state employees’ wages are not keeping up with inflation. State employees are paid more than 16% below prevailing market wages, and one in five state positions are vacant.  

At the same time, retirees are living longer, increasing the benefits PERA must pay. This puts a burden on state employees that the state can and needs to address by raising wages to market rates and filling the staggering number of vacancies that create chronic understaffing and threaten critical public services.

Perhaps the most outlandish assertion in the recent article is the suggestion that 401(k)s are a better option for state employees. In reality, public pensions remain the most secure way to save for retirement. Public pensions overall perform better, are accountable to workers and their families, and have much lower fees. 

The national average annual pension benefit, meaning a fixed monthly payment that a retiree will receive upon retirement, is more than $26,000. By comparison, there is no annual benefit for 401(k)s and the average total account balance is only around $18,000. PERA has done everything possible to ensure a secure retirement for public employees. Nationwide, most public pensions are well-funded and continuing to improve. So why is PERA in trouble? In a word, it’s not. 

Years of budget cuts have depleted our state workforce, slashed wages, compromised health and safety, and prevented dedicated state employees from giving the level of service they want to provide. The real crisis facing Colorado is lack of investment in our critical public services and the employees that make our state run.

The solution is not to stack PERA’s board of directors with Wall Street types or turn to an uncertain defined contribution plan controlled by big banks with astronomical fees. Instead, it’s time to recognize the high cost of underfunding public services and invest in our state for the long run.

Dragan Mejic is a 20-year state employee and member of the  Executive Board of Colorado WINS, the state employees union representing over 31,000 state employees.