Forbes Columnist: How does “Screwing Workers” Out of a Pension COLA Benefit Enhance their “Retirement Security”?



Rather than enacting legislation to reform public pensions prospectively and legally, (like state legislatures across the country), a handful of state legislatures (including the Colorado General Assembly and the Rhode Island Legislature) are attempting to retroactively take accrued, earned benefits from public pensioners.  Colorado state legislators (setting a moral example for their children) are trying to break state contracts to maintain Colorado's status as a state "tax haven."  (So far, Colorado legislators have opted against an attempt to break the state's corporate contracts.)

Edward Siedle, a contributor at Forbes addresses state legislative "COLA-theft" in his most recent column.


"The Rhode Island Retirement Security Act of 2011, enacted November 18, 2011 (which is being challenged as unconstitutional), suspends the COLA for all state employees, teachers, state police and judges until the plans’ funding level exceeds an 80 percent funding level."

(My comment: The Colorado Legislature's SB10-001 sets a more ambitious COLA-theft goal than does the Rhode Island legislation . . . Colorado's bill takes pension COLA benefits until a "100 percent" pension funded level is achieved.  Perhaps, the Colorado Legislature should finish the job it started, and simply pass a bill stating that ALL of the state's public and corporate contracts will be scrapped until Colorado taxpayers contribute nothing for state services.)


"Why is it that laws screwing workers always have the words 'retirement security' in their titles?"

(My comment: Colorado PERA, proponent of Colorado's 2010 public pension contract breach, tells us: “In Colorado, Senate Bill 1 [the bill that broke Colorado PERA pension COLA contracts] passed with the support of the Colorado Coalition for RETIREMENT SECURITY . . .".

In a recent editorial, former Colorado Senator Hank Brown tells Colorado PERA pensioners that Colorado PERA's 2010 breach of their COLA contracts will help provide them with "RETIREMENT SECURITY."  Hank Brown:

“Through a little ‘Colorado Courage,’ [a euphemism for breach of contracts] policy makers ensured that PERA is on track to be fully funded and provide RETIREMENT SECURITY . . .".

It follows that Hank Brown could enhance his own RETIREMENT SECURITY by relinquishing part of his own "$2.6 million" federal pension.  The Duke Chronicle on Senator Hank Brown’s personal “$2.6 million” federal pension benefit:

“Members of Congress rant and rave about government spending, but when it comes to their golden retirement pensions — somehow that doesn't count.”  “On the Senate side, the Midas awards go to next year retirees: Sens. Sam Nunn, D-Ga., Bill Bradley, D-N.J., and Hank Brown, R-Colo., who will each collect estimated lifetime benefits in excess of $2.6 million.”

I do not understand how taking money by force, seizing accrued, earned pension benefits, breaking the state's public pension contracts while the state's corporate contracts are unscathed . . . how this enhances a Colorado PERA pensioner's "retirement security."

As we have seen, Rhode Island's "COLA-theft" legislation was championed by current Rhode Island Treasurer Gina Raimondo, who hopes to ride this "COLA-theft" horse to the Rhode Island Governor's office.  (Breaking public pension contracts is rather popular among voters at present.)


"Retired, largely elderly state workers had to have their benefits shaved by 3% annually to 'save' the pension, they were told.  With an average pension benefit of $33,000, the Treasurer (Gina Raimondo) apparently figured these retirees could learn to live a bit more frugally in their golden years."

"The measly 3% COLAs promised to working stiffs are chump-change compared to the over 4% fees she’s (Rhode Island Treasurer Gina Raimondo) paying hedge fund desperados."

"It seems the Treasurer believes it’s a lot easier for retired state workers to adjust their cost of living than it is for hedge fund high rollers.  Or maybe workers are simply less deserving of the monies that have been set-aside for, and by, them."

Our own Governor John Hickenlooper (R-Colorado) is also doing his part to nudge a few public pension dollars toward the captains of industry:

"Gov. John Hickenlooper said in a statement that Colorado business owners have long said they need easier access to capital to grow.  'The creation of the Colorado Mile High Fund will improve the access to capital and we are pleased that Colorado PERA’s partnership will benefit and help grow companies here in Colorado,' Hickenlooper said."

According to Hick, Colorado business owners need "easier access to capital."  The current, historically-low interest rates on Colorado bank loans just aren't cutting the mustard.  So, Hick recently decreed that Colorado PERA pensioners will assume risk with their Colorado PERA trust funds that smart bankers apparently won't touch.  I think this Hickenlooper corporate welfare decree ($50 million in corporate loans backed by pensioners) proves his "Colorado Courage."

"The Colorado Mile High Fund [the Fund] is a $50 million co-investment program designed to invest in a diversified, high-quality portfolio of companies with a nexus to Colorado."

"The Fund is sponsored by the Colorado Public Employees’ Retirement Association (Colorado PERA) and is managed by the Credit Suisse Customized Fund Investment Group."

Back to Siedle:

"I can tell you where that COLA savings is going—into the already-stuffed pockets of Wall Street’s most highly-compensated gamblers—almost dollar-for-dollar.  By my estimate, $2.1 billion in fees (out of the $2.3 billion in COLA savings) will be paid by the pension to hedge, private equity and venture capital tycoons. That’s some 'reform.'  No wonder Wall Street is so eager to support this shameless public pension money grab."

"This should come as no surprise because Wall Street solutions to retirement problems, even in the corporate and 401(k) marketplace, have always involved greater fees to Wall Street."

"If $87.4 million in fees were paid every year for the next 20 years, that would amount to $1.75 billion or with compounding to $3.8 billion, which equates to $2.1 billion in 2013 dollars. In summary, the savings related to suspension of the 3% COLA ($2.3 billion) miraculously appear to be just enough to pay Wall Street’s elevated fees of 2% and 20% of profits ($2.1 billion). Imagine that!"

"Rhode Island pensioners have been told that they have to sacrifice to 'save'” the state pension. If that is true and the pension can’t afford to pay retirees 3%, then how can it afford to pay Wall Street 2% and 20%– over 4%?  Rhode Islanders, in my opinion, you don’t have to be a Rhodes scholar to see you’ve been hood-winked."

Full article at Forbes:



In my mind, the 27 members of Colorado PERA's SB10-001 lobbying troop were quite effective during the 2010 legislative session.  They succeeded in ramming SB10-001 through the legislative process. To me, it looks like they got the job done for Colorado PERA.

Colorado PERA spends $400,000 out of PERA member trust funds each year for lobbying, and they get their money's worth!  It's no simple matter to persuade an elected official who has sworn to uphold the U.S. Constitution to ignore the constitution's Contract Clause.  The 27 SB10-001 lobbyists succeeded in dramatically (and temporarily) diminishing the contractual obligations of Colorado PERA-affiliated employers.

So, I find it odd that the prime sponsor of the "COLA-theft" bill, former Senator Brandon Shaffer considers some PERA lobbyists to be "bad lobbyists."

The wisdom of SB10-001 co-prime sponsor Brandon Shaffer:

“PERA is very good at crunching numbers, but they’re terrible at getting their message out. They need to make it toxic for any politician to go up against PERA. As individuals, you need to sit down with PERA and tell them you’ve spoken to President Shaffer, and he says you have bad lobbyists.”

(My comment: Some of the lobbyists supporting Colorado PERA's "COLA-theft" bill, SB 10-001, represented the Colorado Education Association.)

“His wife (Senator Brandon Shaffer) is a teacher, active in the CEA . . .”

According to the website of the Colorado Secretary of State, six lobbyists (of the 27 SB10-001 lobbyists) were paid by Colorado PERA to ram the COLA-theft bill (SB10-001) through the legislative process:

1.  Michael Beasley – Colorado PERA – supporting
5280 Strategies (Beasley) – Colorado PERA – supporting
2.  Beth C. Minahan – Colorado PERA – supporting
3.  Collon Kennedy – Colorado PERA – supporting
4.  Steve Adams – Colorado PERA – supporting
Colorado Communique, Inc. (Minahan, Kennedy, Adams) –  Colorado PERA –  supporting
5.  Mary Alice Mandarich – Colorado PERA – supporting
6.  Roberta Robinette – Colorado PERA – supporting

When SB10-001 co-prime sponsor Senator Brandon Shaffer refers to "PERA's bad lobbyists" who, exactly, is he referring to?  Does he consider any of these six lobbyists to be "bad lobbyists"?  Come clean Shaffer!

Rather than strengthening Colorado PERA's influence at the Colorado General Assembly as Senator Shaffer suggests ("making it toxic for any politician to go up against PERA") I argue that the Colorado General Assembly should begin making its own public pension policy.

I suggest that the Colorado General Assembly create an ongoing oversight commission for all Colorado public pensions.  I suggest that the Colorado Legislature study public pension administration, and prospective pension reform options (i.e., follow the example of other states.)  I suggest that Colorado PERA's influence over the legislative process be curtailed rather than magnified.

In 2010, Colorado PERA's leaders marched uninformed Colorado legislators right off the contract breach cliff.  In light of this, why should Colorado PERA's legislative influence be increased?



According to Colorado PERA officials, breaking "fully-vested" pension COLA contracts was the only choice in 2010:

"The only solution that works involves impacting the COLA," he (Colorado PERA General Counsel Greg Smith) said.

But, it turns out that certain modifications to "partially-vested" public pension contractual rights pack more pension reform "punch" than does the breach of pension COLA contracts.  Such alternatives to taking "fully-vested" public pension benefits offer a "less drastic" impairment of public pension contracts.

This fact was reported during a 2011 public pension funding presentation at Harvard.  According to the presenters, two public pension reform options impacting "partially-vested" pension contractual rights: (1) the use of average pay over the course of a career to calculate base pension benefits and (2) raising retirement age to 65 offer a greater reduction of public pension liabilities than does the elimination of pension COLA benefits.  Both of these pension reform options impact only "partially-vested" public pension contractual rights.

It follows that incremental changes in these "partially-vested" parameters, for example, calculating a PERA pension base benefit using a 10 or 15 year salary average, or raising the PERA retirement age to 60 for active pension members would generate a greater pension liability reduction than a 1.5 percent taking of "fully-vested" COLA benefits.  The point is that public pension reform options are available, that offer significant cost savings, that do not impact “fully-vested” public pension contractual rights. Why were the “less drastic” pension reform options of raising the PERA retirement age, or averaging pay over the course of a public sector career not considered in 2010?

Further, the rate at which future pension benefits accrue may be set prospectively by a legislative body at a level generating a greater reduction in pension system liabilities than does the breach of "fully-vested" public pension COLA contracts.  Such options were not on the table in 2010 because these pension reform options were not supported by the 27 lobbyists pushing SB10-001 through the legislative process.

October 13, 2011 Thomas J. Healey & Carl Hess presentation at Harvard:

“Underfunded State Pensions: The Size of the Problem, the Obstacles to Reforms, and Potential Paths Forward.”

"Change to practice of averaging pay over the course of a career:
• Lowers the cost by 7.4% of payroll
• Overall cost reduction of 33%

Raise retirement age to 65:
• Lowers the cost by 5.7% of payroll
• Overall cost reduction of 25%

Cost savings from elimination of public pension COLAs:
• Lowers the cost by 5.3% of payroll
• Overall cost reduction of 24%"

Colorado PERA active and retired members, many legal, prospective "less drastic" pension reform options were ignored by the Colorado Legislature in 2010.  Support the rule of law and public pension contractual rights in Colorado.  Contribute at  "Friend" Save Pera Cola on Facebook!

2 Community Comments, Facebook Comments

  1. hawkeye says:

    Thank goodness for the Save Pera Cola group standing up for PERA retiree contracts against a juggernault of PERA administrators & board members, education lobbyists, politicians, and a few public employee groups.  It's incredibly surreal when you consider the assortment of groups and individuals willing to throw a particular group of retirees "under the bus", so to speak, in order to renege on statutory and contractual obligations.  The goal of these groups is to retroactively change a statutory fixed annual benefit increase into a gratuitous, adjustible COLA … what shameless guile!    

Leave a Reply

Comment from your Facebook account

You may comment with your Colorado Pols account above (click here to register), or via Facebook below.