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Ripping off Colorado State Employees…the PERA Scam. A Guest Commentary

July 19, 2018

Union activists from Colorado WINS, state wide employees union, lobbying for better working conditions at the Colorado State legislature in Denver. Several union members commented how Dan Pabon, one of the authors of this bill butchering (and that is the correct word) PERA benefits the state pension fund, made a special effort to avoid contact with the union. 

by Doug Vaughan

PERA rip-off: Like the village in Vietnam burned by the US Army “in order to save it”, maybe it’s too late to stop the state from pouring $500 million to “save” the pensions of our Public Employees Retirement Assn., even as it cuts them again. But it’s a drop in a leaky bucket– the fund is underfunded by $30-50 billion! So, it’s never too late to expose the financial fraud underlying this scam:

As retiree Jeremiah M. Attridge notes, Colorado’s taxpayers spiff $500 million a year in “base rate fees” to 7 private money managers to handle 64% of PERA’s assets. This guaranteed commission is augmented by another 20% these firms “earn” (skim) from any profits on PERA’s investments. 

Despite receiving higher contributions from both employers and employees, while reducing benefits 8 years ago in the Great Recession, in 2015 PERA declared an “actuarial crisis” predicated upon a single study that found that retirees were living longer than expected — quel horror! — and that the expected rate of return on investments would no longer be as high as in the past. Maybe.

But, even granting that lower return, a real contributing cause to this crisis is PERA’s profiteering management: Besides paying hedge-fund managers half a billion dollars a year in guaranteed administrative fees, PERA pays 12% of its annual income to Wall Street money handlers as commissions, while cutting pensioners’ share. Meanwhile, PERA’s top staff have generously increased their own compensation:

Prior to the 2008 stock market crash, PERA’s payroll was $16,603,000. In 2009, after experiencing a 26% loss in value of assets in the previous year, PERA staff got a 14% pay increase to $19,044,000. They went back to the State Legislature with solemn promises of “belt tightening” to get SB1 passed, then had to let their own belts out a few notches with payroll increasing 16% to $22,112,000 in 2010. Compensation for its 296 employees topped out at $30,402,000 in 2016. The average annual salary of PERA’s employees is now $102,709.45.

There is no “actuarial crisis”. As Jeremiah says, “This an administrative problem, fostered by a history of legislative sloth and incompetence, obsequiously allowing money paid by taxpayers intended to provide modest pensions to civil servants to be used as a trough for corporate swine and ethically challenged parasites to feast upon.”

Rep. Dan Pabon, one of the authors of the pending bill, RSVP. Are these ##$$’s wrong? Irrelevant? Yes, we know your hands are tied by TABOR. We who supported you in the past hope you’ll reconsider this Wall Street welfare and fight for pensioners who have earned retirement in modest dignity.

One Comment leave one →
  1. William Conklin permalink
    July 19, 2018 9:10 am

    I was a teacher for several years, not enough to get PERA, but I can imagine that teachers are going to put off retiring, and the one thing teachers had with all the stress involved in the job, was a light at the end of the tunnel. But capitalism, which in its end days, has difficulty extracting wealth from the peasants for goods it creates with underpaid labor, is now sucking out the wealth of the peasants with monetary scams designed to keep the Plutocrats wealthy.

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