Gov. Bill Ritter on Tuesday, Feb. 23, signed legislation that will reduce PERA retiree benefits but keep the pension plan afloat.
Ritter said the changes made to the Public Employees Retirement Association pension fund were necessary to keep the plan solvent.
"This legislation will ... allow the system to meet its obligations to current and future retirees," he said. "We are all confronting the harsh economic realities of the worst recession since the Great Depression. This is a fiscally responsible bill."
Under the new law, Senate Bill 10-001, more than 90,000 retirees will receive no cost-of-living adjustment (COLA) this year. In upcoming years, retirees would receive no more than a 2 percent increase, depending on inflation and the funding of the plan.
The legislation was moved swiftly through the General Assembly and signed by the governor before March in order to void a planned 3.5 percent COLA increase. That change alone will save PERA about $80 million.
Employer and employee contributions will increase under the law, and the retirement age for most new employees will rise to 60 from 55. These and other changes will become effective Jan. 1, 2011.
Retirees will be notified by mail of the COLA change this week, said Katie Kaufmanis, PERA's communications director. Newsletters containing information about all the changes also will be sent to members in the near future.
PERA has said large payouts and stock market volatility contributed to the fund's dire condition. The plan pays nearly $3 million each month to retirees, and the 2008 market crash led to a nearly $30 billion decline in assets.