Retirees file suit against newly signed PERA law

Reduction of benefits unconstitutional, plaintiffs say

A group of retirees has filed a lawsuit challenging the recently signed law that cuts Public Employees' Retirement Association (PERA) benefits.

The suit was filed Friday, Feb. 26, on behalf of nearly 100,000 PERA members who are eligible to retire or have retired since March 1, 1994.

The lawsuit, Gary R. Justus and Kathleen Hopkins vs. the State of Colorado, et al, says the PERA law, signed by Gov. Bill Ritter on Tuesday, Feb. 23, is unconstitutional because it impairs the retirees' contractual rights to receive pension benefits at the levels promised.

"Both the United States and Colorado constitutions bar reductions in pension benefits once the right to those pension vests. And that is exactly what the Legislature did here," said Stephen M. Pincus, one of the attorneys for the retirees.

The Legislature passed Senate Bill 10-001, which includes several changes proponents say are necessary to keep the plan from going broke, but the class-action lawsuit only deals with the annual benefit increase.

The new law eliminates the annual cost of living adjustment in 2010 and caps the amount paid in future years at 2 percent. Previously, those who retired received a 3.5 percent annual increase.

Justus, a retired Denver Public Schools (DPS) math teacher, said, "This lawsuit is about the state complying with its own constitution. The General Assembly is trying to correct its past mistakes on the backs of the retirees. We can't go back and restart our careers."

Justus worked for more than 29 years with DPS before retiring in 2003; Hopkins worked 15 years for the state of Colorado and retired in 2001.

By not paying out a benefits increase this year, the plan would realize a cash infusion and be on its way to becoming solvent, according to Meredith Williams, PERA's executive director.

PERA has said large payouts and stock market volatility have contributed to the fund's dire condition. The plan pays nearly $3 million each month to retirees, and the market crash in 2008 led to a nearly $30 billion decline in assets.

The lawsuit was filed in District Court in Denver. Defendants are the state of Colorado, PERA, Ritter, PERA board Chairman Mark J. Anderson and PERA board Vice Chairwoman Sara J. Valt.

The retirees are being represented by Stember Feinstein Doyle & Payne, LLC, a Pittsburgh, Penn., firm that specializes in pension rights. The firm recently represented about 750,000 retirees from GM, Ford and Chrysler whose benefits were restructured.