Pension fund needs $4.7M, officials say
El Paso County's pension fund will need a cash infusion to stay afloat because it's now paying out more than it takes in.
The fund needs an additional $4.7 million annually to meet its obligations over the long term, pension officials told county commissioners Monday.
Retirement plan officials said the fund has lost 29 percent of its value, or $88 million, since October 2007.
"Given the timing, everybody could assume you can sum up in one word: bad," said sheriff's bureau Chief Joe Breister, a retirement board member.
The fund covers 3,680 employees, beneficiaries and retirees of the county Health Department, work force center, public trustee and the Pikes Peak Library District.
They're covered by a defined benefit plan under which employees contribute 6 percent of their pay and the county matches that annually. Retirees are guaranteed a certain amount upon retirement, regardless of the performance of the markets.
Payouts this year could exceed what's paid in by more than $3 million, largely because of the growing number who draw benefits.
Since 2000, the number of retirees drawing benefits has doubled to 934, but the number of employees contributing to the plan has grown by only 14 percent, to 2,431.
According to data compiled by pension fund adviser Buck Consultants, the county's contributions would need to increase to 10.6 percent of the payroll next year to make ends meet over the long haul.
Besides the credit-crisis-driven financial collapse this year, the fund never fully recovered from the bear market of 2001 and 2002, said Dale Connors with Watershed consultants, another pension adviser.
"That's when the unfunded liabilities started creeping in," he said.
The fund's ability to meet its obligations is based on an annual return of 8 percent on its investments, but Connors said, "There's been no place to earn 8 percent."
Instead, the fund posted a one-year loss of 16.2 percent.
"These losses are huge, and we're all rightly worried about them," said Treasurer Sandra Damron, a pension board member. "But they're not realized yet. They don't get realized until we sell out, and that's when we see the loss. That (loss) can be made up. I wanted to put a little bit of a silver lining on it."
Connors said El Paso County pays the least percentage toward its retirement plan of five counties in Colorado that run a defined benefit program. The others are Adams, Arapahoe, Pueblo and Weld. Weld County is considering bumping its contribution to 9 percent next year, he said.
Breister said the pension board might make a formal request for more money from the 2010 budget. He said the plan is 74 percent funded, which is higher than many public pension funds.
Damron said the pension board hasn't considered a benefits cut, although it hasn't given a cost-of-living increase in several years.
Commissioners had little to say about the prospect of paying more at a time when the county is laying off workers and axing programs to make ends meet.
The state's Public Employee Retirement Association, which covers 429,000 workers including city of Colorado Springs employees, is in more dire straits. Faced with a $12 billion plunge in assets since January, officials are considering cutting benefits, The Associated Press reported.
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Contact the writer: 636-0238 or pam.zubeck@gazette.com
