In Fall 2019, FPPA introduced proposed legislation for the 2020 Colorado legislative session. The legislation—pursued at the direction of the board based on Task Force recommendations—is aimed at shoring up FPPA’s statewide plans and improving benefits for current and future members.

The Statewide Plans Task Force

In summer 2018, the FPPA Board of Directors created a Statewide Plans Task Force with the expressed purpose of studying the statewide plans managed by FPPA. This includes the Statewide Defined Benefit Plan (SWDB), the Statewide Death & Disability Plan (SWD&D) and the Statewide Hybrid Plan (SWH). The Task Force was comprised of 16 total members rep- resenting the FPPA Board, employers, fire departments, police departments, and other stakeholders.

Throughout the process, the Task Force was also asked to evaluate the findings of their study and provide recommendations to the Board regarding the future of the statewide plans. Any recommendations made by the Task Force would be non-binding and up to the Board to use at their own discretion.

Statewide Plans Task Force Recommendations

Over the course of several months, the Task Force convened 11 times to discuss the various issues of the statewide plans. Equally important in these talks was how to ultimately resolve those issues; e.g. what changes to FPPA rules and regulations (and underlying state legislation) would need to be made for the benefits to be provided without hindering the strength or viability of the plans themselves?

The Task Force ultimately made several recommendations to the Board regarding the statewide plans. These recommendations included contribution increases in the SWDB and SWD&D plans, and proposed benefit enhancements in the SWDB plan. No recommendations were made for the SWH plan.

Proposed 2020 legislation

Based upon the Task Force recommendations, the FPPA Board directed staff to introduce legislation that would take the following action:

Statewide Defined Benefit Plan – Proposed Legislation

• Increase employer contribution rate by 4%
  • Increase by 0.5% of salary per year beginning in 2021, with a total rate of 12% in 2028
    • Ensures long term full funding of the plan
    • Reduces probability of statutory plan rollbacks
    • Increase likelihood of COLAs in the long term
  • Allows the FPPA Board to offset employer reentry contributions towards the increase
  • Allows the FPPA Board to implement additional equal member and employer contribution increases agreed upon through a member and employer election
• Convert Separate Retirement Accounts (SRAs) to defined contribution accounts
  • Significant allocations to these accounts have not been made for almost two decades
  • Gives members control of these accounts and greater confidence in their financial future
• Rule of 80 beginning at age 50
  • Allows plan members whose age and years of service equal 80 to elect a normal retirement benefit
  • Cost of benefit to be paid by an increase of the employer contribution rate by 1%, at a rate of 0.5% per year over 2 years

Statewide Death & Disability Plan – Proposed Legislation

• Increase contribution rate to 3.0% in 2021 (currently 2.8%)
• Allow FPPA Board to adjust rate by 0.2% annually
• One-time $58 million cash infusion from the state in 2021
  • To fund shortfall attributable to members hired before January 1, 1997
  • State had the responsibility to fund all benefits for members hired prior to January 1, 1997
  • Actuarial experience shows previous state funding was inadequate to fund the liability

Old Hire Plans – Proposed Legislation

• Grant FPPA Board authority to set the contribution policy based on:
  • Stabilization of the annual required contribution
  • Maintaining funded ratio
  • Reduce or eliminate contribution over time
  • Statutory requirements do not work well as plans wind down

A draft bill containing these proposals was introduced to the Pension Review Commission on October 21, 2019. It passed unamended through committee and will be introduced in the full house in January.

More information regarding this proposed legislation—to be released over the next several weeks—will be linked from our website, FPPAco.org