US - Trustees of the Colorado Public Employees Retirement Association (PERA) have proposed increasing employee and employer contribution rates in order to bring the scheme back up to full funding.
Trustees said the changes, approved at a board meeting Friday, will also decrease cost of living adjustments (COLA) for retirees.
According to local reports, PERA is facing a US$27.5bn shortfall.
Trustees said in a release that the scheme could not invest its way out of the deficit.
The board members said: "Even in light of the recent upturn in the markets, projections show that (PERA) cannot invest its way out of the situation created by the worst economic downturn since the 1930's. PERA's investments would have to earn nearly 60% in 2009 to return PERA to pre-recession funded levels."
Under the new proposals, employers and employees would have to contribute an additional 2%, while COLA would be capped at 2% and brought down from the existing 3.5% level.
The proposal also allows the COLA cap and contribution rates to be adjusted according to the overall funding status at year-end. Increases in COLA and decreases in contributions will be allowed if the scheme is over 110% funded.
The proposals are a continuation of changes made last month to hasten a recovery to full funding levels. In September, trustees lowered the expected rate of return on investments to 8% from 8.5%. They also introduced a 30-year amortisation period to reach a fully funded level, down from 60-years.
If enacted by the state's general assembly in its 2010 legislative session, the changes to the proposals will take effect January 1, 2011.
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