Colorado PERA (membership before July 2005)

This page documents how FinZot models the Colorado PERA (membership before July 2005) defined benefit pension plan.

Who this plan covers: General and education members of Colorado Public Employees’ Retirement Association, 5-years-2011 variant, before July 1, 2005: PERA membership began (PERA benefit structure); 5+ years of service credit on Jan. 1, 2011.

Employee Contributions

Employee contributions are the portion of salary that the employee pays into the pension fund.

Field	Value
Contribution Rate	11% of salary
Tax Treatment	Pre-tax (reduces taxable income)

Vesting & Retirement Eligibility

Vesting

Vesting determines when an employee has earned the right to receive pension benefits. The following formula must evaluate to TRUE for the employee to be vested:

service_credits >= 5

Retirement Eligibility

Retirement eligibility determines when an employee can begin receiving pension payouts. The following formula must evaluate to TRUE:

OR(AND(commencement_age_months >= 600, service_credits >= 25), AND(commencement_age_months >= 660, service_credits >= 20), AND(commencement_age_months >= 720, service_credits >= 5))

Formula Variables:

• service_credits: Years of credited service
• commencement_age: Age when pension payments commence

Benefit Calculation

The annual pension benefit is calculated as:

Annual Benefit = Final Compensation × Benefit Factor × Service Credits

Final Compensation

Final compensation is the salary figure used in the benefit calculation, typically an average of the employee’s highest-earning years.

Field	Value
Method	Highest Any Years
Years Averaged	3

Benefit Factor

The benefit factor is a percentage multiplier that typically varies based on retirement age. Higher ages generally yield higher factors.

MAX(0, MIN(1 / MAX(40, service_credits), 0.025 - ROUND(2.5 * service_credits *(1 - POWER(2.718281828, - 0.0797722 *(MIN(MAX(50, 30 +(commencement_age_months / 12 - service_credits)), 65, MAX(55, 40 +(commencement_age_months / 12 - service_credits) / 2)) - commencement_age_months / 12) - 0.000171118 *((MIN(MAX(50, 30 +(commencement_age_months / 12 - service_credits)), 65, MAX(55, 40 +(commencement_age_months / 12 - service_credits) / 2)) - 57.5) ^ 2 -(commencement_age_months / 12 - 57.5) ^ 2) - 0.111495 *(POWER(0.899877, 65 - MIN(MAX(50, 30 +(commencement_age_months / 12 - service_credits)), 65, MAX(55, 40 +(commencement_age_months / 12 - service_credits) / 2))) - POWER(0.899877, 65 - commencement_age_months / 12)) + 0.0033837 *((MIN(MAX(50, 30 +(commencement_age_months / 12 - service_credits)), 65, MAX(55, 40 +(commencement_age_months / 12 - service_credits) / 2)) - ROUND(MIN(MAX(50, 30 +(commencement_age_months / 12 - service_credits)), 65, MAX(55, 40 +(commencement_age_months / 12 - service_credits) / 2)))) ^ 2 -(commencement_age_months / 12 - ROUND(commencement_age_months / 12)) ^ 2))), 1) / 100 / MAX(1, service_credits)))

Formula Variables:

• commencement_age: Age when pension payments commence
• service_credits: Years of credited service

Cost-of-Living Adjustment (COLA)

The COLA formula determines how pension benefits grow over time after retirement to keep pace with inflation.

IF(years_since_retirement >= 3 + IF(commencement_month >= 8, 1, 0), current_pension_benefit * 1.01, current_pension_benefit)

Formula Variables:

• initial_pension_benefit: The annual benefit amount at retirement
• years_since_retirement: Number of years since retirement began

Tax Treatment

Pension payouts from this plan are taxable as ordinary income.

Social Security Coverage

Most Colorado PERA (membership before July 2005) employers do not participate in Social Security. FinZot marks a job with this plan as non-covered by default: no 6.2% Social Security tax is withheld and those wages earn no Social Security benefit. Medicare is still withheld. If your employer does participate, turn that setting off on the income stream.

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Note: FinZot’s pension estimates are for planning purposes only and may not reflect all plan provisions. For official benefit estimates, contact your plan administrator.