The Denver Post reported Sunday that the Public Employees Retirement Association relies on an 8 percent investment return in its projections. The newspaper quoted economists and financial advisers as saying 6.5 percent to 7.5 percent is more realistic.
PERA covers 450,000 teachers, state and local government workers, and lawmakers. It cut back last year amid warnings it would go broke in 20 years.
Retirees got no cost-of-living increase last year and future increases were capped at 2 percent. The retirement age for new employees rose from 55 to 60, and workers and government employers were required to contribute more.
PERA Executive Director Meredith Williams said she is confident the fund will rebound over the long haul.
"We are the ultimate long-term investor," she said. "I sleep pretty good at night thinking about PERA's future."
PERA's projection of an 8 percent rate of return is in line with similar plans nationwide. The average among public pension funds is from 7.5 to 8 percent.
Michael Kingston, chief investment officer at Investors Independent Trust Co. in Boulder, said PERA shouldn't rely too heavily on past performance of the markets.
"If I was to give PERA advice, I'd say you can't go forward looking through the rearview mirror of your car," Kingston said. "What happened in `08 (the deep recession) was not an event. It was the beginning of an era."
State Treasurer Walker Stapleton, a Republican, said PERA is still headed for trouble and that taxpayers may have to pay to make up the difference between what PERA promised retirees and what it can afford to pay them.
Senate President Brandon Shaffer, a Longmont Democrat, said Walker and other critics of the fund are part of a national movement to pare public pension benefits and turn them into something like 401(k) plans that don't have guaranteed payouts.
"We fixed our state pension system," Shaffer said. "We are different. This was a long-term strategy and not something that was designed to fix everything overnight."
(Copyright 2011 by The Associated Press. All Rights Reserved.)