PERA Defined Contribution Plan School Personnel
The introduction of HB 1176 is expected to modernize the retirement options available to employees within the school system. This flexibility may increase employee satisfaction and retention by allowing participants to manage their retirement savings according to their individual circumstances. Employers would be required to contribute a fixed percentage of the employee's salary toward the flexible contribution plan as well as to the defined benefit plan, which can have budgeting implications for school districts.
House Bill 1176 seeks to establish a Flexible Defined Contribution Plan for eligible members of the Public Employees' Retirement Association (PERA) employed by public schools. Currently, members of the school division and the Denver Public Schools division are not allowed to enroll in PERA's defined contribution plan and instead participate in a defined benefit plan. This bill would allow new hires starting January 1, 2024, to choose between the existing defined benefit plan and the new flexible contribution plan, where they would have the ability to set their own contribution rates.
Debate surrounding HB 1176 is likely to focus on the trade-offs between stability and flexibility in retirement plans. Proponents argue that providing greater options will empower employees to better secure their financial futures and attract talent to teaching positions, which are often viewed as under-compensated. Conversely, opponents may express concerns about the long-term viability of retirement security if too many employees opt into the new plan, potentially destabilizing the defined benefit plan that many current employees rely upon.