HB 23-1176

House Bill 23-1176, which has been signed into law, allows new school employees hired on or after January 1, 2024, in Colorado to choose a flexible retirement savings plan called the PERA defined contribution plan instead of being automatically enrolled in the traditional pension plan. Under this new option, these employees can decide how much they want to contribute from their salary towards their retirement account, while their employer will contribute an amount equal to 6.5% of their salary and also put in an additional 15% into a defined benefit plan. This change gives school personnel more control over their retirement savings options starting next year.

Official Summary

Current law allows only specified employees to participate in the public employees' retirement association's (PERA) defined contribution plan. Employer and member contribution rates for PERA's defined contribution plan are fixed in statute and vary per division. Members of the school division or the Denver public schools (DPS) division of PERA are not able to enroll in the defined contribution plan and are enrolled in the defined benefit plan administered by PERA. The bill requires the PERA board to establish and administer a flexible defined contribution plan and gives PERA members who are hired on or after January 1, 2024, and who are members of the school division or DPS division (eligible employees), the option to participate in the flexible defined contribution plan. If an eligible employee opts to participate in the flexible defined contribution plan, the eligible employee may determine the employee's contribution rate. Employers of eligible employees who opt into the flexible defined contribution plan are required to contribute an amount equal to 6.5% of the member's salary toward the member's account, and contribute an amount equal to 15% of the member's salary to the defined benefit plan. (Note: This summary applies to this bill as introduced.)