Journal of Pension Economics and Finance

Articles

Deferred compensation for career employees in public defined benefit pension plans: evidence from Colorado PERA

MICHAEL V. MANNINOa1 c1 and ELIZABETH S. COOPERMANa1 c1

a1 University of Colorado Denver

SUMMARY

With significant under funding of public defined benefit pension plans, public debate often focuses on funding problems, neglecting benefit-side factors that contribute to under funding. In this study we examine the benefit side by calculating the value of deferred compensation, using a unique dataset of salary histories for recent university retirees covered by the Colorado Public Employees Retirement Association plan. We find sizable levels of deferred compensation that is associated with retirement age and period, job class, service years, and to some extent gender, with administrators receiving the highest levels. We also find wage–earning profiles to underestimate salary growth for higher-paid employees.

(Online publication May 09 2008)

Correspondence:

c1 Correspondence Address: The Business School, University of Colorado Denver, Campus Box 165, P.O. Box 173364, Denver, CO. 80217-3364, USA.

Footnotes

The authors thank Hyo-Jeong Kim and Odonchimeg Bayaraa for their exceptional data analysis work, and Judy Tao, Meng-Fang Wu, and Allana Warren for their excellent work on data collection. We thank Mr. Richard Greer (F.S.A. and M.A.A.A) of Aegon Corporation for providing samples of net interest rates and contract values. We thank Professor Marcelle Arak and Professor Woody Eckard for valuable comments and suggestions on an earlier draft of the paper. We thank the budget offices of the University of Colorado Denver, the University of Colorado Boulder, and Metro State University for providing lists of recent retirees. We thank the Colorado Public Employees Retirement Association for providing important data (mortality table, guaranteed rates, portfolio returns, and annual reports) and explaining aspects of PERA retirement benefits.