In 2022, the Colorado state pension fund had its worst year since the Great Recession, losing $9.8 billion.
The losses were so large, they set the Colorado Public Employees’ Retirement Association’s finances back for years, digging a hole that the pension is only now starting to climb out of.
But in the aftermath, PERA’s investment managers took home some of their largest bonuses ever.
On average, PERA’s investment staff more than doubled their take-home pay, earning bonuses of $299,000 — the equivalent of tacking an extra 124% onto their salaries.
Nine investment officials received more than $400,000 each in annual incentive payments that are supposed to reward good performance. Two people tripled their salaries through the incentives.
All following a year in which PERA’s investments faltered badly.
PERA’s board of trustees has adopted an aggressive compensation policy to attract financial sector talent and keep its investment staff from leaving for better pay. The practice has become increasingly common across the country, pension experts say, as public sector retirement systems struggle to compete with endowments and private investment firms for employees.
But while many of PERA’s counterparts put limits on how much their investment staff can earn, Colorado’s pension board has imposed few constraints, setting pay targets well above its peers.
Some employees will reap the rewards for life; under Colorado law, incentive pay counts toward their future retirement benefits.
In an interview with The Colorado Sun, top PERA officials defended the practice, saying the bonuses more than pay for themselves. Over the last decade, PERA’s 8.3% investment return ranks in the top 10% of public pensions. And, pension officials say, if they outsourced more of their investments to private firms, it would cost far more than doing it in-house. One study found that outside investment management can cost pensions three times more than using their own staff.
“Our mission is to provide retirement security for our members, and so that means we need to recruit and retain the talent necessary to run PERA according to best practices,” Andrew Roth, PERA’s executive director, told The Colorado Sun in an interview. “From the investment program perspective, that means we have to attract and retain talented individuals who are able to outperform the market.
“We could turn the investment program over to the private sector to run for us; we’d pay about $80 million a year more,” Roth said. “In order to retain the talent we have, I view our compensation program as a financial safeguard for our retirees and for our members.”
But critics see a disconnect between how PERA pays its staff and the grim financial reality faced by the people it serves. Since 2010, PERA has gone through two rounds of benefit cuts and contribution hikes to try to close a $29 billion funding gap. In that time, retired state workers, school teachers and bus drivers have lost 21% of their pensions’ value to inflation, according to a report PERA released in December.
For the average PERA retiree making $39,000 a year from their pension, that’s the equivalent of a $8,000 pay cut.
The public workforce faces financial strain of its own. Colorado teachers and state workers have long earned less than their counterparts in other states — something lawmakers have tried to address by increasing K-12 funding and installing a new pay plan for the state workers’ union. But the state budget crisis is threatening to stop both efforts in their tracks.
“The teachers, the janitors, all the people that contribute to this — they are struggling. They don’t get raises. They don’t get awards for doing their jobs,” Eunice Botchway, a PERA board member, said at a meeting in December. “As a trustee, what do I tell the teachers that are struggling?”
Meanwhile, the amount PERA sets aside for employee bonuses has ballooned from $4.6 million in 2018 to $11.7 million — and it’s set to rise again this year to $13.1 million, after the board approved a 13% increase in November.
Hilary Glasgow, who leads the state workers’ union, called the bonuses “insane” — especially at a time the state is slashing healthcare, affordable housing and childcare programs.
“This is not just an affront to public employees, to state employees or teachers, all of the county workers who pay into PERA,” Glasgow told The Sun. “This is an affront to taxpayers across the board, that this is how their money is being used: to give big bonuses to wealthy investment bankers, who are doing it under the guise of public service.”
Bonuses grow in good years and bad
PERA has offered incentive pay since at least 2003, according to pension system documents. But it wasn’t until the last decade that it became such a large component of the investment staff’s compensation.
The outsized growth has led to scrutiny at the state Capitol. Last year, lawmakers passed a bill to require PERA to publicly disclose the incentive payments on its website for the first time. But the data it published was limited to 2025, and didn’t include employee names.
Through open records requests, The Sun obtained the last six years of employee compensation data, PERA’s internal policies on bonus pay and 10 years of budget documents. PERA would not provide payroll data prior to 2020, citing technological constraints caused by a change in its accounting software.
Of the 38 people who managed PERA’s investments since 2020, 18 doubled their salaries through incentives, The Sun’s analysis found. Eight more earned a 90% bonus on top of their base pay. And everyone on the investment team met enough of their goals to earn some incentive pay, if eligible.
The average bonus payout per employee rose dramatically to $294,000 last year from $187,000 in 2020.
Karen Wick, who represents a coalition of PERA members and retirees, said The Sun’s findings “really reinforce why we fought for greater transparency in PERA’s operations and finances.”
“Members and retirees have spent years making sacrifices through higher contributions or reduced cost of living adjustments to strengthen the system,” said Wick, the program manager for Secure PERA, which backed the bill requiring PERA to disclose employee pay. “And they deserve to know how these decisions are being made and whether those incentives are aligned with the long-term goals and health of the fund.”
As PERA’s bonuses rose, the pension’s funding improved dramatically at first — in part due to strong investment years that saw PERA’s portfolio notch consecutive years of 17% and 16% returns. That’s more than double the 7.25% expected return PERA relies on to fund retirement benefits.
But the pension’s overall funding has lost ground since 2022 — something that critics say should be reflected in smaller bonuses.
“How can we justify providing incentive bonuses when our investment returns are very disappointing?” Maruti Moré, a PERA board member who works for the state Treasurer’s Office, said at a November committee meeting. He suggested bonuses should be tied instead to PERA’s overall financial health.
PERA officials insist investment managers only get paid extra if they outperform their benchmark targets — typically an index fund that tracks the asset class they invest in.
“There’s no subjectivity,” PERA’s chief investment officer Amy McGarrity told board members at the meeting. “We are not compensated in the incentive arena if we don’t outperform.”
But The Sun found that employees were repeatedly awarded large bonuses even in years where they lost money, missed their target or both.
Yearly raises for long-term goals
The apparent gap between pay and performance arises from how PERA evaluates its investment managers.
For starters, investment staff are only judged on whether they beat their benchmark — actual market gains and losses aren’t a factor. If the stock market is down in a given year, PERA could lose billions of dollars and still beat the index funds it uses as a measuring stick.
That’s what happened in 2022, when the war in Ukraine, supply chain bottlenecks and COVID-19 lockdowns in China roiled the stock market. The pension that year lost 13.4% on its investments. But PERA’s portfolio still beat its overall benchmark, which lost 13.7%, according to its annual financial report.
Not everyone beat their target that year. The global equities division, which invests in domestic and international stocks, lost 20.6% — a performance worse than its benchmark index fund, which had an 18.2% loss.
The equities staff, though, was still rewarded with large payouts. Bonuses are heavily weighted toward long-term returns, and according to PERA financial reports, the equities division still beat its three- and five-year targets. The board typically follows the recommendations of its investment consultant, Aon, in setting those targets. For equities, it uses an MSCI global funds index, a benchmark that’s frequently used by other public pensions.
PERA’s top earner when bonuses went out the following year was Jim Liptak, the director of equities, who made $653,000 in incentives on top of his $405,000 salary. He earned $6.3 million from 2020 to 2025, including $3.6 million in incentives. That was the most of anyone on PERA’s staff, before he retired in January.
In total, the 14 people who worked in PERA’s equities division made $4.9 million in incentives in 2023, despite the losses the year before. That works out to $347,000 per person.
PERA leaders say the payouts reflect its investment team’s strong performance over time.
“We recognize the importance of having investment staff to help us become fully funded,” said Board Chair Rebecca Freyre, a state appeals court judge. “We always try to take a long-term view, and it’s the long-term returns that matter.”
Over the last three years, PERA’s investments have rebounded, earning 13.4% in 2023 and 10.8% in 2024. PERA had earned 11.5% through September 2025; its final numbers for last year won’t be released until later this month.
But the fund as a whole earned less than its benchmark. And it performed worse than its peers, according to a Sun analysis of public pension finances maintained by Public Plans Data, a database associated with Boston College that tracks government pensions across the U.S.
Among 100 public pensions with more than $10 billion in assets, PERA ranked in the bottom 20 in returns from 2022 to 2024, the last year data was available.
Some employees saw their incentive pay drop as a result. But you wouldn’t know PERA’s finances had dipped from what it spent on bonuses overall. Payouts grew from an average of $270,000 per person in 2021, to $303,000 in 2024, before they declined slightly last year.
Non-investment staff at PERA can qualify for bonuses, too. But they pale in comparison to what investment managers make. Roth, PERA’s executive director, made a $470,000 salary last year, plus a $71,000 bonus.
PERA pays more than most pensions
PERA’s not alone in awarding bonuses tied to investment performance.
In a 2025 industry compensation survey, 57% of public pensions that managed at least $60 billion in assets paid bonuses to investment staff, according to the National Conference on Public Employee Retirement Systems. Among all public pensions, half now do.
“I think what is driving that is a recognition that public pensions are complex investment entities,” Hank Kim, the executive director of NCPERS, said in an interview. “And that is reflecting somewhat the market, as well as the complexities of the investment universe now versus 40 years ago.”
Still, PERA pays more than most.
The board-approved compensation policy ties its incentives to what the top 25% of its peers pay. It likely ranks even higher than that among public pensions alone, because PERA compares itself to a blended peer group made up of 75% public pensions and 25% private firms.
And PERA’s incentives are worth even more than they seem. Under PERA rules, performance-based bonuses are considered part of an employee’s salary for determining their future retirement benefits.
But not all bonuses are treated that way. Signing bonuses like the state gave to corrections officers and nurses to address staffing shortages during the pandemic, for instance, aren’t considered pension-eligible pay. Under state law, only performance or merit-based bonuses qualify, and only if approved by PERA’s board.
Federal law limits the salary that can be applied to a pension to $360,000, so PERA’s top-paid employees max out their pension benefits whether they get bonuses or not. But for most of the investment staff, the bonuses mean larger pension checks for the rest of their lives.
In the NCPERS survey, chief investment officers for large public pensions made a median of $638,000 in 2025, including bonuses. PERA’s CIO, McGarrity, made $1.2 million in total — her $537,000 salary, plus a $660,000 bonus.
Still, Kim says that’s still far less than what other institutional investors pay. The chief investment officer for Harvard University’s endowment, which manages a portfolio slightly smaller than PERA’s, earned $4.9 million in 2024, according to Harvard Magazine.
Nationwide, the rise in incentive pay has come partly in response to staff turnover and recruiting problems.
For PERA, the justification is less clear. When PERA’s board was reviewing its incentive program last year, McGarrity told the board’s investment committee, “we have not had any challenges, really, recruiting and retaining high-caliber talent.”
In an interview, Roth said the fact that they don’t have higher turnover is proof that the incentives are working.
“One of the reasons we are largely able to retain our staff is because of our incentive compensation program,” Roth said. “We still lose investors — they are poached by private sector firms.”
And when people leave, he said, it can take over a year to replace them.
“In order to find someone that’s willing to take what is a large pay cut, typically, coming from the private sector, you have to find someone who is motivated by the mission,” Roth said.
Glasgow, the executive director of Colorado WINS, doesn’t see how six-figure bonuses fit with that mission.
“My members don’t come to this work to get rich off of public service,” Glasgow said. “I am gobsmacked.”
Other states limit bonuses
Among public pensions in the West, incentive policies vary — but out of the four reviewed by The Sun, all of them imposed limits on pay that PERA doesn’t.
Like PERA, the Arizona State Retirement System allows bonuses to add to an employee’s retirement benefits. But the maximum payout in any given year is 30% of someone’s salary, a spokesperson told The Sun.
PERA’s maximum bonuses range from 75% of their base salary to 225%, officials told The Sun in an interview.
The Oregon Public Employees Retirement System did not respond to requests for information. But as recently as 2022, its incentives were capped at 30% of base pay, as well, The Oregonian reported. It also limits how much compensation counts toward an employee’s pension to $246,000 — about $110,000 less than PERA.
In Washington, total compensation for investment staff is limited to the average of its peers. And it doesn’t provide annual incentives at all. But there’s no evidence its pension finances have suffered as a result. Washington’s returns have consistently beat PERA’s over the last three years, the last five years, the last 10 years, and since 2001. Washington’s pension is also fully funded, while PERA has just 69% of the money it needs to cover all of the future retirement benefits it owes.
CalPERS, the largest pension in the country, pays more than PERA for most of its investment positions — but it only pays the median of its larger peers. PERA targets the median for base pay, but the top quartile for bonuses. And unlike PERA, CalPERS’ incentive pay doesn’t count toward its staff’s retirement benefits.
Nationally, recruitment problems for public pensions are fading. Industry studies now show that most pensions don’t have a problem attracting or retaining staff. And most of them pay less than PERA; the majority of pensions set their pay levels at the median of their peers.
Colorado state workers don’t even make that. The state’s latest compensation study in 2025 found that state agencies pay 9% less than employees can make in similar public sector jobs. And this year, in the face of a $1 billion shortfall, lawmakers eliminated a 3.1% cost of living increase for state workers that the union had previously bargained for.
PERA, and the $225 million annual payment taxpayers make to it, was spared from any cuts, as lawmakers tried to make up for decades of underfunding the benefits they promised to public sector workers.
And unlike the state, which must balance its budget to a strict constitutional spending limit, PERA’s own operating budget is only limited by the restraint of the board itself. The $146 million PERA spends on operations comes out of the $67 billion it manages in retirement funds.
The mantra of “shared sacrifice”
Every year since 2018, Colorado public employee pensions have gotten a little smaller, as they shrink relative to the state’s cost of living.
That year, retirees didn’t get a cost of living raise at all — one of the many financial sacrifices they were forced to make when the legislature passed Senate Bill 200, Colorado’s landmark deal to pay down the pension’s unfunded debt.
State workers got a 3% pay bump that year — but had to give some of it right back when their payroll contributions went up to help pay for their shrinking retirement benefits.
State agencies had to pay the pension millions more, and so did school districts and dozens of other public employers, all to shore up one of the worst-funded government worker pensions in the nation.
As a result, most covered public workers now contribute 11% of their salaries to PERA. Retirees’ cost-of-living increases have shrunk to 1% a year, while inflation hovers well above 3%.
Officials at PERA call it the “shared sacrifice” model. To save a state pension that was teetering toward insolvency, nearly everyone in Colorado — public retirees, current workers and taxpayers — needed to share in the financial pain.
Except for those who work at PERA.
That fall, PERA’s board voted to give its investment staff an 8% raise — more than enough to cover the financial hit they would have taken from the 2018 pension reforms.
But the real raise was much larger.
PERA’s board that year approved a 128% increase in the staff incentive budget.
Scott Smith, a former board member who is also the chief financial officer for Cherry Creek Schools, said that if PERA’s finances were in good shape, he “couldn’t care less how much they were paying their staff.”
“But the fact is, PERA is grossly underfunded,” Smith said. “Our retirees are falling further and further behind. Our staffs and our employers are under tremendous stress. And then PERA pays themselves millions and millions of dollars worth of bonuses.”
PERA officials look at it differently. They say they need a top investment team precisely because the pension is so underfunded.
“We have a lot of pressure to continue this outperformance,” Roth told the board in November. “While we may have years where we underperform, in the long term, excellent performance will get us where we need to go.”
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