(1) Each year prior to the effective date of an annual increase, the board shall determine the amount of the annual increase to be paid, if any. In no event shall the board award an annual increase to any division that exceeds the amount provided for in this section.
(1.5) For the years 2018 and 2019, the annual increase awarded shall be zero percent.
The maximum annual increase that may be awarded by the board pursuant to section24-51-1001 (3) shall be determined based on annual actuarial valuations of the annual increase reserve of each division. Each year after the board determines the annual increase amount, and prior to its effective date, a sum equal to the net present value of the total actuarial cost of paying the annual increase to all eligible recipients shall be reallocated from the annual increase reserves of each division to the retirement benefits reserve or the survivor benefits reserve, as appropriate. All annual increase payments shall be made from the reserves used for monthly benefit payments, and no annual increase payments shall be made from the annual increase reserve.
The annual increase reserve of each division shall contain the allocations specified inthis subsection (3). Such amounts shall be retained in the annual increase reserve of each division until removed from that reserve pursuant to this section. The allocations shall be as follows:
A portion of the employer contribution specified in section 24-51-401 (1.7) equal toone percent of the salaries of members who were not members, inactive members, or retirees on December 31, 2006;
A sum received in connection with purchased service credit pursuant to section 2451-503 (4), specified as annual increase allocation; and
A proportional share of the investment income earned on the amounts specified inparagraphs (a) and (b) of this subsection (3).
(4) An actuarial valuation shall be conducted each year for the annual increase reserve of each division for the purposes of this section. The actuarial valuation shall include a determination of the total market value of the assets in the reserve and a calculation of the net present value of the actuarial liabilities associated with providing each of the annual increases described in subsections (4)(a), (4)(b), and (4)(c) of this section. Subject to section 24-511009.5, the maximum annual increase awarded by the board shall be the lesser of the following calculations:
Subject to the maximum annual increase as adjusted pursuant to section 24-51-413, apermanent increase equal to one and one-half percent of current benefits payable to benefit recipients then eligible for an annual increase in accordance with section 24-51-1001 (3);
Subject to the provisions of subsection (4.5) of this section, a permanent increase ofcurrent benefits payable to benefit recipients then eligible for an annual increase in accordance with section 24-51-1001 (3) that is equal to the average of the annual increases determined for each month, to the nearest one-tenth of a percent, as calculated by the United States department of labor, in the national consumer price index for urban wage earners and clerical workers during the calendar year preceding the increase in the benefit for the year associated with the actuarial valuation of the annual increase reserve; or
A permanent increase of current benefits payable to benefit recipients then eligiblefor an annual increase in accordance with section 24-51-1001 (3) that will exhaust ten percent of the year-end balance at market value of the annual increase reserve.
(4.5) For the year 2010, the association shall use the average of the annual increases determined for each month, to the nearest one-tenth of a percent, as calculated by the United States department of labor, in the national consumer price index for urban wage earners and clerical workers for each of the months in the 2009 calendar year.
(5) No calculation made pursuant to this section shall cause a reduction in current benefits of eligible benefit recipients.
Source: L. 2006: Entire section added, p. 1186, § 21, effective May 25. L. 2010: IP(4),
(4)(a), and (4)(b) amended and (4.5) added, (SB 10-001), ch. 2, p. 22, § 21, effective February 23; (3)(a) amended, (SB 10-146), ch. 65, p. 229, § 2, effective March 31. L. 2016: (3)(b) amended, (SB 16-189), ch. 210, p. 768, § 54, effective June 6. L. 2018: (1.5) added and IP(4) and (4)(a) amended, (SB 18-200), ch. 370, p. 2256, § 19, effective June 4.
Cross references: For the legislative declaration in SB 18-200, see section 1 of chapter 370, Session Laws of Colorado 2018.