Leadership • Collaboration • Excellence

1 Leadership Collaboration ExcellenceSummary Annual financial ReportFor the Year Ended December 31, 2012I am pleased to present colorado PERA s Summary AnnualFinancial Reportfor the year ended December 31, has long been considered an industry leader acrossmany facets of our operation. In an era when most pensionplans are underfunded, we were the first state pension plan inthe nation to take the necessary steps to enact pension reformlegislation these reforms enacted in 2010 with Senate Bill(SB) 10-001 are working for the state of colorado . Themajority of legislators and other officials are committed to the full implementation of this landmark , we still have more work to this era of diminished retirement security, it s critical tounderstand what PERA does and the fiscal responsibilitiesrequired to be prepared for retirement. PERA has beencommunicating and educating its members for decades, butthat s not enough.

2 All Coloradans need to know about thevalue of current climate demands that we must communicateour message in a variety of channels and to a broaderaudience. For these reasons, the PERA Board of Trustees(Board) adopted a new communications strategy in 2012. Implementation of the Strategic Communications Plan hasbecome a cornerstone project in the day-to-day operations at PERA. The main components of this plan focus on thefollowing: Use social media to develop a community of participantsengaged in issues relevant to public employees and theirfinancial and retirement to PERA employers to foster communicationsand employer the business community onthe importance and impact of PERAon every Main Street and in everycounty across communication strategies aredesigned to educate not only our ownmembers, but to also enlighten andinform colorado citizens who may notknow about the importance of PERA tothe state s economy.

3 Every year, PERA pays out more than $ billion inretirement distributions and itsinvestment portfolio includes over $485 million in colorado -basedbusinesses. These retirement payments and investmentssupport local businesses, create colorado jobs, and generatehundreds of millions of dollars in state and local tax to executing our Strategic Communications Plan, wesurveyed our members to help us determine the issues mostimportant to them as PERA members 91 percent of thosesurveyed were proud of their background as publicemployees and believed it was an important and valued partof who they are. At PERA, we are also proud of the public servants whom weserve. We will continue to work for all of the publicemployees across the state and provide a plan that benefitseveryone not only for today s retirees, but also those juststarting careers in public service, and those yet to be hired.

4 Together, we are Coloradans working to build a W. SmithColorado PERA Executive DirectorGregory W. SmithExecutive DirectorMessage From the Executive Director2| colorado PERA Summary Annual financial Report2012 This Summary Annual financial Reportis derived from information contained in PERA sComprehensive Annual financial Report (CAFR),but does not include certain financialinformation nor is it presented in a manner toconform with Generally Accepted AccountingPrinciples (GAAP). PERA s CAFRis produced toconform with GAAP and is available on our Website at or by requesting a copyfrom PERA s Customer Service primary measure of a pension fund shealth is its funded status that comparesthe assets available to the benefits thatmust be paid. It is a long-term process andimportant to remember that all benefitsare not due and payable at s funding objective is to be able topay long-term benefit promises throughcontributions that remain relatively levelfrom year to year as a percent of salariesearned by members.

5 This means membersand employers in each year pay their fairshare for retirement service accrued in thatyear by PERA year, an actuary performs a study, orvaluation, to estimate the long-term costs/liabilities of PERA. The actuary estimatesour liabilities based on a variety ofassumptions that include the following:Life span of retirees Future salary increases for workingmembers InflationRates of return for PERA sinvestmentsBased on these assumptions, the actuary isable to calculate PERA s funded funded status is a comparison of theactuarial value of assets PERA has againstwhat PERA owes now and in the future Funded Status(At December 31, 2012, for all Division Trust Funds and the Health Care TrustFunds1,3) BASed on BASed on 12/31/201212/31/2012 MARket VAlue ActuARiAl VAlue oF ASSetS oF ASSetSActuarial accrued liability $ billion$ billion Assets held to pay those liabilities2, billion billionUnfunded actuarial accrued billionFunded above funded status is based upon an assumed rate of return on investments of percent and an assumed rate of percent to discount the liabilities to be paid in the future to a value as of December 31, market value of assets is the fair value of the investments.

6 The actuarial value of assetscalculates the value of the assets by spreading any market gains or losses above or below theassumed rate of return over four data in this table has been aggregated for informational purposes. The assets of each trustfund are for the sole purpose of its members and cannot be used by another fund. 4In aggregate, the market value of the assets as of December 31, 2012, is $721 million morethan the value of assets calculated by the actuaries, as they are recognizing the gains andlosses in value over four years, rather than in the year they occurred. The remaining gains and(losses) to be smoothed for 2010 are $ billion, for 2011 are ($ ) billion, and for 2012 are$ billion. FUNDING OF colorado PERA Photo courtesy of the colorado Department of TransportationColorado PERA Summary Annual financial Report2012 |3 Funded Status of colorado PERA(Based on Current Funding as of December 31, 2012)AMoRtizAtionAMoRtizAtionPeRiodPeRio dWith FutuReFundedWith cuRRentcontRiBution RAtetRuSt FundRAtio1 FundingincReASeSState Years36 YearsSchool Years34 YearsLocal Government Years27 YearsJudicial Public Schools Division Care Years66 YearsDenver Public Schools Health Care Years21 Years1 Funded Ratio based on actuarial value of Considering anticipated reductions in the future Pension Certificates of Participation (PCOP) offset contribution requirementsto the DPS Division for the cost of certain PCOPs as currently structured, the amortization period is expected to be below 30 years.

7 $60$70$50$40$30$20$10$0 Funded RatioBillions of Accrued LiabilitiesActuarial Value of Assets(Without Health Care Trust Funds) Value of Assets as a Percent of Actuarial Accrued Liabilities1(Funded Ratio of colorado PERA Pension Trust Funds)FUNDING OF colorado PERA 1 This data has been aggregated for informational purposes; the assets of each trust fund are forthe sole purpose of its members and cannot be used by another courtesy of the colorado State Patrol 2012 Net Change in Fair Value $4,109 MDividends $522 MInterest $313 MReal Estate/Opportunity Fund/Alternative Investments $226 MSecurities Lending $13 MInvestment Expense ($151M) Employer $1,105 MMember $808 MRetiree Health Care and Life Premiums $111 MPurchased Service $50 MOther $20 MFederal Health Care Subsidy $15 MPension Benefits ($3,507M)Refunds ($372M)Health Care Benefits ($230M)Administrative Expense ($48M)Other ($16M)Disability/Life Insurance ($5M) Benefits Paid($ billion)

8 Investments$ billionContributions$ billion$43 billion net assets as of December 31, 2012$40 billion net assets as of December 31, 20114| colorado PERA Summary Annual financial Report2012 Summary Comparative Combined Statement of Net Position(Includes All Funds Division Trust Funds, Voluntary Investment Program, Defined Contribution Retirement Plan, DeferredCompensation Plan, Health Care Trust Fund, Denver Public Schools Health Care Trust Fund, and Life Insurance Reserve)The Comparative Combined Statement of Net Position is a summary of the net assets available to pay future benefit payments and gives asnapshot at a particular point in time. AS OF AS OF DECEMBER 31, 2012 DECEMBER 31, 2011 Total assets $44,585,855,000$41,597,224,000 Total liabilities 1,650,817,0001,625,724,000net position available $42,935,038,000$39,971,500,000 Summary Comparative Combined Statement of Changes in Net Position(Includes All Funds Division Trust Funds, Voluntary Investment Program, Defined Contribution Retirement Plan, DeferredCompensation Plan, Health Care Trust Fund, Denver Public Schools Health Care Trust Fund, and Life Insurance Reserve)The Comparative Combined Statement of Changes in Net Position shows the inflows and outflows during the year.

9 YEAR ENDED YEAR ENDED DECEMBER 31, 2012 DECEMBER 31, 2011 Total additions $7,141,182,000 $2,779,692,000 Total deductions 4,177,644,000 3,943,977,000 Net change 2,963,538,000 (1,164,285,000)Net position beginning of year 39,971,500,000 41,135,785,000 net position end of year $42,935,038,000 $39,971,500,000 financial SUMMARY2011 Net Change in Fair Value ($140M)Dividends $402 MInterest $364 MReal Estate/Opportunity Fund/Alternative Investments $227 MSecurities Lending $15 MInvestment Expense ($143M) Employer $1,024 MMember $855 MRetiree Health Care and Life Premiums $113 MPurchased Service $31 MOther $16 MFederal Health Care Subsidy $15 MPension Benefits ($3,324M)Refunds ($343M)Health Care Benefits ($214M)Administrative Expense ($49M)Other ($10M)Disability/Life Insurance ($6M)

10 Benefits Paid($ billion)Investments$725 millionContributions$ billion$41 billion net assets as of December 31, 2010 colorado PERA Summary Annual financial Report2012 |5 Investment portfolio income is a significant source of revenue to Investment Committee, a subcommittee of the Board, is responsiblefor assisting the Board in overseeing PERA s investment 2012, there was net investment income of $5,032,537,000, whichexceeds member contributions of $807,788,000 and employercontributions of $1,104,901, the year ended December 31, 2012, the total fund had a rate of returnof percent net-of-fees on a market value basis (does not include theDefined Contribution Plans).PERA s annualized net-of-fees rate of return over the last three years percent, and over the last five years it was percent.