Updated September 3, 2026. Quick answer: Colorado Public Employees’ Retirement Association (PERA): the COLA is automatic under its statutory “automatic adjustment provision,” service credit can be purchased, and no DROP was found. Vesting takes five years of earned service credit.
Colorado firefighters and police officers belong to a separate association with its own rules: Colorado FPPA retirement decisions.
More on Colorado: Colorado Executor Bond Requirement, Is a Living Trust Worth It in Colorado? and How to Reinstate a Corporation in Colorado.
Provisional. This page is published at medium confidence. The specific points that could not be confirmed are listed under What could not be verified below, and are named rather than smoothed over.
The verdicts
| Is the COLA granted? | Automatic |
|---|---|
| Is the COLA compounded? | Not stated |
| Vesting | 5 years of earned service credit |
| Buy service credit? | Yes |
| DROP? | None found |
| State | Colorado |
Those first two rows are separate questions and are routinely confused. Whether you get an increase at all is one thing; whether it compounds is another. A system can grant an increase automatically every year and still compute it against your original benefit forever, which is a materially worse deal than it sounds.
The COLA
“All AIs are paid in July and subject to change with the automatic adjustment provision.” For members who joined on or after January 1, 2007, the annual increase for July 2026 is the lesser of 1.0% or the average of the monthly CPI-W for 2025, to be announced in mid-2026; members who joined before that date, and all DPS benefit structure members, have a flat 1.0% cap for July 2026. Whether the increase compounds on the prior balance is not stated in the materials reviewed.
Buying service credit
PERA lets members reinstate a refunded/rolled-over account and purchase service credit for any employment not covered by PERA or another retirement program, including “any U.S. employment where the employer is set up under federal, state, or local government, as well as public and private K-12 school employment, and employment with public employee organizations.” Cost for pre-1/1/2007 members: “the amount rolled over/refunded plus interest”; for post-1/1/2007 members: “the amount rolled over/refunded, interest, and 1% of HAS for each month purchased” (the 1% goes to the annual increase reserve fund). Non-PERA-covered employment is priced at “the actuarial cost of providing the future benefit resulting from the purchase and is calculated using your HAS, your age, and your PERA membership start date.”
Run your own numbers before deciding: some purchases never recover their cost, and the calculator shows which.
Coordinate this with your overall retirement plan
An adviser can help weigh a COLA that may not compound, a service-credit purchase that may never pay for itself, or a DROP election against the rest of your retirement plan, but that does not replace the numbers in your own member statement.
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Vesting
Five years of earned service credit is PERA’s threshold for reduced/inactive-vested status: “If you are an inactive DPS benefit structure member with five or more years of earned service credit and you were not eligible for retirement at the time you terminated employment (inactive vested deferred), you are only eligible to retire when you reach full service retirement eligibility.” Full unreduced retirement eligibility varies heavily by hire date, from 30 years at 50 (hired before 7/1/2005) to 35 years at any age (hired on/after 1/1/2020).
DROP
No DROP program appears in PERA’s fact sheets or benefit-basics pages reviewed this session.
DROP is rarer than it appears across the systems on this site: most have none.
Payment options and the survivor election
Colorado PERA asks a retiring Defined Benefit Plan member to pick a payment form at the moment of applying. The Your Benefit Options at Retirement page says the member will have “three options for payment of your benefit”. PERA explains that these choices decide whether another person keeps receiving the benefit after the member dies or whether the benefit ends at death. The page also separates two roles. A cobeneficiary is whoever the member designates at retirement to continue the monthly benefit, and PERA says it “must be only one person and not an entity”. The named beneficiary is the person or entity chosen to receive a lump sum after all benefits have been paid to the member and the cobeneficiary.
The roles are not equally flexible. PERA says the cobeneficiary cannot be changed in most circumstances, with exceptions that can include death and marriage, while “you can update your beneficiary information at any time”. It adds that “The age of your cobeneficiary will determine how much of a reduction there is to your benefit amount.”
Under the standard PERA benefit structure, Option 1 is the single-life choice: “After your death, no future benefits will be paid.” If an account balance remains, the page says it is paid as a single payment plus a 100% match to the named beneficiary, or to the estate if none exists. Option 2 pays a smaller lifetime benefit than Option 1, and the cobeneficiary then receives “a monthly benefit that is half of what you were receiving” for life. Option 3 pays a smaller benefit than Option 2, but the cobeneficiary receives “the same amount that you were receiving”. For both survivor options PERA says “All benefits pass on to your cobeneficiary, including any PERACare premium subsidy and annual increase.”
Members of the Denver Public Schools benefit structure see a different list: Option A, Option B, Option P2 and Option P3. Option A is single-life with a payment of any remaining balance, without a match. Option B guarantees the monthly benefit for a set period, usually 10 years, and pays it to the Option B beneficiary if the member dies inside that period. Options P2 and P3 mirror the half and full continuation of Options 2 and 3, again with any remaining balance paid without a match. For the general trade-off between single-life and survivor pensions, see single life versus joint and survivor pension.
A computed example shows what the half rule means in dollars. A computed example from an assumed $3,000 monthly Option 2 benefit, not a Colorado PERA figure: half of $3,000 is a computed $1,500 a month paid to the cobeneficiary after the member dies. The example only applies the half rule; PERA does not publish the Option 2 amount for any given cobeneficiary age on these pages.
| Item | Figure | Where it comes from |
|---|---|---|
| Match on a remaining account balance, standard structure | 100% | Benefit options page |
| Option 2 cobeneficiary share of the member’s benefit | half | Benefit options page |
| Usual Option B guarantee period, Denver Public Schools | 10 years | Benefit options page |
| Computed Option 2 cobeneficiary example from an assumed $3,000 | $1,500 | Computed from the half rule |
What the pages read do not state: the actual reduction factors by cobeneficiary age, a dollar example from PERA, or a table comparing the options. PERA says the member can estimate the monthly benefit under each option by logging in to the member account or calling the Customer Service Center.
Sources for this section:
- Colorado PERA, www.copera.org your-benefit-options-at-retirement: https://www.copera.org/welcome-pera-members/ready-to-retire/your-benefit-options-at-retirement
- Colorado PERA, www.copera.org purchasing-service-credit: https://www.copera.org/welcome-pera-members/benefit-basics/purchasing-service-credit
Who can purchase service credit and how it is paid
PERA frames a service credit purchase as a way to change the retirement outcome. The Purchasing Service Credit page says purchasing may allow a member to “Receive a higher benefit amount”, “Retire earlier”, or “Receive a larger health care subsidy in retirement if you enroll in PERACare”. The two routes are a Defined Benefit Plan account that was refunded or rolled over after leaving a previous PERA job, and employment not covered by PERA or another retirement program. Cost and eligibility depend on the date the current membership began, highest average salary, the type of purchase and age at purchase. This section covers who can buy and how payment works.
Eligibility depends on the membership start date. If it began before January 1, 1999, PERA says “you must have one year of earned service credit” and may buy up to 10 years of qualified or nonqualified employment. If it began on or after January 1, 1999, one year of earned service credit is needed for qualified employment and five years for nonqualified employment. Those members “may purchase up to five years of nonqualified employment”, and the total is limited to 10 years. PERA also says purchases based on a refunded or rolled over account do not count toward the 10 year maximum.
Some employment cannot be bought. PERA excludes “Any period of employment in which you contributed to a mandatory retirement plan and are entitled to a current or future benefit or payment”, with Social Security and military service named as exceptions. It adds that “any employment in which you did not receive any monetary pay may not be purchased”.
Payment has its own limits. “All service credit purchases must be completed while you are an active member and before you retire or leave a job covered under PERA.” Payment may be made “in a lump sum, monthly installments, or a combination of the two”, and installments run over a period equal to twice the number of months purchased, up to 120 months. Certain tax-deferred funds, including the PERAPlus 401(k) and 457 Plans and, if eligible, the PERA DC Plan, can be used by rollover or transfer. For tax-paid funds PERA says “Tax-paid funds must be paid to you and then you can write a check to PERA.” For a general tool, see the pension buyback calculator.
A computed example applies two of those rules. A computed example from an assumed purchase of 24 months and an assumed highest average salary of $6,000, not a Colorado PERA figure: twice 24 months gives a computed 48 months for installments, within the 120 month cap. For a member whose current PERA membership began on or after January 1, 2007 and who buys back a refunded account, the page adds 1% of highest average salary for each month purchased, which is a computed $60 a month, or a computed $1,440 over 24 months. That is only the 1% piece; the refunded amount and interest are charged on top.
| Item | Figure | Where it comes from |
|---|---|---|
| Maximum purchase of nonqualified employment, membership from 1999 | 5 years | Purchasing Service Credit page |
| Total purchase limit, membership from 1999 | 10 years | Purchasing Service Credit page |
| Longest installment period | 120 months | Purchasing Service Credit page |
| Computed 1% of an assumed $6,000 salary, per month | $60 | Computed from the 1% rule |
| Computed 1% component for an assumed 24 months | $1,440 | Computed from the 1% rule |
What the pages read do not state: any refund amount or refund conditions, since refunds appear only as the basis for a purchase, or a dollar price for a purchase of employment not covered by PERA beyond the actuarial cost description. PERA points to its calculators, which need a login, for a personal estimate.
Sources for this section:
- Colorado PERA, www.copera.org your-benefit-options-at-retirement: https://www.copera.org/welcome-pera-members/ready-to-retire/your-benefit-options-at-retirement
- Colorado PERA, www.copera.org purchasing-service-credit: https://www.copera.org/welcome-pera-members/benefit-basics/purchasing-service-credit
What could not be verified
REFUND TERMS: this page does not state what happens to your contributions if you take a refund instead of leaving your account with the system: that comparison was not independently researched for this system this session, and is left as an open gap rather than guessed from another system’s rule. Consult your own plan’s refund/forfeiture terms before deciding. Any additional field marked “not stated” in the verdicts table above was genuinely absent from the official materials read, not omitted for space.
Sources
Read September 3, 2026.
Related public pension systems: Tennessee TCRS · Indiana PERF.
General information drawn from each system’s own official published materials, not legal, tax or financial advice. Vesting, COLA and buyback rules are set by state statute and plan tier, differ materially by hire date, and can change by future legislation. This page cannot see your own member statement, which governs. We are not a law firm, a tax adviser, or a fiduciary, and this is not personalized advice.