Public Employees’ Retirement System (PERS) Updates
***PERS Update - For Informational Purposes Only***
This information is being provided to assist employees in researching, reviewing, and evaluating how proprosed PERS reform and/or changes may impact their retirement benefits.
Employees are responsible for researching, verifying, and evaluating how these changes and reform measures may impact them and their retirement benefits.
OSU is NOT providing legal interpretation of the PERS reform and/or changes and cannot evaluate how these changes may impact an individual employee’s retirement benefits.
** NEW 7.20.2017: PERS UAL Task Force will hold its first meeting Monday, July 24, 2017, from 2-5 p.m. in the Portland State University Boardroom, 1800 SW 6th Ave., Suite 515, Portland, OR. The meeting is open to the public. Members of the public can learn more on the task force’s website and are encouraged to submit comment to task force members by emailing PERSUAL.TASKFORCE@oregon.gov. Comments will be reported to task force members at the July 24th and subsequent public meetings. At the July 24th meeting, the agenda will include the election of a chair, review of the Governor’s expectations of the task force, a report on public comments, a review of state and local government assets, and a discussion by task force members on the available assets.
** NEW 7.08.2017 - 2017 Legislative session has adjourned. No action was taken on the PERS bills that were introduced.
** NEW 5.31.2017: PERS Governor Kate Brown Appoints Members of Task Force to Address PERS Liability. Task Force is charged with identifying and ranking options for reducing the PERS liability by $5 billion. Final Report to Governor Brown to be issued by November 1, 2017. Read the full press release.
There are multiple bills that have been introduced in the 2017 legislative session dealing with retirement programs. Below are some of the bills that may impact the PERS programs. You are encouraged to research and monitor PERS legislation to determine how these changes may impact you.
To follow these bills and/or any of the other bills in currently in the Legislature, viste the Oregon State Legislative website.
To search bills - In the "Search Bills" box (right handside of page)
- enter "retirement"
- then refine search by selecting
PERS provides Talking Points Regarding PERS Bills and Retirement
We appreciate that members are trying to plan for retirement, and that a variety of proposals may impact future benefits. Deciding whether to retire should involve thorough planning and preparation; possible PERS legislation should not be much of a factor for those deciding whether to retire.
- As we understand the 2015 Oregon Supreme Court Moro decision, legislation cannot reduce benefits earned before enactment, but may only reduce benefits earned for service after enactment.
- Generally, member benefits increase with each additional month of service. If a member retires today, they'll get less in benefits than if they retire tomorrow; if legislation alters that paradigm, it probably fails the court's Moro decision.
- Legislation may reduce the pace at which benefits grow for future service, but a member will still earn more in retirement benefits for future service, just "less more" than before reforms.
- If legislation is adopted, our assumption after Moro is that part of a member's total benefit at retirement will be based on the service and calculations BEFORE the legislation and part of their benefit attributed to service and calculation AFTER legislation. The exact impact will differ for every member, so any effect is necessarily dependent on an individual's circumstances.
- PERS cannot and does not speculate on the impact of various proposals until they are adopted; the Legislature is the plan sponsor and their laws control the benefits we pay to our members.
2017 PERS Proposed Legislation - Senate Bill 1068
Senate Bill 1068: SB1068 was introduced on June 5, 2017. The bill would require the PERS Board to allocate a portion of the 6% employee contribution that is currently deposited into the Individual Account Program (IAP) account into a separate risk sharing account. This risk sharing account would then be used to help fund the Tier 1, Tier 2, and OPSRP pension benefits accrued after July 1, 2018. Beginning July 1, 2018, 1% of the employee's contribution* would be deposited into the risk sharing account and the balance (5%) would be deposited into the employee's IAP account. Begining July 1, 2019, 2% of the employee's contribution* would be depostied into the risk sharing account and the balance (4%) would be deposited into the employee's IAP account. Begininng in 2021, the PERS Board would review and determine the percent that would be allocated to the risk sharing account based on the criteria outlined in the statute. The risk sharing contribution rate may not exceed 4%.
- Full text of the bill
- Referred to Joint Committee On Ways & Means on 6.5.2017
- As of June 27, 2017, no meetings and/or further discussions have been scheduled.
*OSU currently pays the 6% employee contribution on behalf of their employees.
2017 PERS Proposed Legislation - Senate Bill 559
Senate Bill 559: Changes calculation of final average salary for purposes of Public Employees Retirement System to use five years of salary instead of three years, for salary paid on and after January 1, 2018. Directs Public Employees Retirement Board to recalculate employer contribution rates to reflect savings attributable to Act. Provides for expedited review of Act by Supreme Court upon petition by adversely affected party. Declares emergency, effective on passage. [PERS Tier 1, Tier 2 and OPSRP][Full Formula or Full Formula+Annuity]
- The full text of bill
- Public Hearing held 2/13/2017
- Work session scheduled for 4/17/2017 at 3pm
- Moved to Joint Ways & Means on 4.17.2017 with no recommendation as to passage, amendment to remove emergency clause
- As of June 27, 2017, no meetings and or further discussions have been scheduled
2017 PERS Proposed Legislation - Senate Bill 560
Senate Bill 560: Redirects employee contributions made by member of system from individual account program to account to be used to pay for member's pension or other retirement benefits accrued on or after January 1, 2018. For years beginning in 2018, caps at $100,000 annual salary used to calculate final average salary for purposes of Public Employees Retirement System. Directs Public Employees Retirement Board to recalculate employer contribution rates to reflect savings attributable to Act. Provides for expedited review of Act by Supreme Court upon petition by adversely affected party. Declares emergency, effective on passage. Excludes Judges from the $100,000 limit. [PERS Tier 1, Tier 2 and OPSRP] [Average Ending Salary: Full Formula or Full Formula+Annuity][IAP: all plans]
NEW Senate Bill Amendments added 3.15.2017 (total of 7 amendments each replacing the original proposed bill and any other amendment) - proposals include: reduces Tier 1/2 pension multiplier from 1.67% to 1.00% for service after January 1, 2018; Tier 1 - reduces "assumed rate" from 7.5% to 3.5% in converting account balances to lifetime annuities - effective on passage; Tier 1/2 - eliminates unused sick leave and/or vacation lump-sum payout from the calculation of average ending salary; Tier 1/2 unused sick leave accrued after 1/1/2018 could not be used in Average Ending Salary calculation; OPSRP tier (hired after 8/28/2003) - new members hired after the effective date of Act (declared emergency, effective on passage) minimum retirement age increased to age 67 from age 65 regardless of years of service; New employees - increases "wait time" from 6 months to 12 months to become members; Current and new employees - changes definition of qualifying positions from 600 hours in calendar year to 1,000 hours in calendar year. Refer to the Legislative Staff Review and PERS Analysis of Legislative concepts found in the 2017 PERS and Legislative Analysis of Bills and/or Amendments section.
NEW 4.12.2017: Senate Bill Amendment #10 would replace the original proposed bill and previous amendments: reduces Tier 1/2 pension multiplier to a "rate to be determined" from 1.67% for years of service on/after January 1, 2018; reduces OPSRP pension multiplier to a "rate to be determined" for service on/after January 1, 2018; All Tiers - Average Ending Salary - average to be used is 3 years for service before January 1, 2018 and to five years in the 5 years for service after January 1, 2018; Tier 1, Average Ending Salary will exclude lump-sum payment for unused vacation that is accrued after January 1, 2018; Tier 1/2, Average Ending Salary will not include unused Sick Leave accrued on/after January 1, 2018; Tier 1 - Money Match Formula, annuity rate used will be the lesser of the rate determined by the board or the federal Pension Benefit Guaranty Corporation (this is effective for retirements on or after the effective date of this act - The act has an emergency clause stating it is effective upon passage);Employer cannot make the employee contributions after January 1, 2018 or expiration of bargaining agreement; creates a "member pension contribution account" (this is a additional account) that will be used to help fund the lifelong pension benefit; ; Board will set employee contribution rate for the "member pension contribution account" every 2 years - no rate is currently identified; employee can redirect contributions that were to be made to the IAP into the "member pension contribution account"; see the full text of the amendment for additional changes. Refer to the Legislative Staff Review and PERS Analysis of Legislative concepts found in the 2017 PERS and Legislative Analysis of Bills and/or Amendments section for additional information and analysis of the impact.
2017 PERS and Legislative Analysis of Bills and/or Amendments
HOW TO SEARCH LEGISLATIVE BILLS
- Go to the Oregon State Legislature website
- From the "Bills and Laws" tab,
- Select "Current Session Details"
- Select "Bills" icon (in the top blue header)
- Type in word/phrase to search; or
- If you know the bill number, select it from the list of Senate or House bills
HOW TO CALCULATE YOUR PERS PENSION BENEFIT
- Request written estimate:
- Use the written benefit estimate request if your pension estimate needs to be processed by the PERS divorce unit
- Maximum vacation payout for an Unclassified employee is 180 hours
- OSU does participate in the PERS sick leave program
- Retirement date is always the first of the month, regardless of last day worked
- ORP members (Optional Retirement Plan with Valic, Fidelity or TIAA) –
- use salary data from date last in a PERS position (i.e., 1996)
- use sick leave balance at the time membership changed from PERS to ORP (i.e., 1996)
- do NOT use a vacation balance because unused vacation (if applicable) was not paid out when you changed to the ORP pension program
- Fax (503-598-0561) or mail form directly to PERS
- PERS processes request in the order of retirement date (not in the order requests are received). Recommend using the earliest retirement date possible.
- Online Pension Estimate
- >click on Online Member Services
- > Select “Log In”
- >"Open a New Account" and then login.
- > You're now on the Account Home Page.
- > Scroll down and click on "Member" in the "Account Plan" section, you are now on the Account Summary Page.
- > Click on "Benefit Estimate" (on the left hand side of the screen)
- > Click on "Create a New Benefit Estimate", the system will ask a series of questions (i.e., retirement date, beneficiary, etc.)
What if I am a member of the Optional Retirement Plan (ORP) with Valic (prior to 2007), Fidelity, or TIAA - Does this impact me?
Unclassified employees hired prior to 1996: employees made a choice in 1996 to either stay with PERS or to change to the ORP plan. Many of these employees were vested in the PERS program at that time and continue to have membership in the PERS program.
Unclassified employees hired after 1996: these employees had a choice to remain in PERS (if they were coming from another Oregon PERS employer), elect PERS for the first time, or to participate in the ORP plan after serving their initial 6-month waiting period with the university. If the employee was already a PERS member, they would also elect to maintain their account with PERS or to transfer the accounts.
ORP members that continue to have a PERS account, could be impacted by the changes being proposed to the PERS programs. The impact will depend on which PERS Tier (Tier 1, Tier 2, OPSRP) plan you participate in as well as the projected formula you are estimated to retire under. For Tier 1, possibities include Full Formula, Full Formula+Annuity (hired prior to 1981), or Money Match. For Tier 2 and OPSRP employees, Full Formula is the formula you will retire under. The PERS Average Ending Salary is calculated a little differently between the various tiers. Therefore, it is important to know which Tier you belong and which formula you are estimated to retire under. Please refer to the How to Calculate Your PERS Pension Benefit section on how to do an online estimate or submit a written estimate.
2017 PERS Proposed Legislation - Senate Bill 309 - DID NOT MOVE OUT OF COMMITTEE
Senate Bill 309: Eliminates option of members of individual account program of Public Employees Retirement System to receive distributions as installment payments upon retirement. Requires members retiring on or after January 1, 2019, to receive distributions as lump sum. [PERS Tier 1, Tier 2 and OPSRP]
2017 PERS Proposed Legislation - Senate Bill 791 - DID NOT MOVE OUT OF COMMITTEE
Senate Bill 791: Eliminates limitations on hours that may be worked by a retired member of Public Employees Retirement System without suspension of retirement benefits. A person who retires under the provisions of ORS 238.280 (1), (2) or (3) may be employed under this section only if the person's date of retirement is more than six months before the date the person is employed under this section. [PERS Tier 1, Tier 2 and PERS OPSRP]
- The full text of bill
- Public Hearing held 3.6.2016 @3pm
- No further action has been scheduled as of 3.29.2017
2017 PERS Proposed Legislation - Senate Bill 913 - DID NOT MOVE OUT OF COMMITTEE
Senate Bill 913: Changes various provisions to Public Employee Retirement System. Assumed Rate - lesser of rate rate set by the PERS Board or the current rate for valuing annuity benefits by the federal Pension Benefit Guaranty Corporation [impacts Tier 1 Money Match formula] - Actuarial equivalency factor tables adopted under this section become effective on January 1 of the calendar year following adoption of the tables by the board or on another date sepcified by the board. Reitrement Age for members establishing membership after the effective date of bill (effective on passage): OPSRP Regular Retirement Age increased to age 67 from age 65, OSRP Early Retirment age increased from age 55 to age 57. Redirects Employee Contributions (6% IAP account contributions) to a member pension contribution account and will be applied to the cost of the pension or other retirement benefits payable. Employer may not make (pick-up) the employee contribution on or after the later of January 1, 2018 or the expiration of any collective bargaining agreement in effect on Janaury 1, 2018. Calculation of Final Average Salary - changes to 5 years or final 60 months [Pers Tier 1, Tier 2, PERS OPSRP]. Declared an Emergency, bill effective upon passage.
2017 PERS Proposed Legislation - House Bill 3013 - DID NOT MOVE OUT OF COMMITTEE
House Bill 3013: Changes various provisions to Public Employee Retirement System. Assumed Rate - lesser of rate rate set by the PERS Board or the current rate for valuing annuity benefits by the federal Pension Benefit Guaranty Corporation [impacts Tier 1 Money Match formula] - Actuarial equivalency factor tables adopted under this section become effective on January 1 of the calendar year following adoption of the tables by the board or on another date sepcified by the board. Declared an Emergency, bill effective upon passage.