The Senate Committee on Workforce, chaired by Senator Kathleen Taylor (D-Portland), continued its consideration and analysis of reform concepts for the Public Employee Retirement System (PERS) on Wednesday. Several amendments were introduced for SB 560, sponsored by Senator Tim Knopp (R-Bend). The amendments included the following:
• Reducing the multipliers used for calculating full-formula benefits from 1.67 percent for general service members to 1 percent for Tiers I and II, and reducing the multiplier for police and fire members from 2 percent to 1.2 percent. A retiree’s benefit is calculated by multiplying their final average salary by the multiplier for each year of creditable service (-2 amendment);
Severing the link between the assumed earnings rate and the annuity rate, and reduce it to 3.5 percent. This amendment addresses the “money-match” requirements that remain in the system. Currently, retirees eligible for the money-match are guaranteed a rate of return of 7.5 percent regardless of PERS investment earnings (-3 amendment);
• Prohibiting the use of accrued sick and vacation time that would accumulate as part of an employee’s final average salary calculation, effective on passage (-4 amendment);
• Increasing the retirement age for general service employees in the Oregon Public Service Retirement Plan (OPSRP) from 65 to 67 years of age regardless of years of service(-5 amendment);
• Requiring a public employer to pay a percentage of an employee’s salary into PERS when they hire a retiree (-6 amendment); and
• Increasing the amount of time it takes a newly-hired employee to establish membership in OPSRP (-8 and -9 amendments).
The committee only heard testimony from an invited panel that consisted of PERS staff, legislative counsel and the state’s chief human resources officer. The panel examined the constitutionality, systems savings and human resources aspects of each of the proposals. The preliminary analysis of these amendments can be found here.
The committee is expected to continue this discussion next week.
Contact: Scott Winkels, Intergovernmental Relations Associate – email@example.com
Recommendation from the Legislative Counsel from September of 2016
1. Cap the final average salary calculation at $100,000 per year;
2. Use a market rate for Money Match annuities;
3. Ensure all PERS members contribute to their benefit by redirecting member contributions into an account to help pay for their future retirement;
4. Stop unfair pension enhancement by preventing future unused vacation and sick leave from artificially inflating final average salary calculations;
5. Spread the final average salary calculation over five instead of three consecutive years;
6. Move all new employees to a defined contribution plan requiring employers to match the 6% employee contribution into the Individual Account Program; and
7. Allow full bargaining regarding government payment of employee PERS contributions and limiting agreements to five-year periods.
The PERS actuary, Milliman, is evaluating the financial impacts of these proposals. If implemented, these reforms would not affect benefits already accrued by current PERS members.
“We now have a solid place to start conversations on real, fair PERS reform, and we’re ready to get to work,” said Senators Knopp and Johnson. “We invite any Oregonian interested in solving our PERS crisis to join us.”
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