The Public Employees Retirement System (PERS) is the retirement and disability fund for public employees in the

U.S. state In the United States, a state is a constituent political entity, of which there are 50. Bound together in a political union, each state holds governmental jurisdiction over a separate and defined geographic territory where it shares its sover ...

Oregon Oregon () is a U.S. state, state in the Pacific Northwest region of the Western United States. The Columbia River delineates much of Oregon's northern boundary with Washington (state), Washington, while the Snake River delineates much of it ...

established in 1946. Employees of the state, school districts, and local governments are eligible for coverage. A health insurance plan for covered retirees was added to the program in 1987. The program is administered by a twelve-member board of trustees, appointed to three-year terms by the

Governor A governor is an administrative leader and head of a polity or political region, ranking under the head of state and in some cases, such as governors-general, as the head of state's official representative. Depending on the type of political ...

subject to confirmation by the

Senate A senate is a deliberative assembly, often the upper house or chamber of a bicameral legislature. The name comes from the ancient Roman Senate (Latin: ''Senatus''), so-called as an assembly of the senior (Latin: ''senex'' meaning "the el ...

, which also administers the Oregon Savings Growth Plan, a voluntary deferred compensation plan established in 1991.

Pension benefits

Tier one

Public employees hired before January 1, 1996 receive the system's most generous pension benefit. Benefits under this program have been described as "expensive" and "overly generous," often entitling retired workers to lifetime monthly payments over 100% of their pre-retirement earnings. In 1979, the PERS governing board set as its goal that the system's benefits, when added to social security, shall replace 75-85% of pre-retirement earnings. Actual payments grew because of a program known as "money match," which guaranteed member account returns between 5% and 8%, without regard to greater market performance or the health of the economy. During the 1980s and 1990s, the governing board awarded account earnings in excess of 8%, placing little or no money in reserves for eventual market downturns in the 2000s. Member accounts saw appreciable and consistent growth during this time, but underlying pension assets did not grow to cover the increased benefit guarantee. Career public employees who worked from 1970 to 2000 often were entitled to retirement income replacement rates over 130% of their pre-retirement earnings.

Tier two

If hired between January 1, 1996 and August 28, 2003, a public employee is entitled to a somewhat reduced pension benefit as a result of changes passed by the

Oregon Legislative Assembly The Oregon Legislative Assembly is the state legislature for the U.S. state of Oregon. The Legislative Assembly is bicameral, consisting of an upper and lower house: the Senate, whose 30 members are elected to serve four-year terms; and the Ho ...

in 1995. Member account (money match) returns are not guaranteed for Tier Two employees, and the age to qualify for general service full retirement is increased from 58 to 60 years. Tier Two employees are also not eligible for an Oregon state tax remedy, whereby Tier One employees can have a certain portion of state income tax reimbursed as an incremental increase to their pension benefit. Benefits paid under this program are still considered generous and above average, normally offering income replacement rates far in excess of the PERS board's stated goal.

Oregon Public Service Retirement Plan (OPSRP)

Sometimes referred to as "Tier Three," OPSRP applies to employees hired after August 29, 2003. This further reduced pension sought to bring state actuarial liabilities in line with employer contributions by raising the retirement age and by vesting benefits more slowly. Benefits under this program are considered in line with comparative government pension programs. OPSRP payouts more or less meet the replacement rate target set by the PERS board. Unlike Tier One/Tier Two public employees, OPSRP members' benefits may be calculated only on the basis of their final salary and employment length. Vesting occurs at 1.5% of final salary per year, capped at 30 years.

Individual Account Program

Created originally as a mechanism to divert member contributions away from the "money match" pension program that was partially responsible for generous benefits above the system's income replacement target, the IAP is a qualified

defined contribution plan A defined contribution (DC) plan is a type of retirement plan in which the employer, employee or both make contributions on a regular basis. Individual accounts are set up for participants and benefits are based on the amounts credited to these a ...

akin to a 401(k), 403(b), or 457(b). Member contributions are invested alongside pension assets and realize market gains and losses.

Reforms

The pension system has been reformed by the

several times. Most recently, pension reforms signed by

John Kitzhaber John Albert Kitzhaber (born March 5, 1947) is an American former politician who served as the 35th governor of Oregon from 1995 to 2003, and as the 37th governor of Oregon from 2011 until his resignation in 2015. A member of the Democratic Party ...

in 2013 were challenged at, then subsequently reversed by, the

Oregon Supreme Court The Oregon Supreme Court (OSC) is the highest state court in the U.S. state of Oregon. The only court that may reverse or modify a decision of the Oregon Supreme Court is the Supreme Court of the United States.Oregon Oregon () is a U.S. state, state in the Pacific Northwest region of the Western United States. The Columbia River delineates much of Oregon's northern boundary with Washington (state), Washington, while the Snake River delineates much of it ...

457(b) The 457 plan is a type of nonqualified, tax advantaged deferred-compensation retirement plan that is available for governmental and certain nongovernmental employers in the United States. The employer provides the plan and the employee defers comp ...

Deferred Compensation Deferred compensation is an arrangement in which a portion of an employee's income is paid out at a later date after which the income was earned. Examples of deferred compensation include pensions, retirement plans, and employee stock options. The p ...

Plan, known as the Oregon Savings Growth Plan (or OSGP), is provided to state and other eligible public sector employees as a supplement to the

defined benefit Defined benefit (DB) pension plan is a type of pension plan in which an employer/sponsor promises a specified pension payment, lump-sum, or combination thereof on retirement that depends on an employee's earnings history, tenure of service and age, ...

(pension) mandatory to all PERS participants. As of October 2017, total assets of the DC plan were approximately 2.1 billion

USD The United States dollar (symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the official ...

, with about 29,000 participants. Contributions to the plan are made by payroll deduction by participating employers to accounts recordkept by

Voya Financial Voya Financial is an American financial, retirement, investment and insurance company based in New York City. Voya began as ING U.S., the United States operating subsidiary of ING Group, which was spun off in 2013 and established independent fina ...

. Assets may be invested in a number of core plan options, or swept to a self-directed brokerage account for broader investment choice. The plan allows Roth and pre-tax contributions, as well as rollover contributions from qualified retirement plans/accounts, including the Oregon PERS Individual Account Program (IAP).

References

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External links

Official website
{{authority control Public Employees Retirement System , Oregon 1946 establishments in Oregon Public pension funds in the United States Government agencies established in 1946