After Legislators Join PERS, Benefits Skyrocket, Part 1

PERS was created in 1945.  The law stated that the objective of PERS was to provide each PERS member with a total service retirement allowance of  approximately one-half of the member’s average salary during his or her last five years of service.  That benefit was based on 25 years of service for police and fire fighters and 30 years of service for all other members.  The retirement benefit would be paid from two separate sources.  The first payment source would be contributions that the employee had made to PERS.  The second would be the contributions paid by the employee’s employer.  Together, the employee’s contributions and the employer’s contributions would pay for 50% salary benefit for the employee’s lifetime. Legislators were not PERS members when PERS was created in 1945.

In 1953, the PERS objective was modified to take into consideration social security payments that retired PERS members would receive.  No changes were made regarding PERS employees who were not eligible to receive social security.  The objective was still to provide them with a  benefit of 50% of average salary after 25 for police and fire employment or 30 years for other employment.  For PERS members covered by social security, however, the PERS retirement allowance was lowered to 25% of average salary.  This was done because social security was expected to provide another 25% of salary.  That would bring their total retirement payment from PERS and from social security to the 50% of salary amount.  Legislators were not members of PERS in 1953.

In 1955, the PERS retirement objective for PERS members who were not covered by social security remained the same.  For PERS members covered by social security, the objective was modified to specifically state that their retirement allowance from both PERS and social security would be between 50% – 60% of their final average salary.   Legislators were not members of PERS in 1955.

From 1955 to 1967 the PERS retirement objectives remained the same.  But, in 1967 the PERS retirement objective was removed from the law.  In its place was a new provision which established the annuity amount that would be paid from the employer’s contributions.  No limit was placed on the amount that would be paid from the employee contributions and no objective was established for total retirement benefits to be paid to a PERS retiree.  That provision created the opportunity which lead to a substantial increase in PERS retirement benefits after the legislators were allowed to join PERS.

The next installment of this report will summarize what happened in 1967 and how PERS benefits dramatically increased after Legislators were allowed to join PERS, starting in 1971.

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About Dan Re

I am an attorney who has lived in Bend and practiced law since 1981. In educating myself about the Oregon Public Employees Retirement System (PERS), I was shocked at how the PERS laws were changed by the legislature, once legislators were allowed to join PERS in 1971, 26 years after PERS was first created. Those changes personally benefitted the legislators who made them at the direct financial expense of the people they were elected to represent. That is wrong and I intend to change it. In 2009, I started a non-profit 501(c)(4) corporation, In RE The People, Inc., for the purpose of informing concerned citizens of what happened regarding PERS and other issues of social and civic importance. I then created this blog to further that objective.
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