PERS Benefit Padding

An article in the July 21, 2012 Oregonian,  by Ted Sickinger, describes ways PERS members can manipulate their employment statistic to significantly increase their PERS retirement benefits.  The examples given in that article are shocking and an examination of the origin of the laws that allow benefit padding shows that the current PERS system is the product of self-interest promotion at the highest levels of Oregon’s government.

Most of the opportunities that exist for PERS members to pad their retirement benefits did not exist prior to 1971, when legislators were not permitted to join PERS.  But after the Attorney General ruled in 1971 that legislators could join, the legislators did and they consistently gave their PERS benefits top priority.  Between 1971 and 1981, most legislators increased the employer funded PERS pension from 20% of final average salary, to 50% of final average salary.   In 1973, they permitted unused sick leave to be treated as part of final average salary.  In 1975, they enacted a law that required the people of Oregon to guarantee that their PERS employee accounts would never earn less than a minimum return each year and they let the PERS Board, which was dominated by PERS members, determine what that guaranteed minimum rate would be.  The legislators adopted the PERS Pick Up in 1979.  The Pick Up was intended to last for only two years and it allowed public employers to require the people to pay the employee contributions for PERS members.  In 1981, the legislators made the PERS Pick Up permanent.

The above PERS benefit enhancements applied to PERS legislators and all other PERS members but the legislators also passed special PERS laws that applied only to them.  In 1975, they allowed legislators to receive retirement credit for service performed after age sixty-five.  No other PERS members could do that.  That same year, legislators also allowed anyone who had ever been a legislator to retroactively join PERS back to the date they first became a legislator.  No one else had ever been allowed to retroactively join PERS.  Then in 1987, the legislature passed another law that allowed a small group of legislators to again join PERS retroactively.  One of the legislators who voted for that bill and who then retroactively joined PERS was then-Senator Kitzhaber.   By retroactively joining PERS, he was treated as having joined in January, 1979, eight years earlier than he actually joined.  Those eight years of phantom PERS service will significantly increase his PERS retirement benefit.

It is important for Oregonians to know the PERS laws made by PERS legislators allow PERS retirement benefits to be significantly increased.  This problem was created by PERS legislators who put their personal financial interest ahead of the interest of the people of Oregon who they were elected to represent.   They created a culture of PERS self-interest promotion and that set the example for all other PERS members.

A fish rots from the head.  To end this PERS problem, Oregon government needs a new head.



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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