Article: (Oregon) Reforms reduce PERS payouts

Reforms reduce PERS payouts

07:17 AM PST on Monday, December 12, 2005

Associated Press

SALEM -- Pension reforms enacted by the 2003 Legislature have reduced payouts to recently retired teachers, state employees and other public workers, according to statistics from the Public Employees Retirement System.

Oregon PERS headquarters. (KGW Photo)

Employees who retired in 2004 after 30 years of work earned pensions that averaged almost 80 percent of their salary, the Statesman Journal newspaper reported. While that's much better than most workers can expect in retirement, it's a sharp decline from 1999-2001, when hundreds of public employees retired in their early 50s on pensions rivaling or topping their salaries.

"I think it means that the reforms are working," said Rep. Greg Macpherson, D-Lake Oswego. "The old PERS Board made some really poor decisions, then benefits spiked up higher than anyone intended they become."

The average pension for 2004 retirees with 30 years of experience was $45,325, down from $51,022 the year before and the lowest of the past six years, according to PERS figures.

"I think that most people recognize that in public service, the system wasn't designed to give you 100 percent replacement of your earnings at the end," Gov. Ted Kulongoski said. "If the replacement ratio is 79 percent, when you factor in Social Security, I still think that is a substantial retirement."

Retired teacher Kathryn Paeske, 59, disagrees.

的 retired at age 58 and have to wait until age 65 to start becoming Medicare-eligible," the Keizer woman said. "If your retirement benefits are significantly less, your expenses, especially your health expenses, have increased substantially, and I don't think that's being factored in."

Paeske has returned to the classroom as a substitute teacher, trying to work at least two days a week so she can continue to earn health-care benefits.

The traditional PERS benefits formula was devised to pay pensions equaling 50 percent of workers' final salary after 30 years, or 60 percent for police and firefighters. Those targets were obliterated by a series of policy decisions, such as the addition of the Money Match option and generous payouts by the PERS Board.

When the 2003 Legislature created the Oregon Public Service Retirement Plan for new public employees, it guaranteed pensions equaling 45 percent of salary after 30 years. That, combined with new individual investment accounts, should yield pensions projected at 65 percent to 67 percent of salary, Macpherson said.

The median pension for all U.S. public plans is 55.5 percent of salary after 30 years, said Keith Brainard, the research director for the National Association of State Retirement Administrators.