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Tuesday, October 18, 2005

Clampdown

The PERS Board packet for the October 21, 2005 meeting is now posted on the PERS web site. As expected, the Board will be asked to take up issues pertaining to the implementation of the Strunk ruling and the City of Eugene "settlement". The packet contains a 15 page memo from Craig Stroud, head of the Benefits Processing Division, describing the basic method and timetable for implementing the ruling. For "window" retirees who've been using my calculator, the method should come as no surprise. Within the memo is a reasonably well-documented illustration of how the method would be implemented. The benefit recalculation method, application of COLAs, and the actuarial reduction method follow nearly identically to what I had worked out from their previous documents. In short, if you want to figure out how all of this will affect you, get hold of my latest calculator (left link) and enter the appropriate data.

There is a second document in the packet that describes and details a proposed administrative rule that covers "recovery of overpayments". This is a worthwhile read as it explains the lengths to which PERS is going to go to recover 100% of the overpayments. A couple of things to note. First, the proposed OAR refers exclusively to "payees" (and doesn't not, unless I missed it, refer to "beneficiaries" or "alternate payees"). This implies that PERS does not intend to hold beneficiaries or alternate payees responsible for overpayments made to the primary retiree. Don't quote me on this yet because the OAR doesn't say it. It is an inference by omission. Second - a minor piece of good news in an otherwise dismal post. The "actuarial reduction" in monthly benefits will NOT affect the COLA base. In other words, when a COLA is due, it is applied to the actual benefit, not the benefit diminished by the actuarial recovery amount.

The Board doesn't appear to be poised to "adopt" anything at this meeting; that probably awaits even more detail at the November meeting. The longer the Board delays adopting its methodology, the longer it is before any potential litigation will be triggered. It is clear that recovery efforts - initiated by a notice of an overpayment and a description of its computation - MUST begin before April 1, 2006. The statute of limitations for errors and overpayments is set in statute to be 6 years from the date of the error. This means that PERS must initiate the process AT THE INDIVIDUAL LEVEL not later than 6 years from the date the 1999 earnings were credited - approximately on April 1, 2000. The clampdown will start soon.

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