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Tuesday, October 04, 2005

Valley of Pain

Just when I thought that things couldn't get worse than yesterday's email fiasco, along comes PERS with an explanation of how they expect to implement the COLA offset ordered in the Strunk decision in relation to the recalculation of 1999 earnings required by the "settlement". As I feared, the "worst case" scenario computed by my calculator is what PERS' reality is - a valley of pain for you deeper than I had hoped for. PERS is NOT going to apply COLAs to the "fixed benefit" - a benefit they claim was computed in error. Instead PERS will: 1) add up the total amount you've been paid in monthly retirement benefits from date of retirement to implementation date; and 2) recalculate your benefits as though you had earned 11.33% in 1999, not the 20% they paid you (to get the revised benefit, they revisit 1999 and re-do the crediting on the regular account at 11.33% and compound the balance forward to the date of retirement - including contributions to accounts in 2000 - whenever you retired or 12/31/03, whichever is earlier). They will then add the appropriate COLAs to the revised benefit and get you to the implementation date. They will add up the monthly amount you should have been receiving from retirement to implementation date. They will then subtract the second balance from the first. If the result is positive, PERS owes you money. If the result is negative, that's the amount you owe PERS.

For those of you using my calculator, it has been calculating this "worst case" scenario since the beginning. It is the first large number flagged by the "<==". The second large number (smaller than the first) was the amount we'd hoped to owe PERS (actually, we hoped PERS simply owed us money, but that isn't going to happen to any "window" retiree). You might as well ignore everything in the section of the calculator labelled "COLA offset". There will be a COLA offset, but it is prefigured in the first set of calculations. Yet another revised calculator will be released shortly to reflect this sad reality. You might NOW seriously want to contribute (again or for the first time) to OPRI's Legal Defense Fund. We cannot allow this perversion of the justice system stand. Contributions to the OPRLF (Oregon PERS Retirees Legal Fund):

P.O. Box 7325
Salem, OR 97303-0065

P.S. Lipscomb Calculator (see link at left) has now been updated to reflect PERS' final implementation method. Actuarial recovery has not been programmed yet. Check back in a few weeks for that update.

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