I've been playing around with numbers and have formed some opinions about who the winners and losers are likely to be. At issue is the 1999 regular earnings crediting. Prior to the "settlement", 1999 had been credited at 20%, while the variable for that year was credited at 28.83% (an 8.83% spread between variable and regular). The variable "test" requires that PERS compare the contributions and earnings on the variable account as if they had been invested solely in the regular account the whole time. If the variable contributions at regular earnings was greater than the variable at variable earnings, the test fails and PERS didn't let you effect the "one-time variable transfer". People who applied in 1999 for 1/1/2000 typically passed the test; people who waited until 2000 for 1/1/2001 *may* have passed the test or not; I haven't encountered many people who successfully got out effective 1/1/2002 or 1/1/2003. My back of the envelope calculations show that no one who already got out of the variable at any time prior to 1/1/2003 could possibly end up with a reversal of fortune under the revised regular calculation. In fact, the people already out would only be further out. For those who failed the test, there is a chance that a recalculation would produce a *winning* result and an increased benefit. At worst, those who failed before might still fail again. The tricky area - where a winner might turn into a loser comes from those people who retired after 4/1/04, when the regular was credited at 0%. Recall that between the settlement and the Strunk ruling, PERS will have to recredit 1999 at 11.33 (down from 20%) and recredit 2003 (and 2004) at 8% (UP from 0%). Both 2003 and 2004 were winning years in the variable and the spread between the actual variable and what PERS credited to regular (0%) was significant. If all of sudden 2003 and 2004 are credited with 8%, there is a measurable probability that the variable at regular will suddenly overtake variable at variable and a "winner" is converted to a "loser". I've run examples here as well and the likelihood isn't as high as it might seem (it reduces the variable - regular spread in 2003 from 34.68% to 26.68%, and the variable - regular spread in 2004 from 13% to 5%). There is a tangible risk of a small number of reversals of fortune, but a higher prospect of more than a few significant winners.
Given this, it is anybody's guess what the PERS Board will do. I can see real litigation risk if the PERS Board doesn't do it since there is real money involved and a statutory requirement and appeal process for challenging the "one time variable transfer test" results (I know this from personal experience). On the other hand, I can't possibly see how PERS could only adjust the benefits of the "winners" while ignoring the "losers". But, since the reform legislation and the settlement are rife with examples of inequitable treatment of different classes of retirees, this places PERS and retirees (and some still-active Tier 1 members) between the proverbial rock and a hard place.