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Wednesday, September 26, 2007

Fixing a Hole

I've been carrying on an extended email conversation with a recent PERS retiree (I'll call her "Linda", which is not her real name). Linda's issue seemed to be quite subtle and quite complicated at the same time. She worked for a PERS employer in her early years, left to work in the private sector, and then returned to work in the early years of this decade, before all the legislation. She recently decided it was time to retire. Linda kept impeccable records and is a CPA by training. Consequently, when she got her Notice of Entitlement followed by her first check, she was incensed as the account balance that PERS used was significantly different from what Linda calculated. She had every account statement going back to the 1970's and her calculations of her at-retirement account balance couldn't have been off by more than a few pennies, which I verified independently. Her NOE contained no useful information (except for the final account balance, significantly different from hers and mine), and phone calls to PERS were met with a "wall of words" by a whole bunch of uninformed representatives. After poring over her numbers, nothing popped out to me except a possible PERS calculation error. But how? Where? Linda and I communicated regularly and I finally suggested she contact David Crosley at PERS to get more specific information. What exactly was her regular account balance at retirement? What exactly was her variable balance at retirement? David supplied her with her regular account balance at retirement, which turned out to be exactly what her account balance used for her retirement benefit was. Where was her variable account? Linda and I met this morning. Before we met, she emailed David Crosley again to ask what her variable account balance was when she retired. She knew that she had selected the option to transfer her variable account at retirement, but variable accounts are first figured as part of the retirement package and then added to the regular balance before determining final benefits. Linda understood this as well as I do. No mystery here. About a half hour before Linda and I met, she heard from David with the astounding news that she had NO variable account to include in her retirement. This was news to Linda since she had account statements all the way through 2006 showing a variable account earning interest at the terrific rates (except for the sorry years in 2001 and 2002). By the time we met, Linda had figured out the problem and began to work towards a remedy. It seems that back in 2002, Linda requested a one-time variable transfer. Linda NEVER got any response from PERS and considered that she had "Failed" the test. Her instincts were confirmed when she continued to get statements from PERS showing both a regular account earning the fixed 8.0% and a variable account earning market rates in 2003, 2004, 2005, and 2006 - the last statements she would ever get. Linda is also more well-trained in finances than I ever was, and she went to the Salem office in early 2004 to double-check on her hunch. This was confirmed when PERS printed for her a statement of account that showed she failed the variable at regular test and was thus still in the variable. After that, it became a moot point for Linda. The law changed, and the market started to recover. She never thought anything about this until today when she was astounded to find out that contrary to all evidence provided her (annual account statements, interim account statements directly related to the OTVT), she was moved out of the variable account as of 1/1/2003. Apparently, when she filed her retirement papers, PERS changed its mind, moved her out of the variable account retroactively, and reduced her account by about $15000. Needless to say, Linda is now preparing her attempt to fix this hole.

This sorry story is another sad example of how bad PERS has become. The suspicions have been there for a very long time. Bad customer service, lack of notification, unexpected unpleasant and costly surprises await many retirees or near-retirees around every corner. And PERS has the gall to put out customer service surveys. Why bother? The more things change, the worse it gets. And the truly sad thing is that members and retirees effectively pay for all this non-service. No wonder that PERS is truly one of the most hated agencies right now. And I can't say that I blame anyone for the antipathy. Cases like Linda's make one want to become Howard Beale screaming "we're mad as hell and we're not going to take this anymore".

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