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Thursday, December 16, 2010

Happiness is a Warm Gun

And a quick trigger finger.   I'm getting dozens of emails per day asking for advice about when to retire during 2011.  As we all know, the Legislature will convene on February 1, 2011.  During the first month of any legislative session, except an emergency session, the bills are introduced and assigned to committees.  During the second month, the bills start moving through the committees and eventually out on to the floors for a vote if so recommended by the committee in charge of hearing the bill.  We've already seen at least a dozen "suggestions" for ways to reduce PERS costs.  Some of these suggestions are properly in the purview of the PERS Board, not the Legislature.  Others are in the purview of the Legislature.  Still others *may* be effected by the Governor's order.  In a situation like this, it is worthwhile to examine the timing of one's retirement.  The courts have ruled that neither PERS nor the Legislature may unilaterally abrogate the PERS "contract", nor may they enact changes that apply either retroactively or retrospectively.

Armed with this information, I've been suggesting to people that IF THEY WERE ALREADY PLANNING TO RETIRE DURING 2011, that I would consider a retirement on or before March 1 to be the safest bet.  It is unlikely that the Legislature will be able to get anything out of committee, passed, joined by the other house and signed by the Governor much before March 31, at the earliest.  This means that if a bill is enacted as an emergency, it could be in effect as soon as the Governor signs the bill.  If you can possibly retire before March 1 -- and were planning to retire anyway during 2011 -- it is unlikely that waiting a few extra months is worth the potential risk.

Please bear in mind that this is not advice but merely a suggestion.  Some people aren't eligible to retire by March 1, but might be able to retire in August.  Obviously, you can't retire before you're eligible.  Similarly, some people need the income that a few extra months might bring.  What you have to do is to ask the question of whether waiting a few extra months is worth the chance that you might not get the extra income you expected because of some rule change that goes into effect between March 1 and the time you planned to retire.

To my friends at PERS, I am not advertising for anyone to retire.  I am merely advising people about the timing of certain events that are forthcoming in the new year.  The worst thing I could wish for you is a crushing caseload to fill all your spare time.  I know that you've got more than enough on your plate with the nuisance requests from the Oregonian and the Statesman Journal.  I hope you can get some extra bucks from the Legislature to hire a few more bodies.

This will probably be my last post before Xmas.  I'm leaving in the morning for a brief vacation in Minnesota (only I could go on vacation to a place where the high will be 9 degrees for the next four days.  I've got my shorts, my HawaIian shirts, my sunblock and my Maui Jim's already packed).

Merry Christmas and Happy Kwaanzaa to all my friends who celebrate those holidays.  Happy belated Hanukkah to my landsmen who celebrate that glorious 8 days.  And to all, a happy new year.





Joe said...

Great post and some sound thinking. Thanks Mark!

I have 5 more working days till I am out the door with ODOT. I have just 30 years and 3 months, I wanted to be safe. I have no way of knowing what the new year will bring but I know that some nasty surprise is almost a given.

With that in mind it was an easy call to pull the plug and get out now. Consider your move carefully but consider the mood of the public at large. I don't see any good things happing to PERS in the near future so give your retirement date the consideration it deserves.

For me it was an easy choice. I know what the PERS rules are now but have no way of knowing what they will be in the near future.

Joe C.

Kolbs said...

Could you please explain a bit more about "... nor may they enact changes that apply either retroactively or retrospectively."

What is the difference between retroactive and retrospective in this situation?

Thanks. I enjoy reading your blog. Very informative.

mrfearless47 said...

Retroactive and retrospective have similar, but subtly different meanings here. Retroactive means that they can't change the law back to a certain date prior to the present. Retrospective means the same thing, but applies if you change your own status in the interim. So, for example, if you retired on March 1, 2011 and sometime in the future they changed the law to be effective on February 1, 2011, that would be both retrospective and retroactive. If you were working on March 1, 2011 and they changed the law to take effect on January 1, 2011 that would be retroactive, but not retrospective. It basically covers both possibilities for you. The Supreme Court and the IRS have made it difficult without getting stakeholder (member) approval to make any kind of change like this in a public retirement system. They try, but courts typically frown on them as being both illegal and anti-contractual. They could also be unconstitutional depending on the state constitution.

ricktmullins said...

Let's hope the OSC frowns on the "retro" aspects of the Lipscomb decision. I retired 3/1/04 at a promised amount. A few months later I was notified that my monthly checks would be reduced by nearly $500! And they were reduced. Now nearly $36,000 short of what I was promised we await a hearing and a verdict.

No one informed window retirees of the back room decisions regarding the City of Eugene case.

I enjoyed my job didn't want to retire but the legislative rumblings at the time hastened me to retire early. Little did I know that my decision based on promises from PERS would be undermined by something "retroactively" implemented that I had no idea was possible.