The PERS Recovery effort has gotten under way, although no formal, official collection letters have gone out yet. PERS is still waiting for a decision on their budget request to the Legislative Emergency Board.
In the meantime, the little, niggling things I mentioned in my last post are starting to clarify, and the little people are finding that PERS has a variety of groups that are suddenly discovering that they owe PERS money even though they either retired before the 1999 earnings crediting, or after the so-called adjustment. In other words, there are far more people affected by the recovery than just the so-called "window retirees". We've encountered people from the Police and Fire group who retired after the recrediting action, but who purchased Police and Fire units while the 20% crediting was still in force. Those units were not adjusted at the same time that the Tier 1 regular account recrediting took place, and thus were surprised to receive a collection letter. There are approximately 1300 retirees affected by this untimely notice. People who took the partial lump sum (retired prior to 2004) in the late 1990s and decided to have PERS distribute it in some (up to 5) annual payments. The money remaining in PERS after electing the partial lump sum was also credited for 1999 earnings at 20% and so many of those people found themselves receiving an ugly surprise letter from PERS last month. The original default repayment amount started out at 2% and was, unthinkingly and uncritically, selected by PERS staff without any analysis of the actual impact on the timing of repayments. While most people would retire their obligation in under 10 years, a significant number wouldn't. Some extreme outliers wouldn't be recovered in under 40 years. Thus, PERS has had to revisit the minimum payment and revise it to between 2% and 5%. The people most likely to be affected by the higher percentages, some as high as 10%, are people who took partial lump sums.
We've also heard from people who asserted that they had no obligation to PERS yet they received letters. The largest percentage of instances were people who retired in May, June, and July 2005, supposedly after all the account adjustments were made and before they could possibly have received a single overpaid monthly benefit. PERS initially denied that there were any confirmed errors, but I now know of at least three cases in which PERS has acknowledged erroneously sending the letter. I'm pretty confident that there will be more. I have heard from no one who did not receive a letter who believed he/she should have. At this point it is probably safe to assume that if you haven't received a letter, you probably won't receive a letter. However, some of the cases are so complicated and involve so many issues that there may be a few stray letters yet to come along.
The most common question I'm getting is: "when will we actually see the invoice and have to start repaying?" The answer depends on whether the Legislative E-Board approves PERS' request for additional spending authority. If they get the approval, I would expect invoices to start going out in August and probably take about a year to complete. I have no idea how PERS will stage the invoicing, although if I were doing it, I would go after all the low-hanging fruit first (i.e. retirees receiving a monthly benefit). These make up about 75% of the total, so the low-hanging fruit also yields the greatest return for the least expense. There will probably be a much more protracted effort to contact all the people in the other categories, especially if PERS does not have an ongoing relationship with them. If PERS does not get the additional budget, the process will take much longer. I have a hard time imagining that PERS won't get the money since the benefit to cost ratio is so extremely high.
Meanwhile, the silly season is in full tilt, the structure of next year's Legislature is in doubt until November, and early returns suggest that a few well-known players want to revisit PERS yet again in February. The cockier Legislators, or legislative wannabes seem to think there is still legal low-hanging fruit to be harvested from PERS, but I'm doubtful that the bigger pieces will withstand legal review. Nevertheless, we've been kicked in the head so many times in the past decade, that I'm not willing to let up on my scrutiny of the big (or small) picture. A new Attorney General might let up a bit on the privacy matters, but that may be a small victory if we attain it. The price of a PERS retirement now seems to be eternal vigilance, something none of us anticipated when we retired.