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Wednesday, May 15, 2013

A Train Robbery

This is really a post for all of you out there who read this blog and who have been INACTIVE members of PERS for some time (I'm not sure this includes my colleagues in higher education, who withdrew from further participation in PERS back in 1996 when the Oregon University System offered the one-time option to switch to the Optional Retirement Plan -- if I were you, I'd be very concerned and start querying the AOF and other organizations to start lobbying for you).  Anyhow, if you are not an active member of PERS but haven't retired, this message is for you, so start reading carefully from here on out.

Today (May 15, 2013), Oregon's Governor John Kitzhaber threw down the gauntlet for Oregon's Legislature to finish its budget negotiations, pass the additional revenue measures and finish reforming PERS.  Guess who is now in the line of fire?  Yep, inactive members of PERS, especially Tier 1 and Tier 2 members who have been receiving earnings on their money since leaving the system are now at special risk for losing access to Money Match as a means of retiring.  This is far from a done deal.  Indeed, there isn't even a bill proposing to do this yet.  But, now that this is out in the open you can bet that it won't be long before active discussions start.  Even the Oregon Attorney General has checked to indicate that removing Money Match for inactives is defensible. 

If you are already 58 (Tier 1) or 60 (Tier 2), you might want to give serious thought to putting in your PERS retirement papers soon, before they have a chance to hold you up for as much as is already in YOUR account.  That's right.  They could be proposing to take away your right to the employer contribution when you finally retire.  If you manage to retire before this law were to go into effect you could preserve all your accrued benefits and not have to wait for a lawsuit that might save you.  

If you know other inactive members of PERS, pass this message on.  If you are thinking that you can wait until whenever and just retire at your leisure, think again.  Even if the Legislature doesn't get around to this during this session, the problem isn't going to go away.  It is now an open problem, identified in a public testimony as something contributing to the current imbalance in the PERS system.  You are now a sitting duck, waiting to be blown away by a high caliber weapon aimed straight at half your earned retirement benefits (the employer match, not your own money).  Until I see a bill, I can't predict how punitive it will be, but if I were in your situation, I would be thinking very seriously of trying any way possible to start protecting whatever benefits you are entitled to.

If you have any questions, please feel free to post them here.  I have some thoughts about strategies.

15 comments:

seastar said...

I am 62 and have been inactive PERS since 1989. because of this mess i am planning on retiring June 1 2013. i have not turned in my paperwork yet, I'm waiting for the estimate from PERS. Might the date I turn in the paperwork make a difference?

mrfearless47 said...

The turn in date won't matter; only the actual effective date of retirement will matter. I don't think that the June 1 date is problematic as I don't think all the pieces that would need to come together can make it by June 1. You can do your estimate on line in about 1 minute at the PERS WEB SITE.

Tom said...

This 'plan' seems like it could be aimed at almost all PERS employees. An example that is actually happening right now in a department I know well:

10 employees are all fired in a 'reorganization'. They can apply for 4 positions that will come about after this reorganization. Thus, leaving 6 without a job. Let's say 5 of those end up working outside the PERS system. After a year or so, the government entity has saved a TON of money in PERS Money Match scheme!

Mark my word: If this passes muster in the courts - this strategy will be used throughout the system!

What you've worked for us for 25 years? Sorry we have to let you go (just a bit too early for you to retire), and we will TAKE BACK HALF of what we promised you in retirement as you are now an INACTIVE PERS person. So sorry....

mrfearless47 said...

Tier 1 members are especially vulnerable in this scheme. They are the only ounces likely to retire under money match. Tier 2 members are eligible for money match, but without the rate guarantee, less time in the system, and less time to be inactive, they mostly end up retiring under Full Formula. OPSRP members aren't eligible for money match and so this won't make a lot of difference to them.

Stu Pidaso said...

So sad...just 8 weeks ago I was a happy inactive Tier 1 PERS member waiting until 2016 to "retire", knowing exactly what I would have to live on at that time based on promises made to me when I started my career. As recent as the end of last year, my financial gal (whos' done me right so far) said "DO NOT TOUCH YOUR PERS!! YOU'RE GUARANTEED 8% AND THE MONEY MATCH!!!" Well, guess what she's saying now??? Got my first check 2 weeks ago...Part of me said; "There is NO WAY they can take it all back?!?", but?.. And btw, the PERS website gave VERY accurate estimates. Really no need to wait for them to do it...

CW NP Trip said...

If the legislature/courts can pull off this "train robbery" taking away Money Match for inactives, what stands in their way of extending that Money Match take away from ACTIVE PERS members prior to their retirement? Or even taking away the assumed rate on retired Tier 1 members? This move just seems to be opening up Pandora's box for the further rape of the public employees pension fund. And if they move to exclude judges and the like from PERS, aren't the courts going to buckle eventually, as well?
Thanks for all your insight Marc, sorry to be so paranoid, but........

mrfearless47 said...

Oh yes. Depending on the way the court rules -if it permits this robbery to take place - it would indeed embolden the PERS haters to continue to go after the remain eligible Money Match actives. That's why the PERS Coalition would be compelled to fight this in court even though it technically does not represent any of the affected individuals. The precedent would be too great to let it be made with no effective legal opposition.

Bruno said...

In April I submitted my retirement application for a July 1 date. Yesterday I sent a certified letter, as per their directions, to amend the date to June 1. Is there any process to monitor their activity to be sure they process my retirement before any changes are made to money match?

mrfearless47 said...

There isn't a process per se, but I'd be on the phone and sending emails in about a week to make sure the date has been changed. If you don't get satisfactory, or timely answers, you can email David Crosley at PERS. If you need to email him, contact me back channel via the email address for me on this site.

bmcd said...

I have been an inactive Tier One since 1997. This discussion of money match removal frightens me. I expected to start my retirement benefit on September 1 as I will have just turned 58. Would you recommend I hurry up and
process everything for a June 1 or July 1 retirement date, even though the monthly amount I would receive would be a little bit less? Can or will the legislature move that fast?

Hold the Mayo said...
This comment has been removed by the author.
mrfearless47 said...

I would go for June 1. The monthly difference in benefits will be small. Go for June 1 if you can.

janedoe said...

i am so SICK of the damn Rs and this long, drawn out roller coaster ride! do they truly have the power to stop the entire budget by not passing hospital tax until the Ds cave in and take a bigger bite out of PERS? Marc, do you think the anti-spiking brigade will rear their ugly heads yet again? or will they continue to persecute money match? this is so stressful and i naively thought it was almost over.

mrfearless47 said...

@janedoe. I have heard nary a whisper about anti-spiking for long enough now that I think that issue is dead for this session, but not forever. You should be able to get out before anything like that we're to come up. Of course, weird stuff happens and so the sooner you get out, the less stress you will be under.

Wawonder said...

I was planning on waiting, but after 20 years of being inactive, perhaps starting to collect retirement would be wise. The question is, will that make any difference or should I withdraw all from PERS and manage the money myself?