The Legislature grinds on with the R's and D's seemingly stalemated on further PERS reform. At this point, any sort of grand bargain is unlikely and the session will probably come to sine die without any further damage to PERS benefits. This is not to say that people are off-the-hook. Au contraire, there are many things going on that will affect PERS members, actives and inactives. While the Legislature continues to try and find common ground, contract negotiations with State employee unions are ongoing as are meetings of the PERS Board. This Friday, for example, the PERS Board will receive the actuary's recommendation that the assumed interest rate be reduced from 8% to 7.5%. While this is no surprise, it still will affect PERS members and inactives by reducing the Tier 1 rate guarantee and by reducing the actuarial factors used to determine payouts for member benefits. Not incidentally, it will raise employer rates by about 3%, which will undoubtedly set off more howls of protest by employers for further rate reductions to be borne entirely by PERS members and retirees. (This is the reason why it pays to pay attention to the Legislature at the same time because one way the Legislature could "help" employers is to decouple the "assumed interest rate" from the actuarial calculations used to determine Money Match payouts). Simultaneously, the state's offer to the unions includes the elimination of the 6% "pickup". On the surface, this seems to be a straight trade where the state increases the salary of every eligible employee by 6% and then removes 6% of the salary to send to PERS each month as a pre-tax deduction. This is not cost-neutral for either employees or employers because the pre-tax does not mean "tax-free". While pre-tax means that no income tax is withheld, payroll taxes (social security and medicare) are still withheld on the base salary, not on the salary after the PERS payment is made. But, for employees, the reduction in income taxes is probably offset by increases in payroll taxes and the employee, in the near term comes out whole. For the state, there are $28 million in additional payroll taxes, which raises the question of why the state would propose something like this when it is a net loss for them. I can think of a number of reasons why, but I'm going to think about them more before posting.
So, for a week coming off the holidays things remain fertile, but news is trickling out about other aspects that we've been distracted from by watching the Legislature. If anything breaks, you'll know about it here. In the meantime, it is certain that inactive PERS members remain in the crosshairs. If you are inactive (edit: do not have 30 years in) and are at least 55 and know for certain that your retirement from PERS will be under Money Match, the door is open and you can get out. The age of 58 is only a barrier if you were expecting to retire under Full Formula. Remember, you don't get to choose the method of retirement. PERS chooses that based on which gives you the highest benefit. Don't say you weren't informed.