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Monday, October 12, 2015

The Cost of Living

PERS is humming along these days, fixing up the COLA fiasco for those of us who retired before October 1, 2013.  If you happen to have a PERS online account (PERS’ OIS system) - and I highly recommend you having one - you can check where your account is in the processing of back COLA adjustments.  If you log into your account, you can drill down to see what your benefit will be on November 1, after all the adjustments to the COLA going back to 2013 have been made.  If you dig a bit deeper, by using the left side (purple on my computer) detailed listings, you should be able to see the one-time payment for the COLAs not given, but owed, since July 1, 2013.  I’ve noticed a couple of things about the PERS site and the way the adjustments get made.  First, the adjustments appear to be made in steps, so that if you go onto the site today, you might see your November 1 benefit and think it might be too low.  That certainly happened to me.  By the time PERS brought the website back up after routine weekend maintenance, my November 1 benefit had been adjusted a second (or maybe a third) time with the amount nearly identical to my own computations (roundoff may account for the slight difference).  The second thing you might notice if you find your one-time restoration of benefits payment, is that the tax rate seems unusually high.  This is not an error; it is a quirk of the IRS withholding tables when you get a one-off payment in the middle of a month where you get another check for the whole month.  Many have noticed this surprise.  Either consider it good news because you’ve prepaid more taxes for next April; or good news because your refund will be higher.  On the flip side, many of us have noted that the one-off COLA restoration check does not withhold State Income Taxes.  This is true for some people, but not for others.  We have not figured out what the trigger is, but suspect it has to do with (1) the amount of the gross; (2) married or single; (3) number of exemptions.   Mine did not show any state withholding, which for me is not good news.

Anyway, many of the checks seem to be scheduled to be paid on October 14th, so some of us will be getting our “bonus” just in time for the property tax bills to arrive.  My “bonus” will pay my property taxes in Deschutes County, and the leftover will head on to Clackamas County, along with a lot more money.  Regardless of the amount, I am very happy to be getting it, and am grateful to the Oregon Supreme Court and the PERS Coalition for showing the Legislature how foolish they were to go after this benefit.

If you retired on or after October 1, 2013, you can expect this same experience in the early days of next year.  And, you’ll probably enjoy the use of the money as much as those of us who retired earlier will now.

I offer PERS a “high five” for taking this bull by the horns and just getting it done as quickly as possible.  

32 comments:

mrfearless47 said...

Note: PERS claims not to be doing the monthly payment adjustment in steps, but I have no other explanation for why the gross benefit would change several times (getting larger each time) unless exactly that is happening. It is also the case that the adjusted monthly benefit has deductions figured, but not the taxes yet. Beginning October 19, the tax withholding will show up and so you expect the gross benefit to decline.

I hope to have the process sorted out with PERS by tomorrow, and will update with another post if needed.

Paula Burkhart said...

Thank you for the information on the COLA restoration checks. I logged into my PERS online account, but do not see any links to any of the information you describe. All I get on the left (dark blue in my case) are links to forms and to tax return info for 2012 - 2014. Where is the link to find the COLA info? Thanks very much for all you do for PERS retirees. Paula Burkhart

Paula Burkhart said...

I logged into my PERS online account, but do not see any links to any COLA estimate information which you describe. All I get links to is for forms and for tax info for 2012 - 2014. How do I get to the COLA estimate info? Thank you for all you do.

mrfearless47 said...

Paula: When did you retire? If you retired before October 1, 2013, you should be able to see both the November 1, 2015 preliminary check information, as well as the one-off catchup check. The latter is revealed if you go the left panel (blue, purple, whatever your screen color preferences are) and choosing the payment history link. That should reveal 2013, 2014, 2015 (at a minimum) and permit you to inspect each of your PERS benefit checks during that period. It will NOT show the November 1, 2015 check since that hasn't been paid or scheduled yet, but it should show the catchup check, scheduled to be paid about 10/14/15 for many. Of course PERS is working through nearly 120,000 eligible retirees and may not have gotten to everyone yet. If you retired before May 1, 2013, you should be in the group getting processed first, but since there are so many, PERS may not have gotten to your account yet. Have faith. Keep checking every few days. Eventually, your account should pop up as remediated, unless you retired later than I think. Please follow up with additional information if you like.

Paula Burkhart said...

Thank you. I found the information. This is very helpful. Mine does show the November 1 check as well as the catchup check amount. I retired before October 1, 2013, and the check is scheduled for October 14. Thanks again for your help! Paula

Unknown said...

Hi, igjeup (Michael) here. I retired July 2014 after 30+ years, - benefit under Money Match with Option 2 for older spouse survivorship. My Oct 1 final auto-deposit hit my credit union on Oct 8th, in 3 checks ("our PERS computer couldn't update benefit/withholding in one check).
PROBLEM: My Oct total was $19 less than my Sept auto-deposit. My call/complaint to PERS specialist (Susan) was replied with:
"New mortality tables reduce your benefit due to female spouse survivorship. Same answer after I told her my wife is 3+ years older & that had PERS already finalized amortization of my Money Match benefit in July 2014, & that fixed benefit shouldn't be reduced under new tables every time the tables are updated. She said Oct 7th letter coming to me, but i get it yet due to being out of state now.
? Does new mortality table every few years reduce a fixed Money Mstch benefit, - assuming people living longer under each new table?
Thanks, Michael (igjeup)

mrfearless47 said...

Michael: the woman who you talked to was shoveling shit as fast as she could. First, changes to mortality tables only occur in January of even-numbered year. Second, once you retire, your benefit factors are etched in stone so that you are unaffected by changes to mortality tables, assumed interest rate etc. That leaves a couple of questions: 1) were you getting an "estimated benefit" that wasn't finalized until September 2015? 2) did you make any changes to your withholding and personal exemptionthat finally took effect in September? 3) Did your wife hit Medicare age and suddenly get on PERS' or PEBB Medicare advantage program.

I can't think of other reasons why your benefit amount would change in October. I'm assuming that the gross benefit didn't change; this was only a change to your net benefit. I suggest you call PERS again and seek a supervisor. The explanation Susan gave you is full of holes and actually makes no sense.

Unknown said...

Marc, I thought it was a long established policy of PERS that the difference in mortality between men and women is blended. While you've done a great job of debunking all the rest of the BS in the answer that Michael got, that small but not insignificant point jumped out at me. I am a single woman who was able to retire in my early 50s with 30 years of service and I am heavily dependent on my PERS retirement. Is the difference here that Michael is the PERS member and his wife (I assume) is a beneficiary but not a direct member of PERS? Sorry for picking at nits, but this sets off alarm bells for me.
peg

mrfearless47 said...

PERS uses blended tables to determine the mortality of the retiring member. When a beneficiary is involved - male or female - it is the age difference between the spouses, not the sex of the beneficiary that determines how the reduction takes place. Whether the spouse is younger or older, there is an insurance cost to cover the beneficiary. If he or she is younger, the cost is higher than if he or she is older.

I'm not sure what your concern is peg?

oregontrailster said...

Hi Marc, I retired 8/1/13. I have not had my account updated yet. I have checked my account payment history several times. I suspect that PERS is doing updates in stages and they haven't gotten to my month yet. I'm not in a hurry but I do find it curious that some are ahead of others. When I looked at last years payment history, I found that the supplement deposit was dated 11/26/14. I hope I don't have to wait until the end of November, although it just makes for a slightly larger deposit.

mrfearless47 said...

I suspect that form of staging is absolutely correct. But the other form of staging, where updates are posted to a single account in stages (as I've noted with my account and many others with theirs) is not something PERS is willing to 'fess up to. They've said that they will get to all currently eligible retirees by October 31, 2015, so I expect that we'll see another wave following the current group scheduled to be paid the catchup payment tomorrow.

Thanks for posting your own experience. It is very useful to have a variety of experiences to use when questioning PERS about the process they are using to do all of the remediation.

Unknown said...

Yes Marc, what you describe is *exactly* what I've always understood the situation to be for retiring PERS members and beneficiaries. What set off my alarm bells is the portion of the statement that Michael attributes to Susan at PERS "New mortality tables reduce your benefit due to FEMALE spouse survivorship." [i added the italics]

She seemed to say (assuming she said it and Michael heard her correctly) that the otherwise unexplained decrease in monthly benefit was not due to his wife being older than he is, but because she is female. I was just wondering if PERS is changing the rules, and then applying these new rules to members already retired. But I can see that perhaps the statement was just an identification of his beneficiary, not the reason for the reduced benefit.

Like I said, nit-picking. But something that caught my attention.

peg

mrfearless47 said...

The IRS doesn't permit this kind of change. Blended mortality tables apply to all retirement situations so far as I know, and are required by law. Even if PERS wanted to change the rules, it risks its IRS qualification if they change the rules so that the mortality tables are no longer gender neutral. I guess the reason I didn't comment on it was because I didn't for a moment think that "Susan" meant exactly what she was alleged to have said. On the other hand, with as much smoke-blowing as she was doing, who really knows. PERS really needs to do a better job of training their level 1 support staff. I know that many of these people are new, possibly temps, but it really aggravates me when they give out blatantly wrong information rather than acknowledging they don't know the answer and don't want to contact a supervisor.

M&S said...

Hi, igjeup Michael here and just back home from a long long trip to get my "baby" son 32 yrs old FINALLY married out of state. Yeah for beautiful Tahoe Emerald Bay outdoor wedding and Yeah it is over and he is her problem now {kinda kidding} I do recommend emerald bay Tahoe BEFORE the snows fly there. Gorgeous scenary, but dry and low water line ......
I know I heard PERS Susan correctly when she said that the "letter will answer it all" and that the Option 2 survivorship + new mortality table caused the decrease. I specifically declare me as a male and younger than my wife, and she replied that "women live longer" so new tables explains reduction to stretch the dollars after I die until my wife dies.
I will pickup PERS letter tomorrow from my held mail, but I bet Tahoe Vegas big bucks that Marc is correct on the PERS-BS brush-off I got, and this was after I was bumped up to the expert level of service from Customer Service. She mentioned how swamped she was with calls but still she should not guess or try to make me go away. I will pursue the correct answer from a supervisor.
Can I ask for an administrative hearing to contest the reduction in monies?
Michael

mrfearless47 said...

Michael: I think there might be a more sensible explanation, although I'm puzzled about the timing. Since you retired after October 1, 2013,your 2015 COLA was slightly too high to at 2%. If what happened is what I think happened, your benefit was adjusted downward and you are repaying the slight overpayment. It has 0 to do with either of your ages or sexes. It relates entirely to getting a 2% COLA for July 2015 and after, when you were entitled to something closer to 1.98%.

mrf

Unknown said...

Thank you so much Michael for clearing up the doubts I had. Now I'm truly concerned the a PERS Supervisor does not know that they use a blended mortality table and used the old, old excuse that women live longer so must be paid a low benefit to cover the added years!

I totally believe Marc, that the reality is that this rule resides with the IRS and that PERS would loose it's IRS status if they didn't follow this rule, along with all the others that govern such retirement plans. As a former customer service phone/counter person at both DMV and briefly at Oregon Revenue, I have long been concerned about the common misinformation given out by front line customer service contacts at PERS. To find out that a supervisor so poorly understands something so basic to the program is, to me, deeply upsetting.

Thanks to both Marc and Michael for this discussion.

peg

John Goad said...

John G - After checking my online account and finding nothing on the COLA Restoration check, I called PERS today to hear that I might be part of an exclusion group of 23,000 members whose data could not be done with the rest and may need to be done by hand. I am unsure what that''s all about as I retired 7-01-2010.

They don't know if I am part of that group and have to research it and let me know in a week or two. I guess it is the typical PERS runaround.

mrfearless47 said...

Typical reasons for the exclusion group: messy and complicated divorce, separated from employer long before retiring (sometimes both elements apply), breaks in service, current benefit is overpaid or underpaid , which shows up in the type of account audit that just shows up now, and a dozen other reasons. You might want to call back and ask to speak with a level 2 supervisor. They can usually get to the bottom of these problems.

jimc911 said...

John G:
I retired the same day as you did and received my COLA restoration late yesterday but it is missing Oregon state taxes.

PERS messed up my initial benefit payment and finally resolved it 6 months later. I have zero confidence in PERS when it comes to using a computer to do anything.

Jim

mrfearless47 said...

Many of us suffered the fate of no state income taxes withheld. PERS relies on contract programmers who have no allegiance to the organization and no commitment to getting things right. It is a sad commentary on the state of programming that independent contractors don't take pride in their work. PERS doesn't really have anyone to supervise these fly-by-night programmers. It is always wise to double and triple check their computations. Most of the time, the computations are correct (by the grace of god), but when they are wrong, they are way wrong. I'm just glad they managed to withhold federal taxes.

John Goad said...

I will check back with them this coming week. I had no breaks in service before retiring, no divorce, and no over or under payments that I am aware of. It just seemed strange to me that they had issues with it.

mpguy said...

The lack of state tax withholding may cause some people to consider making an estimated tax payment--or increasing their estimates if they're already making quarterly payments. However, remember that those who paid Oregon income taxes for 2014 will be getting a kicker payment that will show up as a credit on the 2015 returns. In many cases, that kicker credit will more than compensate for the lack of Oregon tax withholding on these COLA restoration checks.

oregontrailster said...

This afternoon I spoke with a PERS customer service representative. She told me that I am not in the first group of retirees. She stated that I will be in the next group that will be adjusted in January 2016. It appears that PERS has struggled to adjust members accounts. This must be a major problem for PERS. PERS has done a good job of fixing the COLAs, but need to do a better job of outreach to those that will have to wait a little longer. A letter to those in the next group would save a lot of customer service reps time.

mkw said...

I retired on 7/1/13 and, as of 10/26, see no sign of a COLA adjustment payment in my payment history.

mrfearless47 said...

As I understand things, the group that retired between July 1, 2013 and October 1, 2013 will be addressed by the adjustment taking place in January. Things have changed as PERS has gone through the process. It has turned out to be more challenging to compute than their original estimates.

Christine Evison said...

I retired in 2010 after a 2 yearvsepatation from my employer. Does this mean my COLA has to be hand calculated? When could I reasonably expect to see the outcome?

mrfearless47 said...

@Christine Evison. I have no reason to believe that your COLA has to be hand calculated. There is also no obvious reason why your correction hasn't been made already since the changes in the COLA only apply to those who retired on or after 5/1/13 or 10/1/13, depending on the final implementation. Since you are part of the group who isn't affected by the new COLA rules, I'm not seeing the reason why you shouldn't see your corrected benefit check and corrected for certain going forward by Friday, or Monday at the latest. If you have your monthly check direct deposited, then the correction for back-owed COLA will be direct deposited too. Have you checked your bank to see if a direct deposit from PERS has been made recently? (Mine was deposited on 10/15). If you have heard nothing of any kind from PERS, including the form letter that went out to every eligible recipient for this time through's correction, then you could be in a group that will be fixed by January 31.

If you can provide a few more details - none personal - about the circumstances of your retirement (general service or PF, money match, full formula, or formula plus annuity) it might be possible to dig a bit deeper and figure it out. If you just want to know who to contact at PERS, email me back channel and I can give you a name and email address of someone who might be able to answer your questions more directly with access to your account.

Christine Evison said...

I found a whopping $110.00 PERS deposit on 10/14. Surely this does not equal 2% for COLA 2013, 2014 and 2015 minus the $150 supplemental check I once got? Did I ready letter wrong?

mrfearless47 said...

It might. Remember that you got at least 1.5% in 2013, 1.25% in 2014, and 2% in 2015. That is the unpaid residue, less taxes. Your benefit will be adjusted upwards from your October 1 payment on November 1. Lots of people ended up with smaller benefits than they expected. Part of the problem is the way the taxes get withheld. You should have a PERS OMS account so you can look up your benefits directly and see what is being withheld. You are on the fast track for adjustment.

John Goad said...

Just an update. I was contacted by PERS and advised my benefit adjustment would not be done until January 1st as there was something with my account that did not allow the simple formula to be applied. I asked what that was and the woman who called me did not know. I asked to speak with a supervisor and she told me she was a lead. When I started to ask her another question she hung up. Not a real professional employee for sure.

I am guessing it is because I changed from in state to out of state retiree in 2013.

RainbowSunset said...

I have received nothing and retired on December 1, 2013. I sent them an email asking what was going on...

mrfearless47 said...

RainbowSunset: You fall into the January 2016 correction cohort. The October cohort was limited to (mostly) retirees who retired before the effective date of either law (i.e. prior to May 1, 2013). Even some of the later-in-the-window retirees may not have been corrected in October. You should expect your adjustment to take place in two phases. A one-off check sometime in mid-January to pay you for amounts owed you since you retired, and a regular check, adjusted for your new benefit that reflects all of the compounded missed COLAs starting on February 1, 2016. Once that is done, you will be good-as-new, less the lost purchasing power of the money you receive late. Don't expect to hear anything specific from PERS. You *might* get a generic letter describing what I just told you in the mail either in late December or very early in January.