On schedule, the 2018 Legislative session is up and running. While this short (35 day) session is unlikely to produce any serious fireworks, several of the usual cast of soul-sucking Rs - my own Representative Julie Parrish, and the dynamio trio from Central Oregon - continue to try to exact pounds of flesh from active PERS members None of these proposals is likely to go anywhere, but they offer a glimpse into what the 2019 session could offer, unless we are able to unseat some of these clowns in November. My opinion of Julie Parrish is unprintable, even on my own, uncensored blog. Suffice it to say that she is as strong as an ox, half as smart, and mean as a junkyard dog. (How is that for a string of mixed metaphors?)
On the better news front. All PERS investments did well in 2017, and Tier 2 and IAP accounts will be credited with 15%+. Those with variable accounts and are not retired will see closer to 20%. Tier 1 members will still get the 2017 Guarantee of 7.5%. The 2017 CPI-U for the Portland-Salem metro area was up 4.19%, which means that the COLA for pre-October 2013 retirees will be the maximum 2% with an additional 2.19% heading into the COLA bank. Those retiring later will see a lesser COLA, but the surplus will still go into their COLA banks to be applied against their pre-October 2013 maximum 2% COLAs. In more news, the first retiree monthly check to be affected by the withholding tables resuting from the December 2017 Tax Reform will be issued on March 1, 2018. This should result in less Federal withholding, possibly less State withholding, and higher net benefits. For some, this really represents a tax cut; for others, me included, this is going to result in us having to completely rethink withholding strategies as it is unlikely that our taxes will really go down when they are due in April 2019. The IRS has constructed their new withholding tables with an eye towards underwithholding, which means you might be in for a surprise in April 2019, unless you plan ahead. As soon as you finish your 2017 taxes, you ought to start planning for 2018. There is little room for error during 2018, to avoid unpleasant surprises in 2019.
The stock market correction that began the week before last has many people freaking out. I am not one of them. History and statistics show that drops of 10% or more occur, on average, about every two years. I have no idea how this has affected the PERS Portfolio, but expect the media and Legislative wags’ hair is on fire far more than the OIC. Remember that part of the reason for lowering the assumed rate every two years since 2013 is the result of the Oregon Investment Council’s de-risking strategy. The time to be concerned is October 2018, not now. Me, I’m looking for bargains and keeping the faith in my own portfolio.
Finally, Executive PERS Director Steve Rodeman has announced his retirement effective June 1, 2018. I don’t know whether Steve will be retiring his shingle, or simply taking his PERS Benefit and moving on to a private sector posting. Steve is the last senior manager I know personally (since 2003), and his departure completely breaks all my ties with PERS staff since 2000. Getting direct information and advanced copies of documents will be more challenging than ever now.
Since I will be in town for most of the short session, I will be following PERS-related developments as they arise. So far, the main action is a move to take judges and legislators out of PERS, a move to bring back some investment options in the IAP, after PERS' ill-conceived and poorly received move to target-date funds based on age, and a move to allow retirees receiving the tax remedy to lose it if they move out of state, or restore it if they move back, on a much quicker schedule that is current practice. More from Soul Sucker U (SSU) as it happens.