Ironic

Isn't it ironic that the 2003 Legislature worked so hard to create a "PERS-lite" (OPSRP) that would reduce benefits for new employees? They even went overboard to make sure that PERS Tier 1 members who took a "break in service" for longer than 6 months would NOT be able to return to Tier 1 membership upon returning to work. The "break in service" language created headaches for PERS, headaches for employers, headaches for unions, spawned a lawsuit, and the language is now being cleaned up in the Legislature. But, as hard as everyone has worked to clarify the language, no one really anticipated one consequence of the new law that was only exposed once the Supreme Court ruled in the Strunk opinion. When HB 2020 passed and the Break in Service language put in, the expectation was that Tier 1 members who returned to work after a 6 month or longer break in continuous service would be placed in the less generous system and overall benefits would decline for those people. They assumed that the Court would uphold the "lifetime guarantee", and that poorly performing market would quickly reduce the impact of "money match". With Strunk, theory and reality collide.

Strunk overturned the "lifetime guarantee" provision of HB 2003 and made clear that Tier 1 members' rate guarantee is an annual guarantee, not a lifetime guarantee. Thus, members are entitled to receive a guaranteed minimum rate of return (currently 8%) on all Tier 1 benefits. So, now, when a Tier 1 member takes a break in service for longer than 6 months, he/she can return to the same (or a higher) position, continue to earn 8% on the old Tier 1 benefits, continue to have 6% dropped into the IAP, *and* receive a defined benefit of 1.5% of FAS for each year of service UNDER THE OPSRP. If the member had remained working without a break in service, he/she would only receive Tier 1 account balance plus the annual rate guarantee and the 6% non-guaranteed IAP. A member with 25 years of Tier 1 service, a break in service of 6 more months, followed by 5 years of OPSRP would receive an extra 7.5% of FAS on top of the Tier 1 "Money Match" benefit and the IAP contributions plus earnings/losses.

So, while there aren't that many people who'd benefit in this situation, I'm sure that the Legislature, the employers, and all the other people who argued for this "punitive" break in service provision are finding out what a great deal they gave a small group of Tier 1 members -- probably mostly career senior administrators who seem to recycle in and out of public employment the way the poor go through public housing. Isn't it ironic, or is it?