Dear PERS Coalition Members,
We are writing to provide you an update on the status of the implementation of the Moro decision because you may be receiving calls/questions from members this month.
Under PERS’ COLA restoration schedule, this month is when PERS deals with the more complex accounts. There are about 16,138 of these more complex accounts. Many of these are members who had service before and after the 2013 legislation and so will be receiving a blended COLA. Some may have retired before the 2013 legislative change but received the supplemental payments under the new legislation. As explained below, many of these members received a higher initial benefit which will need to be offset against their COLA owed under Moro. Approximately 3,100 of these retirees will be receiving an invoice from PERS in an amount of $50 or more to correct for the higher initial benefits. Though these members will receive an invoice, in the long-run their benefit will be substantially higher under Moro.
The following are the reasons for the offset:
- Members who received the supplemental payments under the 2013 legislation. The Supreme Court struck down the supplemental payments when it reinstated the 2 percent COLA for retirees;
- OPSRP members who retired after the 2013 legislation received the full COLA under the 2013 legislation vs. the pro-rated COLA they would have received in their first year of retirement under the pre-2013 law. The Supreme Court reinstated the law which provides for pro-rated benefits in the year of retirement; and
- Members who retired after the 2013 legislation with a survivorship option. Their survivorship calculation used the lower COLA payment resulting in a higher initial payment. Generally, the value of the COLA grows over the years and is greatest at the tail end. To account for the greater value of the 2 percent COLA during the tail end/survivorship period, the front-end benefit amount has to be reduced.
The attached memo included in the January PERS Board packet provides some numbers and additional info you can share with members who might call about the invoice they have received. As the memo explains, there were approximately 3,817 additional retirees who would have owed PERS money due to the implementation. However, because the amount owed was less than $50, the Board was able to waive those invoices under ORS 238.715(6).
Once you have had a chance to review the attached, do not hesitate to contact Greg or me with any additional questions. Nothing with PERS is ever straightforward.
Aruna A. Masih
Bennett, Hartman, Morris & Kaplan LLP
210 SW Morrison St., Suite 500
Portland, Oregon 97204-3149
Direct: (503) 546-9636
Main: (503) 227-4600
Fax: (503) 248-6800