Legislation allows ex-public workers to cash out PERS

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Legislation allows ex-public workers to cash out PERS

By Steve Law

Statesman Journal, May 20, 2003

Oregon - Former public employees who left money sitting in the state pension system can “cash out” their accounts before reaching retirement age under a bill that won final legislative approval Monday.

The House passed Senate Bill 258 by a 52-1 vote, sending the bill to Governor Ted Kulongoski’s desk to be signed into law.

The bill allows so-called inactive members of the Public Employees Retirement System to withdraw their accounts between July 1, 2004, and June 30, 2006, if they were classified as inactive since Jan. 1, 2000. Recipients get 150 percent of the value of their accounts.

That will save taxpayers an estimated $243 million in the long run. That’s because those who liquidate their accounts lose further PERS benefits.

If former public employees leave their money in, they get annual cost-of-living-adjustments in retirement. PERS also calculates their pensions based on the assumption that their account keeps earning 8 percent per year via investments. And, if ex-public employees qualify for the Money Match option, their accounts are doubled at retirement.

Passage of House Bill 2003 by this year’s Legislature has watered down the Money Match option and guaranteed 8 percent annual investment earnings for those who joined PERS before 1996. As a result, cashing-out may prove more attractive than before.

SB 258 will save state and local governments an estimated $3.4 million in PERS payments in 2003-05 and again in 2005-07. That will be offset by an initial $684,033 required to hire more PERS counselors and computer staffers to implement the bill.