The Oregon PERS Board of
Directors has approved a 2 percent benefit reduction plan as the method of
recouping just over $156 million in overpayments from those workers who retired
in the "window period" of April 2000 through April 2004. A final court order
allowing PERS to proceed with the repayment plan was issued on March 14; the
decision impacts about 28,000 retirees.
The overpayments occurred in
March-April 2000. The PERS Board routinely credits the previous year's earnings
at its March meeting of any given year, with that credit hitting retirees'
April checks. In March 2000, the board credited retiree accounts with 20
percent earnings. Lawsuits initiated by employers claimed that figure was too
high, and four years later courts set the figure retroactively at 11.33
percent. PERS members who continued working through that period had their
accounts adjusted accordingly, but those who retired in the April 2000-2004 window
had the excess funds factored into their retirement benefits.
PERS says the average
overpayment is $6,650 and that the typical window retiree will pay back the
difference in six to seven years. Retirees may opt to pay back the amount in
one payment if they so desire, or they can choose to have more than 2 percent
deducted so as to pay back the money owed more quickly.
Of the 28,000 window
retirees, some 20,000 receive monthly benefit checks. The other 8,000 took some
form of lump sum payment, so they are essentially out of the PERS system now.
Those retirees will be required to set up a repayment plan through the Oregon
Department of Revenue that mirrors the other retirees' 2 percent minimum
PERS Coalition attorney Greg
Hartman told the board it must offer clear communication to the retirees. Even
though there have been rumblings and even half-hearted attempts over the years
regarding repayment, most retirees have simply been waiting out the legal
"This is going to come out
of the blue for many people," said Hartman.
PERS staff assured the board
at its March 22 meeting that a three-step communication plan would be
implemented before actual repayments begin, likely later this year. That plan
- Posting an FAQ (frequently asked questions)
document on the agency's website regarding the repayment process as soon
- Sending a letter soon to all window retirees
that outlines the situation and the repayment plan; and
- Sending a second later sometime this summer with
information to each retiree as to the exact amount they owe and how long
it will take for them to complete the repayment under the 2 percent
In May, PERS will approach
the Legislature's Emergency Board with a $2 million request for additional,
temporary staff to help the agency wade through the repayment process. PERS
Deputy Director Steve Rodeman estimates it will eventually cost PERS about $4
million to collect the $156.3 million in overpayments.
Hartman emphasizes that
legal challenges have been exhausted, and repayment is not optional. When PERS
first broached the subject several years ago, the agency was lenient about
those who essentially ignored the issue while the matter was litigated.
"Those who took lump sum
payments, in particular, should look at the option PERS is offering to set up
repayment along the lines of the 2 percent the monthly benefit retirees are
taking," said Hartman. "If you don't, and you're out of state, PERS' only
option is to go the collection agency route as the Oregon Department of Revenue
has no authority outside the state.
"We're disappointed with the
outcome, but it's done, and people do have to make the repayment."