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It's official: 'Window retirees' to begin making repayments to PERS
Updated On: Mar 23, 2012

After years of haggling, the Grim Reaper is coming for PERS "window" retirees

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 payback requirement.


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 process.


"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 includes:


  • Posting an FAQ (frequently asked questions) document on the agency's website regarding the repayment process as soon as possible;


  • 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 reduction plan.


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."

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