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Despite losses, Oregon PERS still 'best funded' U.S. public pension
Updated On: Oct 06, 2009

Attorney Greg Hartman says the sky isn't falling on Oregon's retirement system


Associated Press

As was anticipated, the Oregon Public Employee Retirement System (PERS) Board of Directors recently announced a deficit that will require an increase in employer contribution rates — and in return, the regular media immediately began a series of "the sky is falling" commentaries and opinion articles.

 

Oregon AFSCME Political Coordinator Mary Botkin, the union's primary PERS lobbyist, notes that "everybody" knew employer rates were going up in 2010.

 

"It wasn't a secret," said Botkin. "We've been talking about it for several months."

 

PERS Coalition attorney Greg Hartman said the shortfall to the Oregon retirement system's coffers isn't unique.

 

"Just like every other pension fund in the United States, both public and private, PERS had a disastrous investment year in 2008," said Hartman. "That correspondingly causes employer contribution rates to increase. Fortunately we are having a good investment return year so far in 2009, though it will admittedly take a number of good investment years to make up for 2008."

 

As if to validate Hartman's assessment, within days of the Oregon PERS announcement, the Associated Press carried a story from Washington state outlining problems with the Evergreen State's pension system, and noting that Washington lawmakers will have to double yearly payments in its two oldest public employee pension plans to keep them solvent. Doubling such payments is of course equivalent to a 100 percent increase; the problems with Oregon PERS are nowhere near that level.

 

"Even in this time of 'crisis,' people need to understand that [Oregon] PERS remains a very well-funded pension plan, probably the best-funded public pension plan in the United States," said Hartman. "Yes, employer contribution rates will go up, but it's clear that PERS is already exploring options which may limit the immediate increase in contribution rates."

 

Hartman notes that PERS has the ability to "smooth" rate increases, essentially averaging them out over time to lessen the immediate impact to employers. Such smoothing can cut the anticipated rate jump almost in half.

 

"The message for everyone — our members, PERS personnel and perhaps especially the media — is to take a deep breath, recognize that PERS is still very well-funded, and while employer rates will increase, the PERS Board will likely develop some alternative policies which will allow for more moderate increases in employer contribution rates at least in the near term," said Hartman.


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