Oregon PERSThere and back again
2009 OASBO Summer ConferenceEagle Crest Resort
July 31,2009
Oregon PERS - There and back again
1. 2009 Legislative Update
2. Actuarial Assumptions
3. Board Decisions – what will they cost?
4. Rates – up, up, & away!
5. Retire – now or later?
6. PERS Board Meetings – yes you can help!
7. Questions
2009 Legislative Update
Many PERS-related bills introduced
19 bills considered
8 bills adopted
Effective on January 1, 2010 – unless the bill includes an emergency clause – then bill is effective upon signing by the Governor
2009 Legislative Update
Housekeeping bills (signed by Governor):
HB 2157 Federal Tax Reconnect
HB 2704 Elimination of Workers’ Comp Offset
SB 112 Return to Work Retirees (emergency clause; retroactive back to 2004)
SB 5539 PERS 2009-11 Budget
2009 Legislative Update
Housekeeping bills (awaiting Governor’s action):
HB 2873 Public Employees Retirement Benefits (emergency clause)
SB 399 Trustee to Trustee Transfer for Eligible Purchases at Retirement
SB 897 PERS Coalition Omnibus (emergency clause)
2009 Legislative Update
Important bill for K-12 (awaiting Governor’s action):
HB 3401 Use of Excess Amount in Side Accounts (emergency clause)◦ Will require an IRS ruling ◦ Would allow use of excess side account dollars to offset IAP
contributions◦ Losses in side accounts since December 2007 make this an
unlikely resource
Actuarial Assumptions
Mercer (PERS Actuaries) presentations to PERS Board:
May 29, 2009:http://www.oregon.gov/PERS/section/financial_reports/Financial_Modeling_52909.pdf http://www.oregon.gov/PERS/section/financial_reports/Exp_Study_52909.pdf
July 16, 2009:http://www.oregon.gov/PERS/section/board_information/board_information_index.shtml
Actuarial Assumptions
May 29, 2009 – Economic assumptions considered for adjustment:
Regular investment return (deferred to 7/16)Variable investment return (deferred to 7/16)Health cost trend ratesOPSRP admin expenses
Actuarial Assumptions
May 29, 2009 – Actuarial methods considered for adjustment:
Eliminate PUC amortizationShorten certain amortization periodsAllocation of liability for service segments
Actuarial Assumptions
May 29, 2009 – Actuarial methods considered for adjustment:
Clarify adjustments to contribution rate collar
Clarify amortization of new side accounts & new transition liabilities
Exclusion of negative rate guarantee reserve
Actuarial Assumptions
July 16, 2009 – Investment returns/ demographic assumptions considered for adjustment:
Regular investment returnVariable investment returnGenerational mortality tableRetirement service levels
Actuarial Assumptions
July 16, 2009 – Investment returns/ demographic assumptions considered for adjustment:
Merit salary increasesDisability ratesTermination rates
Board Decisions
July 16, 2009 – Board action:
Approved generational mortality tables
Opposed reduction of assumed investment rates (saved us 1.5%)
Approved other adjustments as recommended by Mercer
Board Decisions
Impact of changes (ignoring rate collar):
Mortality assumptions
Other Assumptions and Methods
Total
Tier 1/Tier 2 OPSRPNormal
Cost Rate
UAL RateNormal
Cost Rate
UAL Rate
0.2%
0.0%
0.2%
0.5%
(3.0%)
(2.5%)
0.2%
(0.3%)
(0.1%)
0.0%
0.0%
0.0%
Rates - up, up, & away
2009-11 Biennium (school pool rates):
Reduced by ~3.6% - 14.1%
Some districts with large side accounts have negative PERS rates
If system funding level does not exceed 80% by 12/31/2009, rate collar could double to 6% (pool rate = 20%)
Rates - up, up, & away
2011-13/2013-15 Biennia (all employers):
Modeling indicates rates will increase 6% for 2011-13
Modeling also indicates an additional increase of 6% in 2013-15
Strong likelihood of PERS rates = 26% of payroll before 6% contribution to the IAP
Rates - up, up, & away
Other rate considerations:
Side account rate relief expected to drop from an average of 8% down to 2% - 4% over the next 18 years
Unlikely to have side account resources available after 2027
Modeling projects future rates exceeding 30%
Retire – now or later?
Board approved methods and assumptions impact the 12/31/2008 & 12/31/2009 actuarial valuations
Board will adopt actuarial equivalence factors for 2010 & 2011 at its November meeting
Retire – now or later?
Many changes effective January 1, 2010
Check “Benefit Estimate Calculator” often
PERS Board Meetings
Meetings held at PERS Headquarters in Tigard
Meetings begin at 1:00 PM
Agendas available on PERS website (click “Board” tab, then meeting date)
Remaining 2009 meetings:◦ September 25, 2009 – system-wide actuarial results◦ November 20, 2009 – adoption of actuarial equivalence
factors for 2010 & 2011
Questions?
PERS Headquarters:11410 SW 68th ParkwayTigard, OR 97223
http://www.oregon.gov/PERS/index.shtml
Phone: 503-598-7377Toll free: 888-320-7377Fax: 503-598-0561
Thank you!
C. Lance Colley, Chief Operations Officer
Roseburg Public Schools
541.440.4027
Janice Essenberg,Director, AdministrativeServicesDavid Douglas SD
503.261.8212