The Public Employee Retirement System (PERS) Employer Advisory Group met mid-January to discuss several issues related to PERS. A prime focus of the group was implementation of SB 1049, a PERS reform measure passed in the 2019 Legislative Session. A summary of activities related to the main elements of the reform were provided by PERS staff at the meeting.

The Employer Incentive Fund (EIF), a matching fund, providing 25 percent matches to employers making contributions to side accounts was reported to have reached maximum use on the second round of applications in December, resulting in a waiting list for matching grants. $100 million was initially allocated to the fund by the 2019 Legislature. Some employers that were awarded grants declined to participate, opening availability of a small pool of funds for those on the waiting list. PERS is anticipating the opportunity for another application cycle in 2021 through possible additional funds from repatriated capital and sports betting. Information on EIF allocations can be found here.  

The $195,000 salary cap passed in SB 1049 took effect on January 1, 2020. PERS reported on implementation and noted at this time, it requires manual processing during system reprogramming. The cap is anticipated to impact 600-700 members. In the fall, PERS will roll-out a prorated cap for an employee who would have earned in excess of $195,000 in a given year had they worked full-time, and will be developing processes to prorate the limit. While the process is developed, PERS affirmed staff will continue to manage this issue manually, and will contact employers who have employees in this category. 

The work after retirement took January 1, 2020, and was accompanied by a slew of technical programming issues related to charging the employer rate for a retiree. During the meeting, PERS confirmed that the rate to be charged would be the net rate (after application of side accounts) associated with that employee’s work status (Tier 1 or 2 or OPSRP) and retirement job category. PERS is working with employers for clarifications on payment.  Under SB 1049, if an employer has PERS retirees, they must take a six month break in service before they will be eligible for full-time work. More information from PERS on work after retirement can be found here.

The most complicated provision of SB 1049 for implementation was reported to be the Individual Account Program (IAP) Redirect, which will become effective July 1, 2020. In this reform measure, a portion of the six percent employee contribution from an IAP will be redirected to an Employee Pension Stability Account (EPSA). This only applies to employees who earn more than $2,500 per month, further complicating the calculation that the employees under this threshold are eligible to make ‘voluntary contributions’ or after tax contributions. PERS will require employees who want to make a voluntary contribution to complete an electronic form indicating such, so PERS can share the information with the employer. Additional challenges reported include inconsistency in payroll reporting periods among employers, timing of calculation of earnings, and PERS systems delays for accepting voluntary contributions.

More updates on implementation of SB 1049 are anticipated at the next PERS Employer Advisory Group. 

For questions about implementation of SB 1049, contact Association of Oregon Counties (AOC) Interim Executive Director, Rob Bovett. Bovett serves as the AOC liaison to the PERS Employer Advisory Group.

Contributed by: Megan Chuinard | Public Affairs Associate