71st OREGON LEGISLATIVE ASSEMBLY--2001 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { - braces and minus
signs - } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 2789
House Bill 2762
Sponsored by Representative BUTLER; Representative SCHRADER,
Senator DUNCAN
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.
Allows member of Public Employees Retirement System to elect to
prepay cost of certain service credit purchases otherwise
authorized under law. Allows prepaid service credit purchases
only if participating public employer that employs member has
authorized those purchases. Prescribes procedures and limitations
on prepaid service credit purchases. Allows payment under
election to be made on pretax basis only if Public Employees
Retirement Board receives approval from Internal Revenue Service.
A BILL FOR AN ACT
Relating to public employee retirement; creating new provisions;
and amending ORS 238.157, 238.162 and 238.175.
Be It Enacted by the People of the State of Oregon:
SECTION 1. { + Sections 2 to 9 of this 2001 Act are added to
and made a part of ORS chapter 238. + }
SECTION 2. { + Definitions. + } { + For the purposes of
sections 2 to 9 of this 2001 Act:
(1) 'Prepaid service credit purchase' means a service credit
purchase funded by employer contributions under sections 2 to 9
of this 2001 Act.
(2) 'Prepaid service credit purchase election' means an
election to make a prepaid service credit purchase under sections
2 to 9 of this 2001 Act.
(3) 'Service credit purchase' means:
(a) Purchase of retirement credit for service in the Armed
Forces of the United States under ORS 238.157;
(b) Purchase of retirement credit for service as a teacher in
the public schools of another state under ORS 238.162; and
(c) Purchase of retirement credit for periods of disability
under ORS 238.175. + }
SECTION 3. { + Service credit purchases. + } { + (1) A member
of the Public Employees Retirement System who is eligible to make
a service credit purchase may pay all amounts required for the
service credit purchase in a lump sum to the Public Employees
Retirement Board within 90 days before the member's effective
date of retirement.
(2) Subject to the requirements of sections 2 to 9 of this 2001
Act, a member may elect to prepay the cost of a service credit
purchase in the manner provided by sections 2 to 9 of this 2001
Act if at the time the election is made:
(a) The member has contributed to the fund in each of five
calendar years; and
(b) The member meets all requirements imposed by law for the
service credit purchase.
(3) A member may elect to make a prepaid service credit
purchase only if the participating public employer that employs
the member has given written notice to the board authorizing
prepaid service credit purchases by employees of the public
employer. + }
SECTION 4. { + Application for prepaid service credit
purchase. + } { + (1) Any member who is eligible may make an
application for a prepaid service credit purchase. The
application may be for all or part of the service credit that the
member is eligible to purchase. A separate application must be
made for each type of service credit purchase for which the
member is eligible.
(2) An application for a prepaid service credit purchase must
include:
(a) A reference to the type of service credit purchase to be
acquired;
(b) A statement on whether the application is for the purchase
of all or part of the service credit that the member is eligible
to receive and, if for part, the amount of service credit that
the member wishes to purchase; and
(c) A statement of the number of payroll periods during which
the salary reduction will be made.
(3) Upon receiving an application under this section, the
Public Employees Retirement Board shall verify whether the member
is eligible to make the service credit purchase specified in the
application. The board shall then determine the cost of the
service credit purchase or, if the cost of the purchase cannot be
determined as of the date of the application, an estimate of the
cost. The board shall notify the applicant of the board's
determination on:
(a) The member's eligibility;
(b) The cost, or estimated cost, of the service credit
purchase; and
(c) The dollar amount of the salary reduction for each payroll
period.
(4) The dollar amount of the monthly salary reduction
determined by the board under subsection (3) of this section
shall be an amount adequate to pay the cost of the service credit
purchase determined by the board under subsection (3) of this
section. The full cost of the service credit purchase, including
interest, must be paid before the member's earliest service
retirement age.
(5) After receiving notice under subsection (3) of this
section, a member may elect to make the prepaid service credit
purchase by submitting a written acceptance of the terms of the
purchase to the member's employer and to the board. + }
SECTION 5. { + Funding of prepaid service credit purchase. + }
{ + (1) If the Public Employees Retirement Board receives
approval for pretax treatment of payments under section 9 of this
2001 Act, the amounts specified to be paid in an election made
under section 4 of this 2001 Act must be paid by the employer as
employer contributions to the system. The salary of the member
making the election shall be reduced by the amount of the
payments. The salary reduction may not exceed 75 percent of a
member's gross monthly salary.
(2) Amounts paid by an employer pursuant to a prepaid service
credit purchase shall be considered 'salary' within the meaning
of ORS 238.005 (11) for the purpose of calculating the amount of
the contribution, for the purpose of computing a member's 'final
average salary' within the meaning of ORS 238.005 (15), and for
all other purposes.
(3) A member may not assign, anticipate, alienate, sell,
transfer, pledge or in any way encumber any of the amounts to be
paid by an employer pursuant to a prepaid service credit
purchase, and the employer shall reject and refuse to honor any
such purported action with respect to those amounts. + }
SECTION 6. { + Election irrevocable; exception. + } { + (1)
Except as provided in this section:
(a) A prepaid service credit purchase election is irrevocable,
and the member's employer must make all reductions specified in
the election for as long as the member remains employed by the
public employer; and
(b) A member may not shorten the period of time that payments
must be made under the election by making a lump sum payment for
any period of service being acquired under the prepaid service
credit purchase election.
(2) A member may pay all or any portion of the balance owing
under a prepaid service credit purchase election if:
(a) The member terminates employment with the participating
public employer that is paying the amounts for the purchase; and
(b) The member pays the amounts to the Public Employees
Retirement Board within 60 days after the member terminates
employment with the public employer.
(3) A prepaid service credit purchase election under this
section may be revoked to the extent necessary to pay support
obligations under a judgment, decree or order, or to pay tax
obligations under a tax lien filed by the Internal Revenue
Service.
(4) Nothing in this section affects the ability of a member to
make additional service credit purchases that the member is
eligible to make under the law, or to make more than one prepaid
service credit purchase election for the same type of service
credit purchase. Any additional service credit purchase or
prepaid service credit purchase election does not alter, amend or
revoke any prepaid service credit purchase election previously
made by the member. + }
SECTION 7. { + Refunds prohibited; exception; termination of
employment. + } { + (1) Except as provided in this section, any
amounts paid to the Public Employees Retirement Board under a
prepaid service credit purchase election may not be refunded.
Amounts paid under a prepaid service credit purchase election may
be used only for the purpose of paying the cost of the service
credit purchase and may not be refunded to a member.
(2) If the board determines that an overpayment has been made
for a service credit purchase, or that any amount has been
improperly paid toward a service credit purchase, the board shall
refund the amount of the overpayment or improperly made payment
without regard to whether the service credit purchase was made by
a lump sum payment or under a prepaid service credit purchase
election.
(3) If a member terminates employment with the participating
public employer that is paying amounts under a prepaid service
credit purchase election, the board shall accept no further
payments under the election. If the member is thereafter
reemployed by a participating public employer, the member may
make a new prepaid service credit purchase election if the public
employer has given to the board written notice under section 3 of
this 2001 Act authorizing prepaid service credit purchases by
employees of the public employer. If the member does not make a
new prepaid service credit purchase election before retiring, the
member may make an additional payment toward the service credit
purchase through a lump sum payment in the manner provided by
section 3 of this 2001 Act or may receive partial credit for the
service credit purchase as provided in section 8 of this 2001
Act.
(4) If a member withdraws the amount credited to the employee's
account in the manner provided by ORS 238.265, all amounts paid
by the member under a prepaid service credit purchase election
shall be refunded to the member, without regard to whether those
amounts were credited to the employee's account or the employer
reserve, along with those earnings that are attributable to the
payments. If a person who has received a refund under this
subsection is subsequently reemployed by a participating public
employer:
(a) The person may not repay the amounts so withdrawn under the
provisions of ORS 238.105 or 238.115; and
(b) The person may make a new prepaid service credit purchase
election if the public employer employing the person has given
the board written notice under section 3 of this 2001 Act
authorizing prepaid service credit purchases by employees of the
public employer. + }
SECTION 8. { + Granting of service credit. + } { + (1) Except
as provided in this section, the Public Employees Retirement
Board shall not grant creditable service under a prepaid service
credit purchase election until all costs of the service credit
purchase have been received by the board.
(2) If a member terminates employment with the participating
public employer that is paying amounts under a prepaid service
credit purchase election, and the service credit purchase is not
thereafter completed by way of a lump sum payment or a subsequent
prepaid service credit purchase election, the board shall provide
partial credit to the member upon retirement based on the amounts
paid toward the cost of the service credit purchase.
(3) If the cost of a service credit purchase is not paid in
full for any reason, the board shall provide partial credit to
the member upon retirement based on the amounts paid toward the
cost of the service credit purchase. + }
SECTION 9. { + Pretax treatment of contributions for prepaid
service credit purchases. + } { + Employer contributions for
prepaid service credit purchases may be made on a pretax basis
only if the Public Employees Retirement Board receives approval
from the Internal Revenue Service for pretax treatment of the
payments. The board shall notify public employers that have
authorized prepaid service credit purchases if and when the
Internal Revenue Service approves pretax treatment of the
payments. + }
SECTION 10. ORS 238.157 is amended to read:
238.157. (1) Any person who entered or reentered active service
in the Armed Forces of the United States after January 1, 1950,
for other than active duty for training, or who was in active
service in the Armed Forces of the United States on January 1,
1950, for other than active duty for training, and who, after
being other than dishonorably discharged therefrom, entered the
employ of an employer participating in the Public Employees
Retirement System, may acquire retirement credit for up to four
years of active service in the Armed Forces by paying in { - a
lump sum to the Public Employees Retirement Board within 90 days
of the member's effective date of retirement - } { + the manner
provided by sections 2 to 9 of this 2001 Act + } an amount
determined by the { + Public Employees Retirement + } Board to
represent the full cost to the system of providing the retirement
credit to the member.
(2) No person shall receive retirement credit under this
section for any period of service with the Armed Forces of the
United States for which that person receives credit under the
provisions of ORS 238.156 or for which the person is receiving or
entitled to receive a pension or retirement pay under a public
retirement system established by the United States for the
performance of service in the Armed Forces.
SECTION 11. ORS 238.162 is amended to read:
238.162. (1) A member of the Public Employees Retirement System
who is a teacher as described in subsection (3) of this section
is entitled to receive retirement credit as provided in
subsection (2) of this section if:
(a) The member was employed as a teacher in a public school in
another state before being employed in a position that entitled
the member to credit in the system; and
(b) The member makes the payment required by subsection (2) of
this section within the time specified by that subsection.
(2) Except as provided in subsection (4) of this section, a
member of the system employed as a teacher as described in
subsection (3) of this section and who meets the requirements of
subsection (1) of this section is entitled to receive retirement
credit for the period of the member's service with a public
school in another state, not to exceed a maximum of four years,
if the member { - within 90 days of the member's effective date
of retirement - } :
(a) Applies in writing to the Public Employees Retirement Board
for such retirement credit;
(b) Provides written verification to the board from the public
employer that employed the member in the other state, verifying
the period of time that the member served as a teacher in a
public school in the other state; and
(c) Pays to the board { - , in a lump sum, for each year of
retirement credit applied for under this section, - } { + in
the manner provided by sections 2 to 9 of this 2001 Act + } an
amount determined by the board to represent the full cost to the
system of providing
{ - the - } { + each year of + } retirement credit { - to
the member - } { + applied for under this section + }.
(3) The provisions of this section apply only to a licensed
teacher, as defined in ORS 342.120, who is employed by a common
school district, a union high school district or an education
service district.
(4) A member may not receive retirement credit under the
provisions of this section for any period of service with a
public school in another state if the member is entitled to a
pension or retirement allowance by reason of that service under a
public plan or system offered by the other state.
SECTION 12. ORS 238.175 is amended to read:
238.175. (1) A member of the Public Employees Retirement System
who receives a disability retirement allowance or disability
payments under ORS chapter 656 shall receive retirement credit
for the period during which the member receives the disability
retirement allowance or disability payments if the member
receives the allowance or payments by reason of injury or disease
sustained while in actual performance of duty and not
intentionally self-inflicted.
(2) A member of the Public Employees Retirement System who
receives a disability retirement allowance or disability payments
under ORS chapter 656 by reason of injury or disease that was not
sustained while in actual performance of duty and that was not
intentionally self-inflicted shall receive retirement credit for
all or part of the period during which the member receives the
disability retirement allowance or disability payments if the
member { - , within 90 days before the effective date of
retirement of the member, - } applies in writing to the Public
Employees Retirement Board for that retirement credit and pays to
the board in { - a lump sum - } { + the manner provided by
sections 2 to 9 of this 2001 Act + } an amount determined by the
board to represent the full cost to the system of providing the
retirement credit to the member.
(3) A member may acquire retirement credit under the provisions
of this section for the purposes of calculating a service
retirement allowance only if the member returns to employment
with a participating public employer after the period of
disability.
(4) A member may not acquire retirement credit under the
provisions of this section for a period of time that is in excess
of the period of time used in calculating the disability
retirement allowance paid to the member under ORS 238.320 during
the period of disability for which the member seeks credit. For
the purposes of this subsection, the retirement credit that may
be acquired by a police officer or firefighter who elects to
receive the optional, service-connected disability retirement
allowance provided for under ORS 238.345 shall be determined as
though the police officer or firefighter had received a
disability retirement allowance calculated under ORS 238.320.
(5) Retirement credit acquired under this section may be used
for the purpose of establishing eligibility under ORS 238.115,
238.125 or 238.135 or any other provision of this chapter that
requires a specified number of years of creditable service.
(6) Retirement credit under this section may be acquired only
for periods occurring on or after January 1, 1985, during which a
member receives a disability retirement allowance or disability
payments under ORS chapter 656.
SECTION 13. { + (1) Except as provided in subsection (2) of
this section, sections 2 to 9 of this 2001 Act and the amendments
to statutes by sections 10 to 12 of this 2001 Act become
operative on July 1, 2002.
(2) Sections 2 to 9 of this 2001 Act and the amendments to
statutes by sections 10 to 12 of this 2001 Act become operative
on the effective date of this 2001 Act for the purpose of
adoption of rules and procedures needed to implement sections 2
to 9 of this 2001 Act and the amendments to statutes by sections
10 to 12 of this 2001 Act by the Public Employees Retirement
Board, and for the purpose of any acts that the board may need to
take in seeking approval from the Internal Revenue Service for
pretax treatment of employer contributions under the prepaid
service credit purchase elections authorized under sections 2 to
9 of this 2001 Act. + }
SECTION 14. { + The section captions used in this 2001 Act are
provided only for the convenience of the reader and do not become
part of the statutory law of this state or express any
legislative intent in the enactment of this 2001 Act. + }
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