72nd OREGON LEGISLATIVE ASSEMBLY--2003 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 2553
House Bill 2003
Sponsored by COMMITTEE ON PUBLIC EMPLOYEES RETIREMENT SYSTEM (at
the request of City of Eugene, Oregon School Boards
Association, Portland Business Alliance, Canby Utility Board,
Rogue River Valley Irrigation District, Association of Oregon
Counties, City of Huntington, Oregon Business Council,
Association of Oregon Industries, Special Districts Association
of Oregon, League of Oregon Cities, National Federation of
Independent Businesses, Oregon Business Association)
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.
Revises laws relating to Public Employees Retirement System.
Declares emergency, effective on passage.
A BILL FOR AN ACT
Relating to public employees' retirement; creating new
provisions; amending ORS 238.005, 238.015, 238.062, 238.072,
238.092, 238.095, 238.105, 238.115, 238.200, 238.205, 238.220,
238.250, 238.255, 238.260, 238.265, 238.270, 238.300, 238.320,
238.380, 238.385, 238.390, 238.395, 238.425, 238.442, 238.580,
238.630, 238.640, 238.670, 243.800 and 292.430; repealing ORS
238.667; and declaring an emergency.
Whereas it is the policy of the State of Oregon to provide
career public employees adequate and secure retirement benefits
at a reasonable, affordable and stable cost to taxpayers; and
Whereas since 1995 the cost to taxpayers of funding the Public
Employees Retirement System (PERS) has increased dramatically,
with the cost of PERS increasing when PERS investment income was
good and the cost of PERS continuing to increase when PERS
investment income was poor; and
Whereas as the cost of PERS has increased, retirement benefits
for PERS members have also increased; and
Whereas in 1990 the average career PERS member retired with a
PERS benefit equal to 63 percent of the member's final average
salary, and by 2000 the average career PERS member's retirement
benefit had increased to 106 percent of final average salary; and
Whereas unless steps are taken to reform and stabilize PERS,
retirement benefits will continue to grow and many PERS members
will retire with pensions that far exceed their final average
salaries; and
Whereas the Legislative Assembly neither intended nor promised
to provide PERS members with retirement benefits in excess of the
members' pre-retirement income, and the goal of PERS is and has
been to provide a pension that, when combined with Social
Security benefits, will replace 75 to 85 percent of a member's
pre-retirement income; and
Whereas the excessive benefits being paid to PERS members and
the resultant increased cost to taxpayers is due in substantial
part to actions taken by the Public Employees Retirement Board in
violation of the laws governing PERS in that the Public Employees
Retirement Board has: (a) Unlawfully used outdated mortality
tables to calculate retirees' monthly benefits; (b) Unlawfully
required employers to match earnings in the employees' variable
accounts when those employees' pensions are calculated under the
' money match formula'; and (c) Unlawfully abused its discretion
in failing to set aside adequate statutorily mandated reserves
out of investment income while crediting imprudently large
amounts of investment income to member accounts; and
Whereas in City of Eugene et al. v. State of Oregon, Case Nos.
99C-12794, 00C-16173, 99C-12838 and 99C-20235, the Marion County
Circuit Court found that the Public Employees Retirement Board
paid excessive and unlawful benefits and increased the costs of
PERS by virtue of the unlawful actions of the board; and
Whereas unless immediate steps are taken to reform and
stabilize PERS by ending the unlawful practices of the Public
Employees Retirement Board and correcting the past effects of
those practices, escalating pension costs will undermine the
financial security of PERS, force massive cutbacks in essential
government services, eliminate the jobs of many public employees
and destroy the public's confidence and trust in the government
institutions of the state; and
Whereas this 2003 Act is intended to reform and stabilize PERS,
remedy the effects of past unlawful actions, ensure that future
PERS benefits will be consistent with the goals and intent of the
Legislative Assembly and protect the accrued benefits earned by
current PERS members; and
Whereas this 2003 Act shall be known as the PERS Reform and
Stabilization Act of 2003; now, therefore,
Be It Enacted by the People of the State of Oregon:
{ +
REMEDY FOR ERRORS IDENTIFIED + }
{ +
IN CITY OF EUGENE V. STATE OF OREGON + }
SECTION 1. { + Sections 2, 3 and 4 of this 2003 Act are added
to and made a part of ORS chapter 238. + }
SECTION 2. { + (1) To remedy the errors of the Public
Employees Retirement Board identified in the circuit court
judgment of January __, 2003, in City of Eugene et al. v. State
of Oregon, Case Nos. 99C-12794, 00C-16173, 99C-12838 and
99C-20235, the board shall immediately correct the method used by
the board in calculating retirement allowances to be paid to all
members who retire on or after January 1, 2003, to reflect the
court's judgment and the board's action on remand of the orders
challenged in that case, as follows:
(a) The board shall use actuarial factors that reflect the
current experience of members, as reported by the board's actuary
in the most recent actuarial report.
(b) When determining the annuity portion of the allowance
pursuant to ORS 238.300 (1), the board shall include any
adjustment to member accounts made by the board upon remand.
(c) When determining the pension portion of the allowance
pursuant to ORS 238.300 (2)(b), the board shall match only the
amount that would have been the balance in the member's account
had the member not participated in the variable annuity account.
(2) This section is effective without regard to the final
judgment in City of Eugene et al. v. State of Oregon, Case Nos.
99C-12794, 00C-16173, 99C-12838 and 99C-20235. + }
SECTION 3. { + (1) The Public Employees Retirement Board shall
determine the cost of errors identified in the circuit court
judgment of January __, 2003, in City of Eugene et al. v. State
of Oregon, Case Nos. 99C-12794, 00C-16173, 99C-12838 and
99C-20235, as follows:
(a) For members who retired after October 14, 1996, and before
January 1, 2003, the board shall determine the difference between
the present value of the allowances paid and to be paid,
calculated for those members at the time of retirement, and the
present value of the allowances for those members that would have
been paid or would be paid if the allowances had been calculated
using actuarial factors that reflected the experience of the
members as reported in the last periodic actuarial report issued
before the date of retirement.
(b) For members who retired with a money match benefit after
January 1, 2000, and before January 1, 2003, the board shall
calculate the amount of earnings credited from 1999 income to
their regular member accounts in excess of eight percent, and add
to that amount the portion of the pension component of the
members' allowances attributable to a match of those excess
earnings.
(c) For members who retired after October 14, 1996, and before
January 1, 2003, and who had a variable annuity account, the
board shall calculate the difference between the present value of
the allowances paid and to be paid, calculated for those members
at the time of retirement, and the present value of the
allowances for those members that would have been paid or would
be paid as calculated had the board not required an employer
match of excess variable earnings but had instead correctly
applied ORS 238.260.
(d) For members who retired on or after January 1, 2003, and
who were paid allowances that exceeded the allowance calculated
pursuant to section 2 of this 2003 Act, the board shall calculate
the amount of the excess payments to those retired members, to
the extent those excess amounts are not recovered by the board
from the retired members under the provisions of ORS 238.715.
(e) The board shall calculate the difference between the amount
allocated to active and inactive members' regular accounts from
1999 investment income of the fund and the amount that would have
been allocated had the board distributed the assumed interest
rate to those accounts.
(f) The board shall calculate the additional cost to the system
based on the amount determined in paragraph (e) of this
subsection being credited to members' accounts and not being
placed in fund reserves, including payment of increased benefits
to members, the cost of unfunded actuarial liabilities resulting
from inadequate reserves, the cost of future interest crediting
on the amount determined in paragraph (e) of this subsection, and
any other cost actuarially determined to result from that
allocation to members' accounts.
(g) The board shall determine the amount of any attorney fees,
costs and disbursements awarded to petitioners and intervenors,
to be paid by the board, in City of Eugene et al. v. State of
Oregon, Case Nos. 99C-12794, 00C-16173, 99C-12838 and 99C-20235.
(h) The board shall add the amounts in paragraphs (a) to (g) of
this subsection to yield the total cost of the errors for
purposes of this section.
(2) The board shall consider the cost of the board's errors
determined under subsection (1) of this section as an
administrative expense of the fund, to be paid exclusively from
future income of the fund, and shall amortize the expense over an
actuarially reasonable period, not to exceed 15 years. In no
event shall the cost determined under subsection (1) of this
section be considered an employer liability or charged to
employers through contribution rates.
(3) Notwithstanding subsection (2) of this section, the amounts
calculated pursuant to subsections (1)(e) and (f) of this section
shall not be considered as administrative expenses of the fund to
the extent that those amounts are recovered from members'
accounts by the board's reallocation of 1999 income on remand
from the circuit court or pursuant to any other provision of law.
(4) Notwithstanding ORS 238.360, for members who retired after
October 14, 1996, and before January 1, 2003, the board shall not
apply a cost of living adjustment to the retired member's
allowance until the allowance is equal to or less than the amount
that the retired member would have received had the board
calculated the retirement allowance of the retired member after
having first made the applicable adjustments indicated in
subsections (1)(a) to (f) of this section and had the board
subsequently applied the provisions of ORS 238.360 to that
allowance. This action shall be taken in lieu of, and not in
addition to, any action of the board taken pursuant to ORS
238.715.
(5) Any costs savings to the system that are attributable to
the provisions of subsection (4) of this section shall be offset
against the costs to be amortized pursuant to subsection (2) of
this section. + }
SECTION 4. { + The board shall recalculate the current
contribution rates of all participating employers, pursuant to
ORS 238.225, to reflect the provisions of this 2003 Act and shall
issue corrected contribution rate orders to participating
employers within 90 days of the effective date of this 2003 Act.
The corrected rates are effective July 1, 2003. In no event shall
the board, in determining the contribution rates of employers,
include the cost of matching the 1999 earnings credited to
members' accounts in excess of the assumed interest rate and any
interest subsequently credited on those excess amounts. + }
{ +
ELIMINATION OF EMPLOYEE CONTRIBUTIONS + }
SECTION 5. ORS 238.200 is amended to read:
238.200. (1)(a) An active member of the { + Public Employees
Retirement + }System shall contribute to the fund and there
shall be withheld from salary of the member six percent of that
salary { + as an employee contribution + }.
(b) Notwithstanding paragraph (a) of this subsection, an
employee who is an active member of the system on August 21,
1981, shall contribute to the fund and there shall be withheld
from salary of the member, as long as the employee continues to
be an active member of the system, four percent of that salary if
the salary for a month is less than $500, or five percent of that
salary if the salary for a month is $500 or more and less than
$1,000. Notwithstanding subsection (2) of this section, for the
purpose of computing the percentage of salary to be withheld
under this paragraph from a member who is an employee of a school
district or of the State Board of Higher Education whose salary
is based on an annual agreement, the agreed annual salary of the
member shall be divided into 12 equal installments, and each
installment shall be considered as earned and paid in separate,
consecutive months, commencing with the first month that payment
is actually made under the terms of the salary agreement.
(2) The contributions of each member as provided in subsection
(1) of this section shall be deducted by the employer from each
payroll and transmitted by the employer to the board, which shall
cause them to be credited to the member account of the member.
Salary shall be considered earned in the month in which it is
paid. The date inscribed on the paycheck or warrant shall be
considered as the pay date, regardless of when the salary is
actually delivered to the member.
(3) An active member who is concurrently employed by more than
one participating public employer, and who is a member of or
entitled to membership in the system, shall make contributions to
the fund on the basis of salary paid by each employer.
{ + (4) Notwithstanding subsections (1) to (3) of this
section, a member of the system or a participating employer
acting on behalf of the member pursuant to ORS 238.205:
(a) Is not permitted or required to contribute to the fund more
than three percent of the member's salary earned on or after July
1, 2003, and before July 1, 2004, as an employee contribution
under this section; and
(b) Is not permitted or required to contribute to the fund any
percentage of the member's salary earned on or after July 1,
2004, as an employee contribution under this section.
(5) Notwithstanding subsections (1) to (4) of this section, a
person who has not established membership in the system before
the effective date of this 2003 Act as described in ORS 238.300
(4) may not make employee contributions to the fund under this
section, and the employer of the member may not make employee
contributions to the fund on behalf of the member. + }
SECTION 6. ORS 238.205 is amended to read:
238.205. Notwithstanding any other provision of this chapter,
and subject to the provisions of this section, a public employer
participating in the system may agree, by a written employment
policy or agreement in effect on or after July 1, 1979, to '
pick-up,' assume or pay the full amount of { + employee + }
contributions { - to the fund required of - } { + required or
permitted by ORS 238.200 for + } all or less than all active
members of the system employed by the employer { + to the extent
employee contributions are required or permitted by ORS
238.200 + }. If a public employer so agrees:
(1) The rate of contribution of each active member of the
system employed by the employer who is covered by such policy or
agreement shall uniformly be six percent of salary regardless of
the amount of monthly salary { + , for salary earned before July
1, 2003. For salary earned on or after July 1, 2003, the rate of
contribution shall be determined as provided in ORS 238.200 (4)
and (5) + }.
(2) The full amount of required employee contributions assumed
or paid by the employer on behalf of its employees shall be
considered 'salary,' as defined in ORS 238.005, only for the
purpose of computing a member's 'final average salary,' as
defined in ORS 238.005, and shall not constitute additional '
salary' or 'other advantages,' as defined in ORS 238.005, for any
other purpose.
(3) The full amount of required employee contributions '
picked-up' by the employer on behalf of its employees shall be
considered 'salary,' as defined in ORS 238.005, for the purpose
of calculating the amount of the contribution, for the purpose of
computing a member's 'final average salary,' as defined in ORS
238.005, and for all other purposes.
(4) The full amount of required employee contributions '
picked-up,' assumed or paid by the employer on behalf of its
employees shall be added to the member accounts of the members
for their annuities and shall be considered employee
contributions for all other purposes of this chapter.
(5) For the purposes of this section:
(a) Employee contributions are 'picked-up' if the written
employment policy or agreement described in subsection (1) of
this section provides that employee compensation will be reduced
to generate the funds needed to make the employee contributions;
and
(b) Employee contributions are 'assumed or paid' by an employer
if the written employment policy or agreement described in
subsection (1) of this section provides that additional amounts
shall be paid by the employer for the purpose of making the
employee contributions, and employee compensation will not be
reduced for the purpose of generating the funds needed to make
the employee contributions.
(6) A participating public employer must give written notice to
the Public Employees Retirement Board at the time that a written
employment policy or agreement described in subsection (1) of
this section is adopted or changed. The notice must indicate
whether the employer will 'pick-up' or 'assume or pay' the
employee contributions as described in subsection (5) of this
section. Any change in the manner in which employee contributions
are to be paid applies only to employee contributions made on and
after the date the notice is received by the board.
SECTION 7. ORS 238.260 is amended to read:
238.260. (1) The purpose of this section is to establish a well
balanced, broadly diversified investment program for certain
contributions and portions of the member accounts so as to
provide retirement benefits for members of the system that will
fluctuate as the value and earnings of the investments vary in
relation to changes in the general economy. It is anticipated
that investment of those contributions and portions of the member
accounts in equities will result in the accumulation of larger
deposit reserves for those members during their working years,
tend to preserve the purchasing power of those reserves and the
retirement benefits provided thereby and afford better protection
in periods of economic inflation.
(2) There is established in the Public Employees Retirement
Fund an account, separate and distinct from the General Fund, to
be known as the Variable Annuity Account. Interest earned by the
account shall be credited to the account.
(3) { + (a) + } A member { + who is making contributions to
the fund + } may elect at any time to have 25, 50 or 75 percent
of contributions by the member to the fund on and after the
effective date of the election paid into the Variable Annuity
Account, credited to a variable account, and reserved for the
purchase of a variable annuity. A member who has elected to have
a percentage of contributions so paid, credited and reserved may
elect at any time thereafter to have an additional 25 or 50
percent of contributions by the member, but not to exceed a
maximum of 75 percent, so paid, credited and reserved. An
election shall be in writing on a form furnished by the board and
be filed with the board. An election shall be effective on
January 1 following the filing thereof.
{ + (b) Notwithstanding any other provision of this section,
a member may not be permitted to contribute to the Variable
Annuity Account after June 30, 2004. + }
(4) A member who has elected to have contributions paid into
the Variable Annuity Account under subsection (3) of this section
may thereafter cause the contributions to cease being paid into
the member's variable account by filing a request in writing on a
form furnished by the board and filed with the board. The
contributions shall cease being paid into the member's variable
account after December 31 following the filing of the request.
Contributions paid into the member's variable account before the
effective date of the request for cessation shall remain in the
member's variable account.
(5)(a) An employee who is a member of the system on January 1,
1968, and who thereafter { - files an election under subsection
(3) of this section - } { + made contributions to the Variable
Annuity Account + }, may elect at any time to have an amount
equal to 10 percent per year, for not more than five years, of
the balance of the regular account of the member in the fund on
the effective date of an election filed under subsection (3) of
this section, transferred from the regular account of the member
to the Variable Annuity Account, credited to the member's
variable account, and reserved for the purchase of a variable
annuity. An election shall be in writing on a form furnished by
the board and be filed with the board. An election is final and
irrevocable upon the filing thereof. The first transfer pursuant
to an election shall be made on July 1 following the filing of
the election, but may be made, in the discretion of the board, on
an earlier date.
(b) If the transfers elected by a member under this subsection
have not been completed at the time of retirement, a transfer
equal to one annual transfer shall be made pursuant to an
election by the member made and filed as provided in this
subsection.
(c) No transfer shall be made under this subsection after the
first payment of the service retirement allowance of the member
becomes normally due.
{ + (d) Notwithstanding paragraphs (a) to (c) of this
subsection, a member may not elect to transfer funds under this
subsection after December 31, 2010. + }
(6) Moneys in the Variable Annuity Account may be invested in
investments authorized by law for investment of moneys in the
Public Employees Retirement Fund; but, notwithstanding any other
general or specific law, moneys in the account shall be invested
primarily in equities, including common stock, securities
convertible into common stock, real property and other recognized
forms of equities, whether or not subject to indebtedness. Not
more than five percent of the amortized value of all the
investments of the Variable Annuity Account and of moneys in the
account immediately available for investment may be invested in
the obligations of or equities in a single, primary obligor or
issuer. A pro rata share of the administrative expenses of the
system shall be paid from interest earned by the Variable Annuity
Account.
(7)(a) Except as provided in subsection (8) of this section,
the policy-making investment authority for the Public Employees
Retirement Fund shall enter into contracts with one or more
persons whom the authority determines to be qualified, whereby
the persons undertake to invest and reinvest moneys in the
Variable Annuity Account available for investment and acquire,
retain, manage and dispose of investments of the account in
accordance with subsections (1) and (6) of this section and to
the extent provided in the contracts.
(b) Performance of functions under contracts so entered into
shall be paid for out of the gross interest or other income of
the investments with respect to which the functions are
performed, and the net interest or other income of the
investments after that payment shall be considered income of the
Variable Annuity Account.
(c) The policy-making investment authority may require a person
contracted with to give to the state a fidelity bond in a penal
sum as may be fixed by law or, if not so fixed, as may be fixed
by the authority, with corporate surety authorized to do business
in this state.
(d) Contracts so entered into and functions performed
thereunder are not subject to the State Personnel Relations Law
or ORS 279.545 to 279.746.
(e) A person contracted with shall report to the policy-making
investment authority as often as the authority may require, but
at least annually, the earnings of the moneys invested during the
period covered by the report, the capital gains and losses of the
Variable Annuity Account during the period, the changes in the
market value of the investments of the account during the period
and such other information as the authority may require.
(8) The policy-making investment authority for the Public
Employees Retirement Fund, for and on behalf of the Public
Employees Retirement System and Public Employees Retirement
Board, may enter into group annuity contracts with one or more
insurance companies authorized to do business in this state. In
lieu of any investment of moneys in the Variable Annuity Account
as provided in subsections (6) and (7) of this section, the
authority may pay, from time to time under contracts so entered
into, any moneys in that account available for investment
purposes. Contracts so entered into:
(a) May provide that annuities purchased thereunder be payable
in variable dollar amounts, but if that provision is made,
provision also shall be made that a member of the system who has
a variable account, upon retiring from service and before the
first payment of retirement allowance becomes normally due, may
elect an option to have the annuities payable to the member or
the beneficiary of the member in fixed or variable dollar amounts
or both.
(b) May provide that payment of annuities purchased thereunder
may be made by the insurance company directly to persons entitled
thereto or to the Variable Annuity Account for payment therefrom
to those persons.
(c) Are not subject to ORS 279.545 to 279.746.
(9) Upon retiring from service but within 60 days after the
date of the first benefit payment, a member of the system who has
a variable account may elect to transfer the balance in the
variable account to the regular account of the member, and by
that transfer the annuity shall be based on the amount in the
regular account of the member as otherwise provided in this
chapter and the member shall not receive a variable annuity as
provided in this section.
(10) When an annuity is payable under this chapter to a member
of the system who has a variable account, or is payable to a
beneficiary of that person, the portion of the annuity payable
from the Variable Annuity Account shall be proportionately
increased or decreased for a calendar year when, as of October 31
of the preceding calendar year, the balance of the member's
variable account exceeds or is less than the current value of the
annuity, determined in accordance with the rate of interest and
approved actuarial tables then in effect.
(11) Notwithstanding subsection (10) of this section, the
board, in the event of extraordinary fluctuation in the market
value of investments of the Variable Annuity Account and in order
to avoid substantial inequities, may increase or decrease the
portions of annuities paid from the account for periods less than
a calendar year and determined as of dates other than October 31.
(12) Notwithstanding any other provision of this chapter, the
retirement allowance to which a member of the system who has a
variable account or who made contributions on salary in excess of
$4,800 per year during the period January 1, 1956, through
December 31, 1967, and whose effective date of retirement is
January 1, 1982, or later, is otherwise entitled under this
chapter shall be subject to the following adjustment:
(a) The board shall determine the difference between the member
account of the member and what the member account of the member
would have been had the member not participated in the variable
annuity program on or after January 1, 1982, plus the
contributions made on salary in excess of $4,800 per year during
the period January 1, 1956, through December 31, 1967.
(b) If the member account of the member due to participation in
the variable annuity program or due to the contributions made on
salary in excess of $4,800 per year is greater, the monthly
retirement allowance of the member shall be increased by the
value of the difference, using the annuity tables applicable to
the plan selected by the member.
(c) If the member account of the member due to participation in
the variable annuity program or due to the contributions made on
salary in excess of $4,800 per year is lesser, the monthly
retirement allowance of the member shall be decreased by the
value of the difference, using the annuity tables applicable to
the plan selected by the member.
(13) Except as otherwise specifically provided in this section,
the rights and benefits under this chapter of an active or
retired member of the system or of a beneficiary of the member
are not affected by this section and the provisions of this
chapter applicable to regular accounts of active and retired
members of the system in the fund are also applicable to variable
accounts.
(14)(a) In addition to the transfer provided for in subsection
(9) of this section, a member of the system who has a variable
account may at any time prior to retirement elect to transfer the
balance in that account to the regular account of the member in
the fund if:
(A) The member is other than a police officer or firefighter
and has attained the age of 50;
(B) The member is a police officer or firefighter and has
attained the age of 45; or
(C) The member has a combined total of 25 years or more of
creditable service in the system and prior service credit.
(b) An election under paragraph (a) of this subsection is
irrevocable, and a member who has so elected may not thereafter
elect to make contributions to the Variable Annuity Account under
subsection (3) of this section.
(c) An election under paragraph (a) of this subsection shall be
in writing and shall be filed with the board. The board by rule
shall prescribe a form for the purposes of application. An
election so made shall be effective on January 1 of the year
following the year in which the election is made, except that an
election shall have no effect whatsoever unless the member
account of the member as of the effective date of the election is
greater than what the member account of the member would have
been had the member not participated in the variable annuity
program on or after January 1, 1982, not including the
contributions made on salary in excess of $4,800 per year during
the period January 1, 1956, through December 31, 1967.
(d) As of the effective date of an election under this
subsection, the board shall credit all earnings to the member's
variable account based on the actual calendar year variable
earnings rate for the year in which the election is made. This
account balance shall:
(A) Be used by the board in determining whether the member's
election is effective under paragraph (c) of this subsection; and
(B) Be the account balance credited by the board to the regular
account of the member in the fund if the election is determined
to be effective.
(e) The annuity of a member who makes an effective transfer
under this subsection shall be based on the amount in the regular
account of the member in the fund as otherwise provided in this
chapter, and the member shall not receive a variable annuity as
provided in this section.
SECTION 8. ORS 238.300 is amended to read:
238.300. Upon retiring from service at normal retirement age or
thereafter, a member of the system shall receive a service
retirement allowance which shall consist of the following annuity
and pensions:
(1) A refund annuity which shall be the actuarial equivalent of
accumulated contributions { + , if any, + } by the member and
interest thereon credited at the time of retirement, which
annuity shall provide an allowance payable during the life of the
member and at death a lump sum equal in amount to the difference
between accumulated contributions at the time of retirement and
the sum of the annuity payments actually made to the member
during life shall be paid to such person, if any, as the member
nominates by written designation duly acknowledged and filed with
the board or shall otherwise be paid according to the provisions
of this chapter for disposal of an amount credited to the member
account of a member at the time of death in the event the member
designates no beneficiary to receive the amount or no such
beneficiary is able to receive the amount. If death of the member
occurs before the first payment is due, the member account of the
member shall be treated as though death had occurred before
retirement.
(2)(a) A life pension (nonrefund) for current service provided
by the contributions of employers, which pension, subject to
paragraph (b) of this subsection, shall be an amount which, when
added to the sum of the annuity { + , if any, + } under
subsection (1) of this section and the annuity, if any, provided
on the same basis and payable from the Variable Annuity Account,
both annuities considered on a refund basis, results in a total
of:
(A) For service as a police officer or firefighter, two percent
of final average salary multiplied by the number of years of
membership in the system as a police officer or firefighter
before the effective date of retirement.
(B) For service as a member of the Legislative Assembly, two
percent of final average salary multiplied by the number of years
of membership in the system as a member of the Legislative
Assembly before the effective date of retirement.
(C) For service as other than a police officer, firefighter or
member of the Legislative Assembly, 1.67 percent of final average
salary multiplied by the number of years of membership in the
system as other than a police officer, firefighter or member of
the Legislative Assembly before the effective date of retirement.
(b) A pension under this subsection shall be at least:
(A) { + For a member who first establishes membership in the
system before the effective date of this 2003 Act, + } the
actuarial equivalent of the annuity provided by the accumulated
contributions of the member. { + A person establishes membership
in the system before the effective date of this 2003 Act for the
purposes of this subparagraph if:
(i) The person is a member of the system, or a judge member of
the system, on the day immediately before the effective date of
this 2003 Act; or
(ii) The person performed any period of service for a
participating public employer before the effective date of this
2003 Act that is credited to the six-month period of employment
required of an employee under ORS 238.015 before an employee may
become a member of the system. + }
(B) For a member who made contributions before August 21, 1981,
the equivalent of a pension computed pursuant to this subsection
as it existed immediately before that date.
(c) As used in this subsection, 'number of years of membership'
means the number of full years plus any remaining fraction of a
year for which salary was paid and contributions to the Public
Employees Retirement System made. Except as otherwise provided in
this paragraph, in determining a remaining fraction a full month
shall be considered as one-twelfth of a year and a major fraction
of a month shall be considered as a full month. Membership of a
school district employee, an employee of the State Board of
Higher Education engaged in teaching or other school activity at
an institution of higher education or an employee of the
Department of Human Services, the Oregon Youth Authority, the
Department of Corrections or the State Board of Education engaged
in teaching or other school activity at an institution supervised
by the authority, board or department, for all portions of a
school year in a calendar year in which the district school,
institution of higher education or school activity at an
institution so supervised in which the member is employed is
normally in session shall be considered as a full one-half year
of membership. The number of years of membership of a member who
received a refund of contributions as provided in ORS 237.976 (2)
is limited to the number of years after the day before the date
on which the refund was received. The number of years of
membership of a member who is separated, for any reason other
than death or disability, from all service entitling the member
to membership in the system, who withdraws the amount credited to
the member account of the member in the fund { + or receives a
lump sum payment equivalent to the actuarial present value of the
member's retirement allowance + } during absence from such
service and who thereafter reenters the service of an employer
participating in the system but does not repay the amount so
withdrawn { + or received + } as provided in this chapter, is
limited to the number of years after the day before the date of
so reentering.
(3) An additional life pension (nonrefund) for prior service
credit, including military service, credited to the member at the
time of first becoming a member of the system, as elsewhere
provided in this chapter, which pension shall be provided by the
contributions of the employer.
{ +
RESERVES + }
SECTION 9. ORS 238.670 is amended to read:
238.670. (1) At the close of each calendar year in which the
earnings on the Public Employees Retirement Fund equal or exceed
the assumed interest rate established by the Public Employees
Retirement Board under ORS 238.255, the board shall set aside,
out of interest and other income received through investment of
the Public Employees Retirement Fund during that calendar year,
such part of the income as the board may deem advisable, not
exceeding
{ - seven and one-half - } { + 10 + } percent of the combined
total of such income, which moneys so segregated shall remain in
the fund and constitute therein a reserve account. The board
shall continue to credit the reserve account in the manner
required by this subsection until the board determines that the
reserve account is adequately funded for the purposes specified
in this subsection. Such reserve account shall be maintained and
used by the board to prevent any deficit of moneys available for
the payment of retirement allowances, due to interest
fluctuations, changes in mortality rate or, except as provided in
subsection (3) { - or (4) - } of this section, other
contingency. In addition, the reserve account may be used by the
board for the following purposes:
(a) To prevent any deficit in the fund by reason of the
insolvency of a participating public employer { + due to the
disability of one or more of its employees + }. Reserves under
this paragraph may be funded only from the earnings on employer
contributions made under ORS 238.225.
(b) To pay any legal expenses or judgments that do not arise in
the ordinary course of adjudicating an individual member's
benefits or an individual employer's liabilities.
{ + (c) To credit the benefits-in-force reserve in a year in
which interest and other income credited to the reserve pursuant
to subsection (2) of this section is insufficient to meet the
expected obligations of the reserve, as identified in periodic
actuarial reports. + }
{ - (c) - } { + (d) + } To { - provide for - } { + pay
any other obligations of the fund due to + } any other
contingency { + , as + } { - that - } the board may determine
to be appropriate.
(2) At the close of each calendar year, the board shall set
aside { + and pay into the benefits-in-force reserve + }, out of
interest and other income received during the calendar year,
after deducting the amounts provided by { - law - } { +
subsection (1) of this section, ORS 238.260 and 238.610 and any
amount required by law to be applied to reduce or eliminate a
deficit created pursuant to ORS 238.255, + } and to the extent
that such income is available, { - a sufficient amount to
credit to the reserves for pension accounts and annuities varying
percentage amounts adopted by the board as a result of periodic
actuarial investigations. If total income available for
distribution exceeds those percentages of the total accumulated
contributions of employees and employers, the reserves for
pensions and annuities shall participate in such excess - }
{ + an amount sufficient to result in a reserve balance that
meets the obligations of the benefits-in-force reserve, as
identified in periodic actuarial reports pursuant to ORS 238.605.
After meeting its statutory and administrative obligations to
other reserves and accounts, including such reserves as the board
maintains for the purpose of meeting the benefit obligations of
participating employers to active and inactive members, the board
may distribute any excess income to the benefits-in-force reserve
in such amounts as are consistent with the sound administration
of the system + }.
(3) The board may set aside, out of interest and other income
received through investment of the fund, such part of the income
as the board considers necessary, which moneys so segregated
shall remain in the fund and constitute one or more reserve
accounts. Such reserve accounts shall be maintained and used by
the board to offset gains and losses of invested capital. The
board, from time to time, may cause to be transferred from the
reserve account provided for in subsection (1) of this section to
a reserve account provided for in this subsection such amount as
the board determines to be unnecessary for the purposes set forth
in subsection (1) of this section and to be necessary for the
purposes set forth in this subsection.
{ - (4) The board may provide for amortizing gains and losses
of invested capital in such instances as the board determines
that amortization is preferable to a reserve account provided for
in subsection (3) of this section. - }
{ + (4) The board may distribute interest and other income to
regular member accounts of members who participated in the system
before January 1, 1996, at a rate that exceeds the assumed
interest rate for the system only if the moneys set aside in the
reserves created pursuant to subsections (1) and (3) of this
section and in the benefits-in-force reserve are sufficient to
meet all the actuarially determined obligations of the system
expected to be paid by participating employers to those members
and their beneficiaries, and only if reserve accounts are
sufficiently funded to meet all future interest crediting
obligations for those members pursuant to ORS 238.255. + }
(5) At least 30 days before crediting any interest and other
income received through investment of the Public Employees
Retirement Fund to any reserve account in the fund, the board
shall submit a preliminary proposal for crediting to the
appropriate legislative review agency, as defined in ORS 291.371
(1), for its review and comment.
{ +
INACTIVE VESTED MEMBERS + }
SECTION 10. ORS 238.265 is amended to read:
238.265. (1) Except as otherwise provided in this section, a
member of the Public Employees Retirement System may withdraw
from the Public Employees Retirement Fund the amount credited to
the member account { + , if any, + } for the member if:
(a) The member is separated from all service with participating
public employers;
(b) The member is separated from all service with employers who
are treated as part of a participating public employer's
controlled group under the federal laws and rules governing the
status of the system and the fund as a qualified governmental
retirement plan and trust;
(c) The member has not attained earliest service retirement
age; and
(d) The separation from service is not by reason of death or
disability.
(2) If a member wishes to withdraw the member account { + , if
any, + } of the member under this section, the member must
transmit to the Public Employees Retirement Board a withdrawal
request. The board shall deny the withdrawal, or shall take all
reasonable steps to recover withdrawn amounts, if:
(a) The board determines that the separation is not a bona fide
separation; or
(b) The member fails to remain absent from the service of all
employers described in subsection (1) of this section for at
least one calendar month following the month in which the member
separates from service.
(3) { + (a) + } { - If a member has contributed to the fund
in each of five calendar years and - } { + Subject to paragraph
(b) of this subsection, a vested member of the system who + } has
separated from all service in the manner described in subsection
(1) of this section before reaching earliest service retirement
age { - , the member - } may elect to withdraw { + from the
system by receiving the greater of the balance in + } the member
account of the member { - under this section - } { + or a
lump sum payment equivalent to the actuarial present value of the
member's retirement allowance at the time of separation + } at
any time before reaching earliest service retirement age. If the
inactive member does not make an election to withdraw under this
section, the member shall be paid the { - benefits or - }
retirement { - allowances - } { + allowance + } described in
ORS 238.425.
{ + (b) Notwithstanding paragraph (a) of this subsection, a
vested member whose retirement allowance at the time of
separation has an actuarial present value of $10,000 or less,
shall receive a lump sum payment upon separation from
service. + }
(4) Withdrawal of a member account { + or receipt of a lump
sum payment equivalent to the actuarial present value of the
member's retirement allowance + } under this section cancels all
membership rights in the system, including the right to claim
credit for any employment before withdrawal.
SECTION 11. ORS 238.425 is amended to read:
238.425. In the event that an employee who is a { + vested + }
member of the system { - , who has made contributions to the
fund during each of five calendar years as established by this
chapter, - } and who has not attained earliest service
retirement age { - , - } is separated, for any reason other
than death or disability, from all service entitling the employee
to membership in the system, the member account { + , if any, + }
of the member shall remain to the member's credit in the fund
unless the member elects to withdraw it { + or to receive a lump
sum payment equivalent to the actuarial present value of the
member's retirement allowance + } and there shall be paid such
death benefits as this chapter provides; or a disability
retirement allowance or, after attaining earliest service
retirement age, a service retirement allowance, either of which
shall consist of { + the allowance provided in ORS 238.300, but
actuarially reduced and computed on the member's then attained
age. + } { - : - }
{ - (1) An annuity which shall be the actuarial equivalent of
the member's accumulated contributions and interest thereon
credited to the member; - }
{ - (2) A pension provided by the contributions of employers
as provided in ORS 238.300 (2), but actuarially reduced and
computed on the member's then attained age; and - }
{ - (3) An additional life pension (nonrefund) for prior
service credit, including military service, credited to the
member at the time the member first becomes a member of the
system, as elsewhere provided in this chapter, which pension
shall be provided by the contributions of the employer. - }
{ +
EXTENSION OF CALL FOR DEFICITS + }
SECTION 12. ORS 238.255 is amended to read:
238.255. The regular account { + , if any, + } for an active or
inactive member of the system shall be examined each year. If the
regular account is credited with earnings for the previous year
in an amount less than the earnings that would have been credited
pursuant to the assumed interest rate for that year determined by
the board, the amount of the difference shall be credited to the
regular account and charged to a reserve account in the fund
established for the purpose. A reserve account so established may
not be maintained on a deficit basis for a period of more than
{ - five - } { + 10 + } years. Earnings in excess of the
assumed interest rate for years following the year for which a
charge is made to the reserve account shall first be applied to
reduce or eliminate the amount of a deficit. The Public Employees
Retirement Board shall attempt to ensure that the reserve account
is funded with amounts adequate to leave a zero balance in the
account when all members who established membership in the system
before January 1, 1996, as described in ORS 238.430, have
retired.
{ +
BOARD MEMBERSHIP AND DUTIES + }
SECTION 13. ORS 238.630 is amended to read:
238.630. (1) The governing authority of the system shall be a
board known as the Public Employees Retirement Board and
consisting of { - 12 - } { + five + } members appointed by
the Governor subject to confirmation by the Senate in the manner
provided in ORS 171.562 and 171.565. { + The Governor shall
appoint one board member to act as chairperson during the
member's term. The member appointed as chairperson may be
reappointed as chairperson for subsequent terms. + }Except as
otherwise provided in ORS 238.640, the term of each member shall
be three years.
(2) The board shall have:
(a) The powers and privileges of a corporation, including the
right to sue and be sued in its own name as such board; and
(b) The power and duty, subject to the limitations of this
chapter, of managing the system.
(3) The board:
{ - (a) Shall, at its first meeting each year, designate one
of its members to serve as chair of the board for the remainder
of the year and until a successor is designated and takes that
office; - }
{ - (b) - } { + (a) + } Shall arrange for actuarial service
for the system;
{ - (c) - } { + (b) + } Shall employ a director;
{ + (c) Notwithstanding ORS 180.060, 180.210 and 180.220,
shall retain the services of independent legal counsel who will
advise the board on its statutory and other legal obligations. A
person retained as legal counsel under this subsection may not be
an active or inactive member of the system; + }
(d) Shall create such other positions as it deems necessary to
sound and economical administration of the system, which
positions the director shall fill by appointment;
(e) Shall, with the approval of the Director of the Oregon
Department of Administrative Services, and as otherwise provided
by law, fix the salaries of all persons employed for purposes of
administering the system;
(f) Shall publish and distribute to all employer and employee
members of the system an annual report including a summary of
investments of moneys in the fund, investment earnings,
significant legislative or administrative changes in the system
and other pertinent information on the operation of the system
for the preceding year;
(g) Shall determine the actuarial equivalency of optional forms
of retirement allowances and { + at the next board meeting
following each actuarial report required by ORS 238.605,
shall + } establish { - from time to time - } { + and
thereafter apply + } for that purpose the { - necessary - }
actuarial factors { + that accurately reflect the current
experience of the members + }, which { + factors + } shall
constitute a part of the system; { - and - }
{ + (h) Shall adopt an assumed interest rate for the system
that reasonably reflects the expected average rate of return the
fund will earn after deducting administrative expenses;
(i) Except as specifically required by statute, has no
authority or duty to take actions that increase the level of
benefits awarded to members of the system, leaving sole authority
with the Legislative Assembly to set the appropriate level of
benefits; and + }
{ - (h) - } { + (j) + } Shall adopt rules and take all
actions necessary to maintain qualification of the Public
Employees Retirement System and the Public Employees Retirement
Fund as a qualified governmental retirement plan and trust under
the Internal Revenue Code and under regulations adopted pursuant
to the Internal Revenue Code. Rules under this paragraph may
impose limits on contributions to the system, limits on benefits
payable from the system and other limitations or procedures
required or imposed under federal law or regulation for the
purpose of qualification of the Public Employees Retirement
System and Public Employees Retirement Fund under the Internal
Revenue Code as a governmental retirement plan and trust.
(4) The board established by this section shall succeed to all
the duties and prerogatives of the Public Employees Retirement
Board created by chapter 401, Oregon Laws 1945, in relation to
the Public Employees Retirement Fund, and in addition shall
perform all duties required of it by ORS 237.950 to 237.980, in
regard to moneys payable to or from such fund.
(5) The board shall identify by rule those records that must be
maintained by participating public employers for the purposes of
subsection { - (3)(h) - } { + (3)(j) + } of this section. A
participating public employer shall maintain records for all
employees who are members of the system as required by board
rules, and shall provide that information to the board upon
request.
SECTION 14. ORS 238.640 is amended to read:
238.640. (1) Members of the Public Employees Retirement Board
shall have the following qualifications:
(a) Each member shall be a citizen of the United States and a
resident of this state for at least two years immediately
preceding appointment to the board.
(b) { - Six - } { + Three + } members shall be public
members who are not members of the Public Employees Retirement
System. At least
{ - three - } { + two + } of the public members must have
experience in investing { + , financial management + } or pension
management.
(c) One member shall be an employee of { - the state - }
{ + a participating public employer + } in a management
position at the time of appointment and throughout the term of
appointment.
{ - (d) At the time of appointment and throughout the term of
the appointment, one member shall hold an elective office, by
election or appointment, in the governing body of a participating
public employer, other than the state. - }
{ - (e) - } { + (d) + } { - Four members - } { + One
member + } shall be { + a + } public
{ - employees - } { + employee + }, as defined in ORS
243.650, of a participating public employer and be in an
appropriate bargaining unit, as defined in ORS 243.650, having an
exclusive representative at the time of appointment and
throughout the term of appointment; but membership on the board
shall not itself affect the status of such a member as a public
employee as defined in ORS 243.650. { - At the time of
appointment and throughout the term of appointment, one of those
four members shall be engaged in teaching or other school
activity, one shall be a police officer or firefighter, one shall
be an employee of the state in a category other than teaching or
other school activity or police officer or firefighter, and one
shall be an employee of a political subdivision of the state in a
category other than teaching or other school activity or police
officer or firefighter. - }
{ - (f) In lieu of one member appointed with the
qualifications specified in paragraph (c), (d) or (e) of this
subsection, one member shall be a retired member of the system at
the time of appointment and throughout the term of the
appointment. - }
{ + (e) Notwithstanding paragraphs (c) and (d) of this
subsection, a board member appointed with the qualifications
specified in paragraph (c) or (d) of this subsection who
subsequently retires from public employment may continue to serve
the remainder of the term for which that board member was
appointed. + }
{ - (g) - } { + (f) + } The successor of a board member in
any category shall have the qualifications prescribed for that
category.
(2) Any vacancy on the board shall be filled by appointment for
the unexpired term of the member replaced.
(3) Except as provided in subsection (4) of this section, a
member of the board is entitled to compensation and expenses as
provided in ORS 292.495 from the Public Employees Retirement
Fund.
(4) Any member of the board who is an active member of the
system shall be released by the participating public employer who
employs the member for the purpose of conducting the official
business of the board. The wages or salary of the member shall
not be reduced during periods that the member is released from
duty for the purpose of conducting the official business of the
board. The board shall reimburse a public employer for the cost
of continuing the wages or salary of the member while the member
is released from duty under this subsection. A member who
continues to receive wages or salary under the provisions of this
subsection shall not receive compensation under ORS 292.495, but
shall receive travel and other expenses provided for under ORS
292.495. The provisions of this subsection do not apply to any
person who is a member of the board and who holds another office
that is subject to the provisions of section 10, Article II of
the Oregon Constitution, prohibiting the holding of more than one
lucrative office.
SECTION 15. { + The amendments to ORS 238.640 by section 14 of
this 2003 Act do not affect the term of any member serving on the
Public Employees Retirement Board on the effective date of this
2003 Act. When the first three vacancies occur after the
effective date of this 2003 Act in the positions of members who
are serving on the board, whether the positions become vacant by
reason of completion of the term or for any other reason, the
Governor shall not fill those positions unless fewer than three
members remain who are public members who are not members of the
Public Employees Retirement System, at least two of whom have
experience in investing, financial management or pension
management. When the position of the member serving on the board
under ORS 238.640 (1)(d) (2001 Edition) becomes vacant by reason
of completion of the term or for any other reason, the Governor
shall not fill that position. When the first three vacancies
occur after the effective date of this 2003 Act in the positions
of members serving on the board under ORS 238.640 (1)(e) (2001
Edition), whether the positions become vacant by reason of
completion of the term or for any other reason, the Governor
shall not fill those positions unless no members remain who meet
the qualifications of ORS 238.640 (1)(d) (2003 Edition). + }
{ +
CONFORMING AMENDMENTS + }
SECTION 16. ORS 238.005 is amended to read:
238.005. For purposes of this chapter:
{ + (1) 'Actuarial present value' means the present value of
a member's service retirement allowance as determined by the
calculation provided in ORS 238.300 taking into account the
relevant factors and laws that exist on the date of the
determination. + }
{ - (1) - } { + (2) + } 'Annuity' means payments for life
derived from contributions made by a member as provided in this
chapter.
{ + (3) 'Benefits-in-force reserve' means the reserve
established for the payment of benefits to retired and disabled
members, their beneficiaries and the beneficiaries of deceased
members. + }
{ - (2) - } { + (4) + } 'Board' means the Public Employees
Retirement Board.
{ - (3) - } { + (5) + } 'Calendar year' means 12 calendar
months commencing on January 1 and ending on December 31
following.
{ - (4) - } { + (6) + } 'Continuous service' means service
not interrupted for more than five years, except that such
continuous service shall be computed without regard to
interruptions in the case of:
(a) An employee who had returned to the service of the employer
as of January 1, 1945, and who remained in that employment until
having established membership in the Public Employees Retirement
System.
(b) An employee who was in the armed services on January 1,
1945, and returned to the service of the employer within one year
of the date of being otherwise than dishonorably discharged and
remained in that employment until having established membership
in the Public Employees Retirement System.
{ - (5) - } { + (7) + } 'Creditable service' means any
period of time during which an active member is being paid a
salary by a participating public employer and contributions are
being made to the system either by or on behalf of the member.
For purposes of computing years of 'creditable service,' full
months and major fractions of a month shall be considered to be
one-twelfth of a year and shall be added to all full years.
'Creditable service ' includes all retirement credit received by
a member.
{ - (6) - } { + (8) + } 'Earliest service retirement age'
means the age attained by a member when the member could first
make application for retirement under the provisions of ORS
238.280.
{ - (7) - } { + (9) + } 'Employee' includes, in addition to
employees, public officers, but does not include:
(a) Persons engaged as independent contractors.
(b) Seasonal, emergency or casual workers whose periods of
employment with any public employer or public employers do not
total 600 hours in any calendar year.
(c) Persons, other than workers in the Oregon Industries for
the Blind under ORS 346.190, provided sheltered employment or
made-work by a public employer in an employment or industries
program maintained for the benefit of such persons.
(d) Persons employed and paid from federal funds received under
the Emergency Job and Unemployment Assistance Act of 1974 (Public
Law 93-567) or any other federal program intended primarily to
alleviate unemployment. However, any such person shall be
considered an 'employee' if not otherwise excluded by paragraphs
(a) to (c) of this subsection and the public employer elects to
have the person so considered by an irrevocable written notice to
the board.
(e) Persons who are employees of a railroad, as defined in ORS
824.020, and who, as such employees, are included in a retirement
plan under federal railroad retirement statutes. This paragraph
shall be deemed to have been in effect since the inception of the
system.
{ - (8) - } { + (10) + } 'Final average salary' means
whichever of the following is greater:
(a) The average salary per calendar year paid by one or more
participating public employers to an employee who is an active
member of the system in three of the calendar years of membership
before the effective date of retirement of the employee, in which
three years the employee was paid the highest salary. The three
calendar years in which the employee was paid the largest total
salary may include calendar years in which the employee was
employed for less than a full calendar year. If the number of
calendar years of active membership before the effective date of
retirement of the employee is three or fewer, the final average
salary for the employee is the average salary per calendar year
paid by one or more participating public employers to the
employee in all of those years, without regard to whether the
employee was employed for the full calendar year.
(b) One-third of the total salary paid by a participating
public employer to an employee who is an active member of the
system in the last 36 calendar months of active membership before
the effective date of retirement of the employee.
{ - (9) - } { + (11) + } 'Firefighter' does not include a
volunteer firefighter as defined in subsection { - (23) - }
{ + (26) + } of this section, but does include:
(a) The State Fire Marshal, the chief deputy fire marshal and
deputy state fire marshals; and
(b) An employee of the State Forestry Department who is
certified by the State Forester as a professional wildland
firefighter and whose primary duties include the abatement of
uncontrolled fires as described in ORS 477.064.
{ - (10) - } { + (12) + } 'Fiscal year' means 12 calendar
months commencing on July 1 and ending on June 30 following.
{ - (11) - } { + (13) + } 'Fund' means the Public Employees
Retirement Fund.
{ - (12)(a) - } { + (14)(a) + } 'Member' means a person who
has established membership in the system and whose membership has
not been terminated as described in ORS 238.095. 'Member'
includes active, inactive and retired members.
(b) 'Active member' means a member who is presently employed by
a participating public employer in a position that meets the
requirements of ORS 238.015 (4), and who has completed the
six-month period of service required by ORS 238.015.
(c) 'Inactive member' means a member who is absent from the
service of all employers participating in the system, whose
membership has not been terminated in the manner described by ORS
238.095, and who is not retired for service or disability. '
Inactive member' includes a member who would be an active member
except that the person's only employment with a participating
public employer is in a position that does not meet the
requirements of ORS 238.015 (4).
(d) 'Retired member' means a member who is retired for service
or disability.
{ - (13)(a) - } { + (15)(a) + } 'Member account' means the
regular account and the variable account.
(b) 'Regular account' means the account established for each
active and inactive member under ORS 238.250.
(c) 'Variable account' means the account established for a
member who participates in the Variable Annuity Account under ORS
238.260.
{ - (14) - } { + (16) + } 'Normal retirement age' means:
(a) For a person who establishes membership in the system
before January 1, 1996, as described in ORS 238.430, 55 years of
age if the employee retires at that age as a police officer or
firefighter or 58 years of age if the employee retires at that
age as other than a police officer or firefighter.
(b) For a person who establishes membership in the system on or
after January 1, 1996, as described in ORS 238.430, 55 years of
age if the employee retires at that age as a police officer or
firefighter or 60 years of age if the employee retires at that
age as other than a police officer or firefighter.
{ - (15) - } { + (17) + } 'Pension' means annual payments
for life derived from contributions by one or more public
employers.
{ - (16) - } { + (18) + } 'Police officer' includes:
(a) Employees of institutions defined in ORS 421.005 as
Department of Corrections institutions whose duties, as assigned
by the Director of the Department of Corrections, include the
custody of persons committed to the custody of or transferred to
the Department of Corrections and employees of the Department of
Corrections who were classified as police officers on or before
July 27, 1989, whether or not such classification was authorized
by law.
(b) Employees of the Department of State Police who are
classified as police officers by the Superintendent of State
Police.
(c) Employees of the Oregon Liquor Control Commission who are
classified as enforcement officers by the administrator of the
commission.
(d) Sheriffs and those deputy sheriffs or other employees of a
sheriff whose duties, as classified by the sheriff, are the
regular duties of police officers or corrections officers.
(e) Police chiefs and police personnel of a city who are
classified as police officers by the council or other governing
body of the city.
(f) Parole and probation officers employed by the Department of
Corrections, parole and probation officers who are transferred to
county employment under ORS 423.549 and adult parole and
probation officers, as defined in ORS 181.610, who are classified
as police officers for the purposes of this chapter by the county
governing body. If a county classifies adult parole and probation
officers as police officers for the purposes of this chapter, and
the employees so classified are represented by a labor
organization, any proposal by the county to change that
classification or to cease to classify adult parole and probation
officers as police officers for the purposes of this chapter is a
mandatory subject of bargaining.
(g) Police officers appointed under ORS 276.021 or 276.023.
(h) Employees of the Port of Portland who are classified as
airport police by the Board of Commissioners of the Port of
Portland.
(i) Employees of the State Department of Agriculture who are
classified as livestock police officers by the Director of
Agriculture.
(j) Employees of the Department of Public Safety Standards and
Training who are classified by the department as other than
secretarial or clerical personnel.
(k) Investigators of the Criminal Justice Division of the
Department of Justice.
(L) Corrections officers as defined in ORS 181.610.
(m) Employees of the Oregon State Lottery Commission who are
classified by the Director of the Oregon State Lottery as
enforcement agents pursuant to ORS 461.110.
(n) The Director of the Department of Corrections.
(o) An employee who for seven consecutive years has been
classified as a police officer as defined by this section, and
who is employed or transferred by the Department of Corrections
to fill a position designated by the Director of the Department
of Corrections as being eligible for police officer status.
(p) An employee of the Department of Corrections classified as
a police officer on or prior to July 27, 1989, whether or not
that classification was authorized by law, as long as the
employee remains in the position held on July 27, 1989. The
initial classification of an employee under a system implemented
pursuant to ORS 240.190 does not affect police officer status.
(q) Employees of a school district who are appointed and duly
sworn members of a law enforcement agency of the district as
provided in ORS 332.531 or otherwise employed full-time as police
officers commissioned by the district.
(r) Employees at the MacLaren School, Hillcrest School of
Oregon and other youth correction facilities and juvenile
detention facilities under ORS 419A.050, 419A.052 and 420.005 to
420.915, who are required to hold valid Oregon teaching licenses
and who have supervisory, control or teaching responsibilities
over juveniles committed to the custody of the Department of
Corrections or the Oregon Youth Authority.
(s) Employees at youth correction facilities as defined in ORS
420.005 whose primary job description involves the custody,
control, treatment, investigation or supervision of juveniles
placed in such facilities.
(t) Employees of the Oregon Youth Authority who are classified
as juvenile parole and probation officers.
{ - (17) - } { + (19) + } 'Public employer' means the
state, one of its agencies, any city, county, or municipal or
public corporation, any political subdivision of the state or any
instrumentality thereof, or an agency created by one or more such
governmental organizations to provide governmental services. For
purposes of this chapter, such agency created by one or more
governmental organizations is a governmental instrumentality and
a legal entity with power to enter into contracts, hold property
and sue and be sued.
{ - (18) - } { + (20) + } 'Prior service credit' means
credit provided under ORS 238.442 or under ORS 238.225 (2) to (6)
(1999 Edition).
{ - (19) - } { + (21) + } 'Retirement credit' means a
period of time that is treated as creditable service for the
purposes of this chapter.
{ - (20)(a) - } { + (22)(a) + } 'Salary' means the
remuneration paid an employee in cash out of the funds of a
public employer in return for services to the employer, plus the
monetary value, as determined by the Public Employees Retirement
Board, of whatever living quarters, board, lodging, fuel, laundry
and other advantages the employer furnishes the employee in
return for services.
(b) 'Salary' includes but is not limited to:
(A) Payments of employee and employer money into a deferred
compensation plan, which are deemed salary paid in each month of
deferral;
(B) The amount of participation in a tax-sheltered or deferred
annuity, which is deemed salary paid in each month of
participation; and
(C) Retroactive payments made to an employee to correct a
clerical error or pursuant to an award by a court or by order of
or a conciliation agreement with an administration agency charged
with enforcing federal or state law protecting the employee's
rights to employment or wages, which shall be allocated to and
deemed paid in the periods in which the work was done or in which
it would have been done.
(c) 'Salary' or 'other advantages' does not include:
(A) Travel or any other expenses incidental to employer's
business which is reimbursed by the employer;
(B) Payments for insurance coverage by an employer on behalf of
employee or employee and dependents, for which the employee has
no cash option;
(C) Payments made on account of an employee's death;
(D) Any lump sum payment for accumulated unused sick leave;
(E) Any accelerated payment of an employment contract for a
future period or an advance against future wages;
(F) Any retirement incentive, retirement severance pay,
retirement bonus or retirement gratuitous payment;
(G) Payments for periods of leave of absence after the date the
employer and employee have agreed that no future services
qualifying pursuant to ORS 238.015 (3) will be performed, except
for sick leave and vacation;
(H) Payments for instructional services rendered to
institutions of the Department of Higher Education or the Oregon
Health and Science University when such services are in excess of
full-time employment subject to this chapter. A person employed
under a contract for less than 12 months is subject to this
subparagraph only for the months to which the contract pertains;
or
(I) Payments made by an employer for insurance coverage
provided to a domestic partner of an employee.
{ - (21) - } { + (23) + } 'School year' means the period
beginning July 1 and ending June 30 next following.
{ - (22) - } { + (24) + } 'System' means the Public
Employees Retirement System.
{ + (25) 'Vested' means being an active member of the system
in each of five calendar years. + }
{ - (23) - } { + (26) + } 'Volunteer firefighter' means a
firefighter whose position normally requires less than 600 hours
of service per year.
SECTION 17. ORS 238.015 is amended to read:
238.015. (1) No person may become a member of the system unless
that person is in the service of a public employer and has
completed six months' service uninterrupted by more than 30
consecutive working days during the six months' period. Every
employee of a participating employer shall become a member of the
system at the beginning of the first full pay period of the
employee following the six months' period. { - Employee and
employer - } Contributions for new members shall first be made
for those wages that are attributable to services performed by
the employee during the first full pay period following the six
months' period, without regard to when those wages are considered
earned for other purposes under this chapter. All public
employers participating in the Public Employees Retirement System
established by chapter 401, Oregon Laws 1945, as amended, at the
time of repeal of that chapter, and all school districts of the
state, shall participate in, and their employees shall be members
of, the system, except as otherwise specifically provided by law.
(2) Any active member of the Public Employees Retirement System
who, through the annexation of a political subdivision employing
the member or by change of employment, becomes the employee of
another political subdivision which is participating in the
Public Employees Retirement System and has also a separate
retirement system for its employees, shall remain an active
member of the Public Employees Retirement System unless, within
60 days after the effective date of the annexation or change of
employment or April 8, 1953, the member shall by written notice
to the Public Employees Retirement Board and to the
administrative body of the new public employer elect to
relinquish membership in the Public Employees Retirement System
and become a member of the separate retirement system of the
employer, if eligible for membership in that retirement system,
and the member shall be so carried by the new employer.
Immediately upon such annexation of any political subdivision or
such change of employment, the new public employer shall inform
such employee in writing of the right of the employee to exercise
an election as in this section provided.
(3) A political subdivision (other than a school district) not
participating in the retirement system established by chapter
401, Oregon Laws 1945, as amended, which employs one or more
employees, each of whose position requires 600 hours of service
per year, or an agency created by two or more political
subdivisions to provide themselves governmental services, which
employs one or more employees, each of whose position requires
600 hours of service per year, may, through its governing body,
notify the board in writing, that it elects to include its
employees in the system hereby established. Such public employer
may request the board to make a study and estimate of the cost of
including it and its eligible employees, other than volunteer
firefighters, in the system, which the board thereupon shall
cause to be made and the cost of which the employer shall bear.
Upon completion of the study and estimate the employer may apply
for admission to the system, whereupon it shall begin to
participate therein and its eligible employees other than
volunteer firefighters shall become members of the system. If the
employer is an agency created by two or more political
subdivisions to provide themselves governmental services and
ceases thereafter to transmit to the board contributions for any
of its eligible employees, the benefits based upon employer
contributions to which such employees would otherwise be entitled
shall be reduced accordingly.
(4) Except as subsection (7) of this section provides otherwise
with reference to volunteer firefighters, no employee whose
position with one public employer or concurrent positions with
two or more public employers normally require less than 600 hours
of service per year may become a member of the system.
(5) No inmate of a state institution or an alien on a training
or educational visa working for any participating employer, even
though the inmate or alien received compensation from a
participating employer, shall be eligible to become a member of
the system. No person employed by a participating employer and
defined by such employer as a student employee is eligible to
become a member of the system for such student employment.
(6) A person holding an elective office or an appointive office
with a fixed term or an office as head of a department to which
the person is appointed by the Governor may become a member of
the system by giving the board written notice of desire to do so
within 30 days after taking the office or, in the event that the
officer is not eligible to become a member of the system at the
time of taking the office, within 30 days after becoming so
eligible. Membership so established shall not be discontinued
during the appointive or elective term of the officer except upon
separation of the officer from service.
(7) A public employer employing volunteer firefighters may
apply to the board at any time for them to become members of the
system. Upon receiving the application the board shall fix a wage
at which, for purposes of this chapter only, they shall be
considered to be employed and which shall be the basis for
computing the amounts of the contributions { + , if any, + }
which they pay into, and of the benefits which they and their
beneficiaries receive from, the fund; and if the wage so fixed is
satisfactory to the employer, shall include the firefighters in
the system.
(8)(a) In the event that an employee enters the service of a
public employer which is participating in or later begins to
participate in the system and in the event that at the time of
entering that service or at the time that the employer begins to
participate in the system the employee has commenced to purchase
and is continuing to purchase a retirement annuity, if the
employer deems the annuity adequate for the purposes of this
chapter, it may enter into an agreement with the employee and the
board pursuant to which the employee may be exempted from
contributing to the Public Employees Retirement Fund, and, if no
public funds are being used to purchase the annuity or a
corresponding pension, the employer, in lieu of the contributions
which it otherwise would make to the fund on account of the
employee, may make contributions toward the cost of purchasing
the annuity. Such employee otherwise shall be subject to the
provisions of this chapter, except that neither the employee nor
any person claiming under the employee shall receive any payments
from the retirement fund as service or disability allowance.
(b) An employee who enters into an agreement under paragraph
(a) of this subsection may elect at any time thereafter to start
to participate in the system by giving written notice of desire
to participate to the board and to the employer. The employee
shall receive no retirement credit for the period during which
the employee was exempted from contributing to the fund under the
agreement, but the employee shall be considered to have completed
the six months' service required for membership in the system.
When the employee starts to participate in the system the
employer shall start to contribute to the fund on account of the
employee in the same manner as the employer contributes on
account of other employees who are active members of the system
and the employer shall stop making contributions toward the cost
of purchasing the retirement annuity.
(9)(a) All new appointees in the Federal Cooperative Extension
Service or in any other service in which participation in the
Federal Civil Service retirement program is mandatory, who
receive a federal appointment on or after July 1, 1955, may
participate in the Public Employees Retirement System only by
giving written notice of their election to so participate to the
Public Employees Retirement Board within six months after the
effective date of their appointment.
(b) All persons employed by the Federal Cooperative Extension
Service or by any other service in which participation in the
Federal Civil Service retirement program is mandatory, who are
under federal appointment as of July 1, 1955, and who are members
of the state retirement system, shall continue such membership
unless, prior to February 1, 1956, they give written notice to
the Public Employees Retirement Board of their desire to cancel
their membership.
(c) Any person who is an active member of the Public Employees
Retirement System, who, on or after July 1, 1955, is employed by
the Federal Cooperative Extension Service or by any other service
in which participation in the Federal Civil Service retirement
program is mandatory, and who is given a federal appointment,
shall continue such membership in the Public Employees Retirement
System unless, within six months after the effective date of the
appointment, the person gives written notice to the Public
Employees Retirement Board of the desire to cancel membership.
(d) A cancellation of membership under paragraph (b) or (c) of
this subsection terminates membership in the Public Employees
Retirement System and cancels the right to any benefits from, or
claims against, that system. Such cancellation prevents the
withdrawing member from claiming thereafter any retirement credit
for any period of employment before the cancellation. Upon
receipt of a notice of cancellation, the Public Employees
Retirement Board shall refund the member account of the
withdrawing member, regardless of the age of the withdrawing
member.
(10) Employees, including managers, of foreign trade offices of
the Economic and Community Development Department who live and
perform services in foreign countries under the provisions of ORS
285A.090 (13) shall not be members of the system. However, any
person who is an active member of the system immediately before
becoming an employee of a foreign trade office shall continue to
be a member of the system during the period of time the person
serves as an employee of the foreign trade office.
(11) An employee who is an employee of the Oregon Health and
Science University may not be an active member of the Public
Employees Retirement System if that employee is participating in
an alternative retirement program established by the university
pursuant to ORS 353.250.
SECTION 18. ORS 238.062 is amended to read:
238.062. Any deputy district attorney receiving any
compensation from the state or from a county participating in the
Public Employees Retirement System shall establish membership in
the system after service for six months without having been
absent 30 working days. { + Any + } contributions { + required
to be paid + } by any such deputy district attorney shall be
{ - due from - } { + based on + } salary paid by the state, by
a county participating in the system or by both. The application
of this chapter to any such deputy district attorney made prior
to the effective date of this section by the Public Employees
Retirement Board hereby is confirmed and ratified.
SECTION 19. ORS 238.092 is amended to read:
238.092. (1) Notwithstanding any other provision of this
chapter:
(a) A retired member of the system who has retired as other
than a member of the Legislative Assembly and who thereafter
becomes a member of the Legislative Assembly and elects to become
an active member of the system as a member of the Legislative
Assembly may also elect, by giving the board written notice of
desire to do so, to receive the pension and annuity provided by
this chapter for service as other than a member of the
Legislative Assembly, and be an active member of the system as a
member of the Legislative Assembly for the period the member
holds office as a member of the Legislative Assembly. The notice
provided for in this paragraph shall be given within 30 days
after the retired member takes office as a member of the
Legislative Assembly.
(b) A member of the Legislative Assembly who is a member of the
system as a member of the Legislative Assembly and who becomes
eligible to retire by reason of service as other than a member of
the Legislative Assembly, without regard to when that service was
performed, may elect, by giving the board written notice of
desire to do so, to retire and receive the pension and annuity
provided by this chapter for service as other than a member of
the Legislative Assembly, and to continue, for the period the
member holds office as a member of the Legislative Assembly, as
an active member of the system as a member of the Legislative
Assembly.
(c) Upon receipt of the notice provided for in paragraphs (a)
and (b) of this subsection, the board shall determine that
portion of the accumulated contributions { + , if any, + } of the
member and interest thereon attributable to service as other than
a member of the Legislative Assembly, which shall be used in
determining the amount of the annuity the member shall receive
for that service. The portion of the accumulated
contributions { + , if any, + } of the member and interest
thereon attributable to service as a member of the Legislative
Assembly shall remain in the member account of the member and,
together with { + any + } subsequent contributions and interest
thereon, be used in determining the amount of the additional
annuity the member shall receive for that service upon ceasing to
hold office as a member of the Legislative Assembly. { + If the
member does not have a member account, the board shall determine
the member's retirement allowance for nonlegislative service
based on the number of years of nonlegislative service, and shall
determine any additional benefit to be received after the member
ceases to hold office as a member of the Legislative Assembly
based on the number of years of service in the Legislative
Assembly. + }
(2) Notwithstanding any other provision of this chapter, a
person who has reached the age of 65 years, whether or not
previously employed by a public employer and whether or not a
retired member of the system, may be employed by the Legislative
Assembly, either house thereof or the Oregon State Police for all
or any part of a regular or special session of the Legislative
Assembly. A person employed under this subsection:
(a) Unless an active member of the system continuing in
employment past the age of 65 years, { - shall not be permitted
to make contributions to the retirement fund, nor shall the
employer make contributions on behalf of the person - }
{ + does not accrue any retirement benefits, and contributions
may not be made by or on behalf of the person + }.
(b) If a retired member of the system, is entitled, during the
period of such employment, to any pension or annuity provided by
this chapter.
SECTION 20. ORS 238.095 is amended to read:
238.095. (1) An employee shall cease to be a member of the
Public Employees Retirement System if the employee withdraws the
member account { + , if any, + } of the member { + or receives a
lump sum payment equivalent to the actuarial present value of the
member's retirement allowance + } in the manner provided by ORS
238.265.
(2) Except as provided in subsection (3) of this section, an
employee shall cease to be a member of the system if the employee
is absent from the service of all employers participating in the
system for a total of more than five consecutive years after the
employee becomes a member of the system.
(3) A school district employee shall not cease to be a member
of the system under subsection (2) of this section if:
(a) After completing a school year, the member is absent from
the service of all employers participating in the system for the
next following five school years; and
(b) The member either returns to school employment at the
beginning of the sixth school year, or reaches earliest service
retirement age before the beginning of the sixth school year.
(4) Interest shall not accrue on the amount in the member
account of the former member from the date that membership is
terminated under subsection (2) of this section. The Public
Employees Retirement Board shall pay the amount in a member
account to a former member upon the termination of the membership
of the former member under subsection (2) of this section if the
former member is separated from all service with employers who
are treated as part of a participating public employer's
controlled group under the federal laws and rules governing the
status of the system and the fund as a qualified governmental
retirement plan and trust.
SECTION 21. ORS 238.105 is amended to read:
238.105. Whenever, within five years after the employee is
separated from all service entitling the employee to membership
in the system, an employee who has withdrawn the amount credited
to the member account of the member { + or has received a lump
sum payment equivalent to the actuarial present value of the
member's retirement allowance + } reenters the service of an
employer participating in the system, the employee's rights in
the system that were forfeited by the withdrawal { + or receipt
of payment + } shall be restored upon repaying to the board
within one year after reentering the service of the employer
{ - , - } the full amount so withdrawn { + or received + }
together with the interest that would have been accumulated on
the sum had the amount not been withdrawn { + or received + }.
SECTION 22. ORS 238.250 is amended to read:
238.250. The board shall provide for a regular account for each
active and inactive member of the system { + who has made
contributions to the fund + }. The regular account { + of the
member + } shall show the amount of the member's contributions to
the fund and the interest which they have earned. The board shall
furnish a written statement thereof upon request by any member or
beneficiary of the system.
SECTION 23. ORS 238.270 is amended to read:
238.270. Whenever a person who is past the earliest service
retirement age separates from the service of a public employer
participating in the Public Employees Retirement System and who
thereafter, but before applying to the Public Employees
Retirement Board for retirement benefits, is employed in a
position that entitles the person to membership in another public
employees retirement system, either within or without this state,
the board, upon the written request of the person and if in
conformance with the provisions of law governing the other public
employees retirement system, may transfer the member
account { + , if any, + } of the person in the fund to the other
public employees retirement system. Such transfer shall cancel
the right of the person to claim any future benefits under the
Public Employees Retirement System for service rendered to a
public employer in this state prior to the date of the transfer.
SECTION 24. ORS 238.320 is amended to read:
238.320. (1) Whenever an employee who is a member of the system
is found, after being examined by one or more physicians selected
by the board, to be mentally or physically incapacitated for an
extended duration, as determined by medical examination, and
thereby unable to perform any work for which qualified, by injury
or disease sustained while in actual performance of duty and not
intentionally self-inflicted, the member shall receive a
disability retirement allowance consisting of:
(a) A disability retirement refund annuity based on the
contributions { + , if any, + } credited to the member account of
the member.
(b) A current service pension provided by the contributions of
employers equal to:
(A) For a police officer or firefighter, the pension to which
the member would have been entitled if the member had worked
continuously until attaining the age of 55, or if the member has
attained the age of 55, the pension which the member would
receive were the member to retire for service, as provided in
this chapter.
(B) For a member other than a police officer or firefighter,
the pension to which the member would have been entitled if the
member had worked continuously until attaining the age of 58, or
if the member has attained the age of 58, the pension which the
member would receive were the member to retire for service, as
provided in this chapter.
(c) The same prior service pension the member would have
received had the member worked until normal retirement age.
(2) As used in subsection (1) of this section, 'injury ' means
bodily injury causing the disability directly and independently
of all other causes and effected solely through accidental means.
(3) Whenever an employee who is a member of the system and who
has been an employee for 10 years or more of an employer
participating in the system is found, after being examined by one
or more physicians selected by the board, to be mentally or
physically incapacitated for an extended duration, as determined
by medical examination, and thereby unable to perform any work
for which qualified, from cause other than injury or disease
sustained while in actual performance of duty or intentionally
self-inflicted, the member shall receive a disability retirement
allowance as provided in subsection (1) of this section.
(4) Payments under a disability retirement allowance provided
for in subsection (1) or (3) of this section for the first 90-day
period of incapacity shall be withheld until such 90-day period
has elapsed.
(5) An inactive member is not eligible for disability benefits
referred to in subsection (1) or (3) of this section unless the
member applies for such disability benefits within five calendar
years after the date of separation from service with a
participating public employer if the disability is continuous
from such separation date or within six months after the date of
such separation from service if disability occurs after such
separation date.
(6) In computing years of employment for the purpose of
subsection (3) of this section, the following schedule shall be
used: For employment before the employee established membership
in the Public Employees Retirement System, a member shall be
considered to have been employed for one year for each year of
prior service credit allowed, and for any minor fraction of a
year of continuous service as certified by the employer for which
no prior service credit was granted. After having established
membership in the Public Employees Retirement System a member
shall be considered to have been employed one year for each
12-month period or major fraction thereof during which time the
member received compensation for employment which entitled the
member to membership in the system, as evidenced by payroll
records. For the purpose of determining a member's eligibility
for disability benefits, no leave of absence after a member
ceases to work for any participating employer shall be considered
other than accumulated sick leave not in excess of 90 days. The
effective date of the disability shall not in any event be
determined by the board as prior to the last day for which the
disabled member performed services for a participating employer.
No benefits may be paid for any month in which the member
received salary or sick leave benefits from the participating
employer.
(7) For the purposes of subsections (1) and (3) of this
section, a member of the system shall be considered to be
mentally or physically incapacitated for an extended duration if
the mental or physical incapacity can be expected to result in
death or has lasted or can be expected to last for a continuous
period of not less than 90 days.
SECTION 25. ORS 238.390 is amended to read:
238.390. (1) In the event that a member of the system dies
before retiring, the amount of money { + , if any, + } credited
at the time of death to the member account of the member in the
fund shall be paid to the beneficiaries designated by the member.
For this purpose a member may designate as a beneficiary any
person or the executor or administrator of the estate of the
member or a trustee named by the member to execute an express
trust in regard to such amount. The withdrawal from the fund of
the amount in the member account of a member { + or the receipt
of a lump sum payment equivalent to the actuarial present value
of the member's retirement allowance + } pursuant to ORS 238.265
shall not invalidate a prior designation of beneficiary in the
event a member returns to covered employment, regardless of
whether the sum is repaid to the fund pursuant to ORS 238.105.
(2)(a) In the event that a member of the system dies before
retiring and has not designated a beneficiary under subsection
(1) of this section, the amount of money { + , if any, + }
credited at the time of death to the member account of the member
in the fund shall be paid to the deceased's estate if it is to be
probated and, if not, then it shall be paid directly without
probate to the surviving next of kin of the deceased or the
guardian of the survivor's estate, share and share alike, payment
to be made to survivors in the following groups in the order
listed:
(A) Husband or wife.
(B) Children.
(C) Father and mother.
(D) Grandchildren.
(E) Brothers and sisters.
(F) Nieces and nephews.
(b) Payment shall not be made to persons included in any of the
groups listed in paragraph (a) of this subsection should there be
living at the date of payment persons in any of the groups
preceding it as listed. Payment to the persons in any group, upon
receipt from them of an affidavit upon a form supplied by the
board, that there are no living individuals in a group preceding
it, that the estate of the deceased will not be probated and that
the amount of money, to the full extent thereof if necessary,
will be used to pay the expenses of last illness and funeral of
the deceased, shall completely discharge the board and system on
account of the death.
(3) The beneficiary designated under subsection (1) of this
section may elect to receive the amount payable in actuarially
determined monthly payments for the life of such beneficiary as
long as such monthly payments are at least $30.
(4)(a) In the event that a member of the system dies before
retiring, has not designated a beneficiary under subsection (1)
of this section, has no surviving next of kin referred to in
subsection (2) of this section and whose estate will not be
probated, the amount of money { + , if any, + } credited at the
time of death to the member account of the member in the fund
shall be paid directly without probate for the following purposes
in the order listed:
(A) Expenses of the funeral of the deceased.
(B) Medical expenses of the last illness of the deceased.
(C) Hospital expenses of the last illness of the deceased.
(b) Claims for payment of expenses under this subsection shall
be filed with the board within six months after the date of death
of the deceased. If no claims are filed within the six-month
period, the amount shall be credited to the fund as are employer
contributions. If a balance of the amount remains after payment
of valid claims filed within the six-month period, the balance
shall be credited to the fund as are employer contributions.
Payments under this subsection shall completely discharge the
board and system on account of the death.
(5) Accrued benefits due a retired member at the time of death
are payable to the designated beneficiary and, if none, to the
administrator or executor of the estate of the member. If the
estate will not be probated, they may be paid, upon receipt by
the board of the affidavit referred to in subsection (2)(b) of
this section, to the next of kin in the order listed in
subsection (2)(a) of this section. If the estate will not be
probated and if there is no beneficiary or next of kin, accrued
benefits or a balance due under a refund annuity option shall be
paid or credited for the purposes and in the manner provided in
subsection (4) of this section. For the purpose of determining
accrued benefits due a retired member at the time of death,
accrued benefits are considered to have ceased as of the last day
of the month preceding the month in which the retired member
dies; but if Option 2 or Option 3 under ORS 238.305 has been
elected as provided in this chapter and the beneficiary survives
the retired member, the benefits to the beneficiary shall
commence as of the first day of the month in which the retired
member dies, and payment of benefits under Option 2 or Option 3
shall cease with the payment for the month preceding the month in
which the beneficiary dies.
(6) Interest upon the member account of the member shall accrue
until the date that the amount in the member account is
distributed. Any balance in the variable account of the deceased
member is considered to be transferred to the regular account of
the member as of the date of death. The board shall establish
procedures for computing and crediting interest on the balance in
the member account for the period between the date of death and
date of distribution.
(7) Payments by the Public Employees Retirement Board of
credits or accrued benefits pursuant to the beneficiary
designation on file with the board or any affidavit referred to
in subsection (2)(b) of this section shall completely discharge
the board and system on account of the death, and shall hold the
board and system harmless from any claim for wrongful payment.
SECTION 26. ORS 238.395 is amended to read:
238.395. (1) In addition to any other benefits under this
chapter, a death benefit, provided by contributions of the public
employer under ORS 238.225, shall be paid to the beneficiaries
designated under ORS 238.390 (1) of a person who is an active or
inactive member of the system and who dies as a result of
injuries received while employed in the service of the public
employer or within 120 days after termination from service with a
participating public employer. A member who is on a leave of
absence without pay from employment with a participating public
employer has not terminated service with that participating
public employer for the purposes of this section.
(2) The death benefit referred to in subsection (1) of this
section shall be { - an amount equal to the amount in the
member account of the deceased member at the time of death - }
{ + a lump sum payment equal to the actuarial present value of
the member's retirement allowance at the time of death, reduced
by the amount of the death benefit paid pursuant to ORS
238.390 + }.
(3) In the event that a beneficiary has not been named as
provided in subsection (1) of this section and ORS 238.390 (1),
the death benefit referred to in subsection (1) of this section
shall be paid to the same person or persons and in the same
manner as provided for payment of money credited to the member
account of the member in ORS 238.390 (2).
(4) In the event that a beneficiary has not been designated and
the deceased member has no surviving next of kin referred to in
ORS 238.390 (2)(a), the death benefit referred to in subsection
(1) of this section shall be used for the same purpose and in the
same manner as provided for the use of money credited to the
member account of the member in ORS 238.390 (4)(a).
(5) The beneficiary designated under subsection (1) of this
section and ORS 238.390 (1) may elect to receive the amount
payable in actuarially determined monthly payments for the life
of such beneficiary as long as such monthly payments, plus the
monthly amount if elected under ORS 238.390 (3), are at least
$30.
(6) Interest upon the death benefit provided by this section
shall accrue until the date that the benefit is distributed. The
board shall establish procedures for computing interest to be
credited on the benefit for the period between the date of death
and date of distribution.
(7) Payments by the Public Employees Retirement Board of
additional death benefits pursuant to the beneficiary designation
on file with the board or any affidavit referred to in ORS
238.390 (2)(b) shall completely discharge the board and system on
account of the death, and shall hold the board and system
harmless from any claim for wrongful payment.
SECTION 27. ORS 238.072 is amended to read:
238.072. An employee shall not be considered to have ceased to
be a member of the system under ORS 238.095 (2) by reason of any
year in which the employee is employed by the Legislative
Assembly or either house thereof, or by a committee of the
Legislative Assembly or either house thereof, for periods
aggregating eight months or more during the year, whether or not
contributions are made to the fund by or on behalf of the
employee for those periods of employment, unless the employee
withdraws the amount credited to the member account of the
member { + or receives a lump sum payment equivalent to the
actuarial present value of the member's retirement allowance + }.
SECTION 28. ORS 238.115, as amended by section 11, chapter 945,
Oregon Laws 2001, is amended to read:
238.115. (1)(a) A member of the system who, after separation
from all service entitling the employee to membership in the
system and withdrawal of the amount credited to the member
account of the member { + or receipt of a lump sum payment
equivalent to the actuarial present value of the member's
retirement allowance + }, reenters the service of an employer
participating in the system and serves as an active member of the
system for 10 years after that reentry, and who has not otherwise
obtained restoration of creditable service forfeited by the
withdrawal { + or receipt of payment + }, shall obtain
restoration of one full month of creditable service forfeited by
the withdrawal { + or receipt + } for each three full months of
service as an active member after that reentry if the member,
within 90 days before the effective date of retirement of the
member:
(A) Applies in writing to the board for restoration of
creditable service; and
(B) Pays to the board in a lump sum for credit to the member
account of the member the amount withdrawn { + or received + }
and interest on the amount withdrawn { + or received + }
compounded annually for each year or portion of a year after the
date of the withdrawal { + or receipt + } and before the
effective date of retirement of the member. The interest shall be
computed at the annual rate of 7.5 percent.
(b) If a member who obtains restoration of creditable service
as provided in this subsection does not obtain restoration of all
creditable service forfeited by the withdrawal { + or
receipt + } pursuant to service after reentry, the payment under
paragraph (a) of this subsection shall be reduced proportionately
to reflect the percentage of creditable service restored.
(c) A member who obtains restoration of creditable service as
provided in this subsection is not entitled to elect to receive
the service retirement benefit described in ORS 238.305 (2) or
(3).
(2) A member who forfeited creditable service rendered to a
public employer before March 27, 1953, because under ORS 237.976
(2) the employee withdrew contributions of the employee to the
Public Employees Retirement System established by chapter 401,
Oregon Laws 1945, and who did not obtain restoration of
creditable service so forfeited as provided in chapter 857,
Oregon Laws 1977, shall, upon retirement, receive restoration of
creditable service so forfeited, if the member, before the
effective date of retirement of the member:
(a) Applies in writing to the board for the restoration of the
creditable service; and
(b) Pays to the board in a lump sum for credit to the member
account of the member an amount determined by the board to be
equal to the full amount of contributions so withdrawn and the
interest that would have accumulated to the regular account of
the member had those contributions not been withdrawn.
(3)(a) A member of the Public Employees Retirement System who
was a member of an association established pursuant to ORS
chapter 239 (1997 Edition), but separated from all service
entitling the employee to membership in the system of the
association and withdrew the amount credited to the member
account of the employee in the retirement fund of the
association, and who, after that separation, entered the service
of an employer in the field of education participating in the
Public Employees Retirement System and served as an active member
of that system for 10 years after that entry, and who has not
otherwise obtained restoration of all creditable service
forfeited by the withdrawal, shall obtain creditable service as a
member of the Public Employees Retirement System equal to all
creditable service forfeited by the withdrawal if the member
within 90 days before the effective date of retirement of the
member:
(A) Applies in writing to the Public Employees Retirement Board
for that creditable service; and
(B) Pays to the board in a lump sum for credit to the member
account of the member the amount withdrawn and interest on the
amount withdrawn compounded annually for each year or portion of
a year after the date of the withdrawal and before the effective
date of retirement or effective date of application of the
member. The interest shall be computed at the rate actually
credited to regular accounts for that period.
(b) This subsection provides a method of obtaining creditable
service for forfeited creditable service described in this
subsection that is in lieu of any application of subsection (1)
of this section for that purpose.
SECTION 29. ORS 238.220 is amended to read:
238.220. (1) The Public Employees Retirement Board may, at its
discretion, accept rollover contributions from an active member.
The board may accept rollover contributions under this section
only if the amounts contributed qualify for pretax rollover
treatment under the federal income tax laws governing qualified
retirement plans.
(2) If the board accepts a rollover contribution under this
section, the contribution shall be paid into the Public Employees
Retirement Fund and credited to an individual rollover account in
the name of the member who made the contribution. The rollover
account must be kept separate from the member account of the
member and must be invested separately from all other moneys in
the Public Employees Retirement Fund. All earnings on the
rollover account shall be credited by the board to the rollover
account. If the membership of the employee in the Public
Employees Retirement System is terminated under the provisions of
ORS 238.095, the board shall cease investment of the amounts in
the rollover account and, after the effective date of the
termination, shall no longer credit earnings and losses to the
rollover account.
(3) Except as provided in subsection (2) of this section,
amounts in a rollover account established under this section
shall be invested in the same manner as funds in regular
accounts. However, ORS 238.255 does not apply to rollover
accounts.
{ - (4) Rollover contributions shall not be considered in
determining whether a member has contributed in each of five
calendar years for purposes of ORS 238.265 and 238.425 or for the
purpose of any other provision in this chapter relating to
employee contributions. - }
{ - (5) - } { + (4) + } Amounts held in a rollover account
under this section shall be distributed to the member within 90
days after the member's effective date of retirement under this
chapter, or within 90 days after termination of the person's
membership in the system under ORS 238.095.
{ - (6) - } { + (5) + } Distribution from a member's
rollover account shall be made in a single lump sum payment.
Distribution from a member's rollover account shall not affect
the calculation of any other service or disability retirement
allowance, death benefit or other benefit payable to a member
under this chapter.
{ - (7) - } { + (6) + } The board shall adopt rules and
establish procedures for determining whether a member will be
allowed to make a rollover contribution under this section. Rules
and procedures adopted by the board must ensure that the rollover
contributions do not adversely affect the status of the system
and the Public Employees Retirement Fund as a qualified
governmental plan and trust under federal income tax law.
{ - (8) - } { + (7) + } The board shall by rule establish a
maintenance fee for rollover accounts established under this
section. The fee may be collected out of earnings on rollover
accounts or, if there are no earnings, from the principal amounts
paid into the rollover accounts. The fee shall be in an amount
determined by the board to be adequate to pay the full cost to
the system of maintaining rollover accounts under this section.
SECTION 30. ORS 238.380 is amended to read:
238.380. (1)(a) Upon retirement of an employee who is a member
of the Public Employees Retirement System and computation of that
member's service retirement allowance under ORS 238.300, 238.305
or 238.425, or computation of any disability retirement allowance
under ORS 238.320, 238.325, 238.330, 238.345 or 238.425, the
Public Employees Retirement Board shall add to the amount of the
allowance, including amounts attributable to prior service credit
and the amount of any refund of accumulated employee
contributions, the greater of the percentage increase calculated
under ORS 238.385 or a percentage increase calculated under
subsection (4) of this section. No benefit shall be paid to a
member or beneficiary under ORS 238.385 if the benefit payable to
the member or beneficiary under this section is larger than the
benefit payable under ORS 238.385.
(b) The percentage increase provided for in this section shall
be adjusted by the board to reflect increases or decreases in a
member's retirement allowance that are attributable to the
member's participation in the Variable Annuity Account
established by ORS 238.260, that are attributable to a change in
the member's beneficiary or payment option under ORS 238.305 or
238.325, or that are attributable to corrections to the member's
retirement allowance calculation.
(c) The percentage increase provided for in this section shall
be applied to any lump sum payment made to a member or a
beneficiary of a member on or after January 1, 1991, that is
attributable to a retroactive correction or adjustment of the
amount payable to the member or beneficiary as a retirement
allowance or that is attributable to a retroactive correction or
adjustment to any other benefit that entitles a member or
beneficiary to an increased benefit under this section. The
percentage increase payable under this paragraph applies only to
the principal amounts included in the lump sum payment as a
retroactive correction or adjustment and does not apply to any
interest on the retroactive correction or adjustment paid as part
of the lump sum payment.
(2) The amount of any death benefit under ORS 238.390, 238.395,
238.400 or 238.405, including the amount of any monthly payments,
shall be increased by the greater of the percentage provided for
in ORS 238.385 or the percentage calculated under subsection (4)
of this section.
(3)(a) A member of the system who elects to receive a lump sum
in lieu of a retirement allowance or other benefit under ORS
238.315 shall receive an increase based on the greater of the
percentage provided for in ORS 238.385 or the percentage
calculated under subsection (4) of this section.
(b) A member of the system who withdraws the amount credited to
the member account { + , if any, + } of the member in the fund
{ + or receives a lump sum payment equivalent to the actuarial
present value of the member's retirement allowance + } under the
provisions of ORS 238.265, or whose member account is returned to
the employee after the membership of the employee is terminated
under the provisions of ORS 238.095, shall receive an additional
amount calculated by multiplying the amount of the member account
of the member by the greater of the percentage provided for in
ORS 238.385 or the percentage calculated under subsection (4) of
this section. If a member thereafter elects to obtain restoration
of creditable service by repaying the amount of the withdrawn
member account { + or the amount of the lump sum payment + }
pursuant to the provisions of ORS 238.105, the member must also
repay all amounts paid under this section, together with interest
from the date of withdrawal { + or receipt of lump sum
payment + } at the same rate as applied to the withdrawn member
account { + or lump sum payment + } under ORS 238.105. If a
member repays only part of the withdrawn member account { + or
lump sum payment + } pursuant to the provisions of ORS 238.115,
the member must repay that part of the amount paid under this
section that is proportionate to the portion of the withdrawn
member account { + or lump sum payment + } that is repaid under
ORS 238.115, together with interest from the date of withdrawal
{ + or receipt of lump sum payment + } at the same rate as
applied to the withdrawn member account { + or lump sum
payment + } under ORS 238.115. All amounts paid to the member
that are subsequently repaid under ORS 238.105 or 238.115 shall
be deposited by the board to the employer reserve for pension
accounts in the fund.
(4)(a) The Public Employees Retirement Board shall calculate a
multiplier for the purposes of this section equal to the
percentage produced by the following formula:
____NOTE_TO_WEB_CUSTOMERS:__________________________________
THE FOLLOWING TABULAR TEXT MAY BE IRREGULAR.
FOR COMPLETE INFORMATION PLEASE SEE THE PRINTED MEASURE.
_______________________________________________________________
1
_______________
1 -
the maximum Oregon
personal income tax rate
____________________________________________________________
END OF POSSIBLE IRREGULAR TABULAR TEXT
____________________________________________________________
(b) Upon the retirement or death of a member of the system, the
board shall determine the fraction of the member's retirement
allowance or death benefit, including any refund or lump sum
payment, that is attributable to service rendered by the member
before October 1, 1991. The board shall then calculate a
percentage that is equal to that fraction multiplied by the
multiplier determined by the board under paragraph (a) of this
subsection. The percentage so calculated shall be used to
determine the amount of the increase in benefits provided to a
member, if any, under this section.
(5) For the purpose of determining that portion of a retirement
allowance or death benefit attributable to service rendered
before October 1, 1991, the board shall divide the number of
years of creditable service performed before October 1, 1991, by
the total number of years of creditable service during which the
pension income was earned. For the purposes of this subsection:
(a) The number of years of creditable service does not include
any period of employment for which a benefit is paid for prior
service credit.
(b) Except as provided in subsection (8)(a) of this section,
the number of years of creditable service includes all retirement
credit of the member, and any retirement credit of a member that
is attributable to periods of service, employment or other
activity performed before October 1, 1991, shall be considered
creditable service performed before October 1, 1991.
(6) The increased benefits provided for in this section shall
be funded by employer contributions.
(7) If the maximum Oregon income tax rate is changed for any
taxable year, the board shall utilize the new rate for the
purposes of calculating the benefit provided for in this section
for all members of the system who retire or die after the change
in rates takes effect. In addition, the board shall recalculate
the benefits payable to all retired members of the Public
Employees Retirement System, or to the beneficiaries of those
members, using the new tax rate. The benefit so recalculated
shall be applicable to the first full month after the
recalculation is made, and be payable the first day of the month
immediately following. If by reason of the calculation or
recalculation of the benefit under this subsection the amount of
the benefit provided for in this section is decreased, any
benefits paid after the change in the tax rate takes effect and
before the calculation or recalculation is made shall not be
recoverable by the system, but the Public Employees Retirement
Board shall ensure that only the amount of the benefit so
calculated or recalculated shall be paid after the calculation or
recalculation is made.
(8)(a) The increased benefits provided by this section apply
only to members who establish membership in the Public Employees
Retirement System before July 14, 1995, and whose effective date
of retirement or date of death is on or after January 1, 1991.
The increased benefits provided by this section do not apply to
any creditable service or prior service credit acquired by a
member under the terms of a contract of integration entered into
pursuant to ORS 238.035, 238.680 or 238.690 on or after October
1, 1991.
(b) The recalculation of benefits provided for in subsection
(7) of this section applies to all retired members, without
regard to the date of the member's retirement or death.
(9) If a member is entitled to receive an increased benefit
under the provisions of this section, and any portion of the
member's retirement allowance or other benefit payable under the
system is payable to an alternate payee under the provisions of
ORS 238.465, the increased benefits payable under this section
shall be divided between the member and the alternate payee in
proportion to the share of the total benefit received by each
person. If an alternate payee elects to begin receiving benefits
under ORS 238.465 (1) before the member's effective date of
retirement, the alternate payee may not begin receiving the
increased benefit provided for in this section until benefits are
first paid from the system on behalf of the member.
(10) A person establishes membership in the system before July
14, 1995, for the purposes of subsection (8) of this section if:
(a) The person is a member of the system, or a judge member of
the system, on July 14, 1995;
(b) The person was a member of the system before July 14, 1995,
ceased to be a member of the system under the provisions of ORS
238.095, 238.265 or 238.545 before July 14, 1995, but restores
part or all of the forfeited creditable service from before July
14, 1995, under the provisions of ORS 238.105 or 238.115 after
July 14, 1995; or
(c) The person performed any period of service for a
participating public employer before July 14, 1995, that is
credited to the six-month period of employment required of an
employee under ORS 238.015 before an employee may become a member
of the system.
SECTION 31. ORS 238.385 is amended to read:
238.385. (1)(a) Upon retirement of an employee who is a member
of the Public Employees Retirement System and computation of that
member's service retirement allowance under ORS 238.300, 238.305
or 238.425, or computation of any disability retirement allowance
under ORS 238.320, 238.325, 238.330, 238.345 or 238.425, the
Public Employees Retirement Board shall add to the amount of the
allowance, including amounts attributable to prior service credit
and the amount of any refund of accumulated member contributions,
an additional amount equal to the percentage increase provided in
subsection (4) of this section.
(b) The percentage increase provided for in this section shall
be adjusted by the board to reflect increases or decreases in a
member's retirement allowance that are attributable to the
member's participation in the Variable Annuity Account
established by ORS 238.260, that are attributable to a change in
the member's beneficiary or payment option under ORS 238.305 or
238.325, or that are attributable to corrections to the member's
retirement allowance calculation.
(c) The percentage increase provided for in this section shall
be applied to any lump sum payment made to a member or a
beneficiary of a member on or after January 1, 1991, that is
attributable to a retroactive correction or adjustment of the
amount payable to the member or beneficiary as a retirement
allowance or that is attributable to a retroactive correction or
adjustment to any other benefit that entitles a member or
beneficiary to an increased benefit under this section. The
percentage increase payable under this paragraph applies only to
the principal amounts included in the lump sum payment as a
retroactive correction or adjustment and does not apply to any
interest on the retroactive correction or adjustment paid as part
of the lump sum payment.
(2) The amount of any death benefit under ORS 238.390, 238.395,
238.400 or 238.405, including the amount of any monthly payments,
shall be increased by an amount equal to the percentage increase
provided in subsection (4) of this section.
(3)(a) A member of the system who receives a lump sum under ORS
238.315 in lieu of a retirement allowance or other benefit shall
receive an additional amount equal to the percentage increase
provided in subsection (4) of this section.
(b) A member of the system who withdraws the amount credited to
the member account { + , if any, + } of the member { + or
receives a lump sum payment equivalent to the actuarial present
value of the member's retirement allowance + } under the
provisions of ORS 238.265, or whose member account is returned to
the employee after the membership of the employee is terminated
under the provisions of ORS 238.095, shall receive an additional
amount calculated by multiplying the amount of the member account
of the member by the percentage increase provided for under
subsection (4) of this section. If a member thereafter elects to
obtain restoration of creditable service by repaying the amount
of the withdrawn member account { + or the amount of the lump
sum payment + } pursuant to the provisions of ORS 238.105, the
member must also repay all amounts paid under this section,
together with interest from the date of withdrawal { + or
receipt of lump sum payment + } at the same rate as applied to
the withdrawn member account { + or lump sum payment + } under
ORS 238.105. If a member repays only part of the withdrawn member
account { + or lump sum payment + } pursuant to the provisions
of ORS 238.115, the member must repay that part of the amount
paid under this section that is proportionate to the portion of
the withdrawn member account { + or lump sum payment + } that is
repaid under ORS 238.115, together with interest from the date of
withdrawal { + or receipt of lump sum payment + } at the same
rate as applied to the withdrawn member account { + or lump sum
payment + } under ORS 238.115. All amounts paid to the member
that are subsequently repaid under ORS 238.105 or 238.115 shall
be deposited by the board to the employer reserve for pension
accounts in the fund.
(4)(a) The percentage increases provided for in this section to
the benefits payable to or on account of a member of the system
who is serving as other than a police officer or firefighter at
the time of death or retirement shall be:
(A) For a member with a combined total of 10 or more years of
creditable service in the system and prior service credit but
less than a combined total of 20 years, one percent.
(B) For a member with a combined total of 20 or more years of
creditable service in the system and prior service credit but
less than a combined total of 25 years, two percent.
(C) For a member with a combined total of 25 or more years of
creditable service in the system and prior service credit but
less than a combined total of 30 years, three percent.
(D) For a member with a combined total of 30 or more years of
creditable service in the system and prior service credit, four
percent.
(b) The percentage increases provided for in this section to
the benefits payable to or on account of a member of the system
who is serving as a police officer or firefighter at the time of
death or retirement shall be:
(A) For a member with a combined total of 10 or more years of
creditable service in the system and prior service credit but
less than a combined total of 20 years, one percent.
(B) For a member with a combined total of 20 or more years of
creditable service in the system and prior service credit but
less than a combined total of 25 years, two and one-half percent.
(C) For a member with a combined total of 25 or more years of
creditable service in the system and prior service credit, four
percent.
(c) The benefits payable to or on account of a member with less
than a combined total of 10 years of creditable service in the
system and prior service credit at the time of death or
retirement shall not be increased under the provisions of this
section.
(5) The increased benefits provided for in this section shall
be funded by employer contributions.
(6) This section applies only to a member who establishes
membership in the Public Employees Retirement System before July
14, 1995, as described in ORS 238.380 (10), and whose effective
date of retirement or date of death is on or after January 1,
1991. The increased benefits provided by this section do not
apply to any creditable service or prior service credit acquired
by a member under the terms of a contract of integration entered
into pursuant to ORS 238.035, 238.680 or 238.690 on or after
October 1, 1991.
(7) If a member is entitled to receive an increased benefit
under the provisions of this section, and any portion of the
member's retirement allowance or other benefit payable under the
system is payable to an alternate payee under the provisions of
ORS 238.465, the increased benefits payable under this section
shall be divided between the member and the alternate payee in
proportion to the share of the total benefit received by each
person. If an alternate payee elects to begin receiving benefits
under ORS 238.465 (1) before the member's effective date of
retirement, the alternate payee may not begin receiving the
increased benefit provided for in this section until benefits are
first paid from the system on behalf of the member.
SECTION 32. ORS 238.442 is amended to read:
238.442. (1) Subject to the rules of the Public Employees
Retirement Board, upon commencing participation in the system a
public employer that is not a school district may elect to
provide prior service credit for employees of the employer who
are employees of the employer on the date on which the employer
commences participation. Prior service credit may be provided
only for employees who are members of the system. Prior service
credit under this section may be provided for continuous service
by the employee to the public employer before the public employer
commenced participation in the system and for any accumulated
seasonal employment by an employee before the public employer
commenced participation in the system. The public employer and
the board shall enter into an agreement that will specify the
number of years of prior service credit that employees of the
employer will receive. Prior service credit under this section
shall be equal to $4 for each year of prior service or major
fraction of a year.
(2) If a public employer elects to provide prior service credit
under this section, the board shall issue a certificate to each
employee entitled to receive prior service credit. The
certificate shall show the amount of prior service credit that
the employee is entitled to receive under the agreement between
the board and the public employer. The certificate shall be final
unless the board, upon the motion of the member or upon the
board's own motion, modifies the certificate for cause.
(3) Prior service credit under this section shall be funded by
employer contributions in the manner provided by ORS 238.225.
(4) A public employer who agrees to provide prior service
credit under this section may elect to treat any year, or part of
a year, for which prior service credit is granted as a year in
which the employee { - has made contributions to the Public
Employees Retirement Fund for the purposes of ORS 238.265 (3) and
238.425 - } { + is an active member for the purpose of becoming
vested + }. An election under this subsection must be made at the
time the public employer enters into the agreement providing for
prior service credit.
SECTION 33. ORS 238.580 is amended to read:
238.580. (1) ORS 238.005 { - (3) and (20) - } { + (5) and
(22) + }, 238.025, 238.078, 238.082, 238.092, 238.115 (1),
238.250, 238.255, 238.260, 238.350, 238.380, 238.410, 238.415,
238.420, 238.445, 238.458, 238.460, 238.465, 238.475, 238.600,
238.605, 238.610, 238.618, 238.630, 238.635, 238.645, 238.650,
238.655, 238.660, 238.665, 238.670 and 238.705 and the increases
provided by ORS 238.385 for members of the system who are serving
as other than police officers or firefighters apply in respect to
service as a judge member.
(2) This chapter applies in respect to persons described in ORS
238.505 (1) and in respect to service as a judge member only as
specifically provided in ORS 238.500 to 238.585.
SECTION 34. ORS 243.800 is amended to read:
243.800. (1) Notwithstanding any provision of ORS chapter 238
or ORS 243.910 to 243.945, the State Board of Higher Education
may establish and administer an optional retirement plan for
administrative and academic employees of the Oregon University
System who are eligible for membership in the Public Employees
Retirement System. The optional retirement plan must be a
qualified plan under the Internal Revenue Code, capable of
accepting funds transferred under subsection (7) of this section
without the transfer being treated as a taxable event under the
Internal Revenue Code, and willing to accept those funds.
Retirement and death benefits shall be provided under the plan by
the purchase of annuity contracts, fixed or variable or a
combination thereof, or by contracts for investments in mutual
funds.
(2) The State Board of Higher Education shall select at least
two life insurance companies providing fixed and variable
annuities and at least two investment companies providing mutual
funds, but not more than five companies in total, for the purpose
of providing benefits under the optional retirement plan
authorized by this section. The State Board of Higher Education
shall establish selection criteria for the purpose of this
subsection.
(3) An administrative or academic employee may elect to
participate in an optional retirement plan offered under the
provisions of this section in the following manner:
(a) An administrative or academic employee who is an active
member of the Public Employees Retirement System may make an
irrevocable election to participate in the plan within 180 days
after the plan's implementation date, effective as of the date of
election.
(b) An employee, as defined in ORS 243.910 (2), who is an
active member of the Public Employees Retirement System and who
has elected, and not canceled that election, to be assisted by
the State Board of Higher Education under ORS 243.940 may make an
irrevocable election to participate in the plan within 180 days
of the plan's implementation date, effective as of the date of
election.
(c) An administrative or academic employee who is hired after
the plan's implementation date may make an irrevocable election
to participate in the plan within the first six months of
employment, effective on the first of the month following six
full months of employment.
(4) Administrative or academic employees who do not elect to
participate in an optional retirement plan:
(a) Remain members of the Public Employees Retirement System if
they are members on the date the plan is implemented;
(b) Continue to be assisted by the State Board of Higher
Education under ORS 243.920 if they are being so assisted; or
(c) Become members of the Public Employees Retirement System in
accordance with ORS chapter 238, if they commence employment
after the optional plan is implemented.
(5) Except as provided in subsection (6) of this section,
employees who elect to participate in the plan are ineligible for
active membership in the Public Employees Retirement System or
for any assistance by the State Board of Higher Education under
ORS 243.920 as long as those employees are employed in the Oregon
University System and the plan is in effect.
(6)(a) An administrative or academic employee who elects to
participate in the optional retirement plan authorized by this
section and who { - has not made contributions to the Public
Employees Retirement System during each of five calendar
years - } { + is not vested + } shall be considered by the
Public Employees Retirement Board to be a terminated member under
the provisions of ORS 238.095 effective as of the effective date
of the election, and the amount credited to the member account of
the member shall be transferred directly to the optional
retirement plan by the Public Employees Retirement Board in the
manner provided by subsection (7) of this section.
(b) An administrative or academic employee who elects to
participate in the optional retirement plan authorized by this
section and who { - has made contributions to the Public
Employees Retirement System during each of five calendar
years - } { + is vested + } shall be considered to be an
inactive member by the Public Employees Retirement Board and
shall retain all the rights, privileges and options under ORS
chapter 238 unless the employee withdraws the amounts credited to
the member account { + , if any, + } of the member { + or
receives a lump sum payment equivalent to the actuarial value of
the member's retirement allowance + } pursuant to ORS 238.265.
(7) Any withdrawals { + or receipt of payment + } from the
Public Employees Retirement Fund under subsection (6) of this
section, whether by termination under subsection (6)(a) of this
section or by elective withdrawal { + or receipt of payment + }
under subsection (6)(b) of this section, shall be transferred
directly to the optional retirement plan by the Public Employees
Retirement Board and shall not be made available to the employee.
(8) An employee participating in the optional retirement plan
authorized by this section shall contribute monthly an amount
equal to the percentage of the employee's salary that the
employee would otherwise have contributed as an employee
contribution to the Public Employees Retirement System if the
employee had not elected to participate in the optional
retirement plan.
(9) The State Board of Higher Education shall contribute
monthly to the optional retirement plan authorized under this
section the percentage of salary of each employee participating
in the plan equal to the percentage of salary that would
otherwise have been contributed as an employer contribution on
behalf of the employee to the Public Employees Retirement System
if the employee had not elected to participate in the optional
retirement plan.
(10) Both employee and employer contributions to an optional
retirement plan authorized under this section shall be remitted
directly to the companies that have issued annuity contracts to
the participating employees or directly to the mutual funds.
(11) Benefits under the optional retirement plan authorized
under this section are payable to employees who elect to
participate in the plan and their beneficiaries by the selected
annuity provider or mutual fund in accordance with the terms of
the annuity contracts or the terms of the contract with the
mutual fund. Employees electing to participate in the plan agree
that benefits payable under the plan are not obligations of the
State of Oregon or of the Public Employees Retirement System.
SECTION 35. ORS 292.430 is amended to read:
292.430. (1) In addition to the annual salaries set forth in
ORS 171.072 and 292.313, the Oregon Department of Administrative
Services may 'pick-up,' assume and pay to the Public Employees
Retirement Fund { - the - } { + any + } employee
contributions, otherwise required by ORS 238.200, for the
Governor, Secretary of State, State Treasurer, Attorney General,
Superintendent of Public Instruction, Commissioner of the Bureau
of Labor and Industries and members of the Legislative Assembly.
(2) The department may provide health, dental, life and
long-term disability insurance without cost to the officers
referred to in subsection (1) of this section and to judges of
the Supreme Court, Court of Appeals, Oregon Tax Court and circuit
courts in such amounts as are provided from time to time to
employees in the unclassified service of the state.
{ +
COLLECTIVE BARGAINING AGREEMENTS + }
SECTION 36. { + Any collective bargaining agreement to which a
participating employer is a party and that is in force on the
effective date of this 2003 Act may be opened at the option of
any party to the agreement for the purpose of renegotiating any
provision in the agreement that concerns wages or the Public
Employees Retirement System. Other provisions of the collective
bargaining agreement may be reopened only by mutual consent of
the parties to the agreement. + }
{ +
EXPEDITED JUDICIAL REVIEW + }
SECTION 37. { + (1) Notwithstanding any other provision of
law, exclusive jurisdiction for review of any claim that arises
under this 2003 Act and that accrues on the effective date of
this 2003 Act is conferred on the Supreme Court.
(2) A person adversely affected by this 2003 Act may institute
a proceeding for review by filing with the Supreme Court a
petition that meets the following requirements:
(a) The petition must be filed within 60 days after the
effective date of this 2003 Act.
(b) The petition must include the following:
(A) A statement of the basis of the challenge; and
(B) A statement and supporting affidavit showing how the
petitioner is adversely affected.
(3) The petitioner shall serve a copy of the petition by
registered or certified mail upon the Public Employees Retirement
Board, the Attorney General and the Governor.
(4) Proceedings for review under this section shall be given
priority over all other matters before the Supreme Court.
(5) The Supreme Court shall allow public employers
participating in the Public Employees Retirement System to
intervene in any proceeding under this section.
(6) In the event the Supreme Court determines that there are
factual issues in the petition, the Supreme Court may appoint a
special master to hear evidence and to prepare recommended
findings of fact. + }
{ +
MISCELLANEOUS + }
SECTION 38. { + ORS 238.667 is repealed. + }
SECTION 39. { + The unit captions used in this 2003 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 2003 Act. + }
SECTION 40. { + This 2003 Act being necessary for the
immediate preservation of the public peace, health and safety, an
emergency is declared to exist, and this 2003 Act takes effect on
its passage. + }
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