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 1669
A-Engrossed
House Bill 2004
Ordered by the House February 24
Including House Amendments dated February 24
Sponsored by COMMITTEE ON PUBLIC EMPLOYEES RETIREMENT SYSTEM
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.
Requires that Public Employees Retirement Board adopt mortality
tables, based on best available actuarial information, every two
years for purpose of computing benefits of members and
beneficiaries of members. Provides that mortality tables first
become effective on January 1, { - 2004 - } { + 2005 + }.
{ - Directs Public Employees Retirement Board to adopt
mortality tables, based on best available actuarial information,
for purpose of computing benefits of members who have effective
date of retirement that is __ days or more after effective date
of Act - } { + Specifies method of determining benefits for
retirees and other beneficiaries on or after July 1, 2003, + }
and before January 1,
{ - 2004 - } { + 2005 + }.
{ + Confers jurisdiction on Supreme Court to determine
constitutional issues relating to implementation of Act. Requires
petition for review to be filed before January 1, 2004. + }
Declares emergency, effective on passage.
A BILL FOR AN ACT
Relating to actuarial equivalency factor tables; and declaring an
emergency.
Whereas the Public Employees Retirement Board has long-standing
authority under ORS 238.630 (3)(g) to establish actuarial
equivalency factors from time to time, and those factors as
established constitute part of the Public Employees Retirement
System; and
Whereas actuarial equivalency factors are based on assumptions
and conditions that vary over time as the demographics of a
system's constituent population and the expected performance of
investments of the Public Employees Retirement Fund change, so
that the most reasonable expectation is that such factors, by
their very nature, must vary over time to reflect those
demographic and performance shifts; and
Whereas the long-term stability and viability of the Public
Employees Retirement Fund depends on the ability of public
employers and taxpayers to pay the costs of the system; and
Whereas the board is charged with giving equal consideration to
the interests of the public employer and the public employee to
the extent consistent with the board's fiduciary duties; and
Whereas adjustments to actuarial equivalency factors must be
made as assumptions and conditions change to ensure that the
public employer's actual costs fairly match the actual
demographic and performance characteristics that then exist and
as reasonably anticipated with the system's fund and membership;
and
Whereas based on the review by the Legislative Assembly of the
Public Employees Retirement System's plan as a whole, the
Legislative Assembly has concluded that the Public Employees
Retirement Board's administration of its authority to establish
actuarial equivalency factors from time to time does not (a)
ensure that the system is run on a sound actuarial basis, (b)
conform to the Legislative Assembly's intent that benefits paid
represent actuarial equivalencies, (c) sufficiently conform to
the Legislative Assembly's direction to balance the interests of
the public employer and the public employee and (d) constitute
the best process available that is consistent with the board's
fiduciary duties; and
Whereas this 2003 Act is intended to redirect the board's
future administration of its authority to establish actuarial
equivalency factors, define the process by which actuarial
equivalency factors are to be reviewed and changed over time, and
set a benchmark for when and how those changes are to occur to
ensure that the system operates using accurate factors that fully
comply with the statutory requirements and, in addition, to
ensure that these factors continue to reflect future changes in
the fund and the system; now, therefore,
Be It Enacted by the People of the 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) Once every two calendar years, the Public
Employees Retirement Board shall adopt actuarial equivalency
factor tables for the purpose of computing the payments to be
made to members and their beneficiaries, alternate payees and
judge members and their spouses and beneficiaries. The tables may
be adopted in conjunction with the system evaluation required by
ORS 238.605. Tables adopted under this section must use the best
actuarial information on mortality available at the time the
board adopts the tables, as provided by the actuary engaged by
the board. Actuarial equivalency factor tables adopted under this
section become effective on January 1 of the calendar year
following adoption of the tables by the board. All computations
of payments must use the actuarial equivalency factor tables that
are in effect on:
(a) The effective date of retirement for any member, judge
member or alternate payee;
(b) The date that the first payment is due for any death
beneficiary; or
(c) The date that the first payment is due for any
recalculation of payments that is not attributable to error,
including but not limited to recalculations under ORS 238.465
(2).
(2) The board may not defer or delay implementation of the
actuarial equivalency factor tables adopted under this
section. + }
SECTION 3. { + The Public Employees Retirement Board shall
first adopt actuarial equivalency factor tables under section 2
of this 2003 Act to become effective January 1, 2005. + }
SECTION 4. { + (1) Subject to subsections (2) and (3) of this
section, for the purpose of computing the service retirement
allowance of members and alternate payees with effective dates of
retirement on or after July 1, 2003, and before January 1, 2005,
the board shall use actuarial equivalency factor tables that are
based on the mortality assumptions adopted by the Public
Employees Retirement Board on September 10, 2002.
(2) The service retirement allowance of any member or alternate
payee who has an effective date of retirement on or after July 1,
2003, shall be the highest of the following amounts:
(a) An amount calculated under ORS 238.300 as of the member's
or alternate payee's effective date of retirement using actuarial
equivalency factor tables in effect on the effective date of
retirement; or
(b) The amount calculated under subsection (3) of this section.
(3) For each member or alternate payee described in subsection
(2) of this section, the board shall establish an account balance
as of June 30, 2003, that includes all employee contributions
made by or on behalf of the member as of June 30, 2003. The board
shall then credit earnings to the account through June 30, 2003,
in the manner provided by board rules in effect on the effective
date of this 2003 Act governing crediting of earnings upon
retirement of a member. The board shall then calculate a service
retirement allowance under ORS 238.300, except that:
(a) The board shall use the actuarial equivalency factor tables
in effect on June 30, 2003, for the purpose of determining the
refund annuity under ORS 238.300 (1); and
(b) The board shall use the account balance established by the
board under this subsection for the member as of June 30, 2003,
for the purpose of determining the refund annuity under ORS
238.300 (1).
(4) The board need not perform the calculations described in
subsections (2) and (3) of this section for a member if the board
actuarially determines that one of the calculations described in
subsection (2) or (3) of this section necessarily provides the
highest amount.
(5) Any monthly payments to be made to a death beneficiary
under ORS 238.390, 238.395 or 238.405 for a member who dies on or
after the effective date of this 2003 Act shall be calculated
using the actuarial equivalency factor tables that are in effect
on the date that the first payment is due to the death
beneficiary. + }
SECTION 5. { + (1) Jurisdiction is conferred on the Supreme
Court to determine in the manner provided by this section whether
the implementation of actuarial equivalency factor tables under
section 2 or 4 of this 2003 Act violates any constitutional
provision, including but not limited to violation of contract
rights of members of the Public Employees Retirement System under
section 21, Article I of the Oregon Constitution, or clause 1,
section 10, Article I of the United States Constitution.
(2) Under the jurisdiction conferred in subsection (1) of this
section, any person aggrieved by the implementation of actuarial
equivalency factor tables under section 2 or 4 of this 2003 Act
may petition the Supreme Court for review. The petition must
state the facts showing how the petitioner is aggrieved and the
constitutional grounds upon which the petition is based. The
Supreme Court shall give priority on its docket to a petition for
review filed under this section and shall expedite a decision on
the petition. Any and all petitions filed under this section
alleging a similar basis or bases of challenge may be
consolidated by the Supreme Court upon its own motion.
(3) A person petitioning for review under this section is not
required to exhaust administrative remedies or file in any other
court prior to filing a petition for review under this section.
(4) A petition for review under this section must be filed
before January 1, 2004.
(5) A petition for review under this section must present a
justiciable controversy. The petitioner must serve a copy of the
petition on the Attorney General.
(6) The petition for review provided for in this section is in
addition to any other remedy or procedure that may be available
to determine whether the implementation of actuarial equivalency
factor tables under section 2 or 4 of this 2003 Act violates any
constitutional provision. + }
SECTION 6. { + 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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