70th OREGON LEGISLATIVE ASSEMBLY--1999 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 3794
Senate Bill 1135
Sponsored by Senator DERFLER; Senator BRYANT (at the request of
Joint PERS Task Force)
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.
Allows public employer that is participating in Public
Employees Retirement System to have employer contributions
deposited in Variable Annuity Account. Requires that deposits in
the Variable Annuity Account by public employer must be equal to
amounts paid into Variable Annuity Account by employees of
participating public employer. Requires transfer of amounts
attributable to employee to retiree reserves upon retirement.
A BILL FOR AN ACT
Relating to public employee retirement; amending ORS 238.260.
Be It Enacted by the People of the State of Oregon:
SECTION 1. 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 account balances of employees who
are members of the system so as to provide retirement benefits
for those employees 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 account balances in equities will result in the
accumulation of larger deposit reserves for those employees
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) An employee may elect at any time to have 25, 50 or 75
percent of contributions by the employee to the fund on and after
the effective date of the election paid into the Variable Annuity
Account, credited to the account of the employee therein and
reserved for the purchase of a variable annuity. An employee 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 employee, 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.
(4) An employee 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 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 account after December 31 following the
filing of the request. Contributions paid into the account before
the effective date of the request for cessation shall remain in
the 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, 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 account of the employee in the fund on the effective date
of an election filed under subsection (3) of this section,
transferred from the account in the fund to the Variable Annuity
Account, credited to the account of the employee therein 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 an employee 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 employee made and filed as provided in this
subsection.
(c) No transfer shall be made under this subsection after the
first payment on account of the service retirement allowance of
the member becomes normally due.
(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 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
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 person who is a member of the
system and who has an account in the Variable Annuity 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 person who is a member of
the system and who has an account in the Variable Annuity Account
may elect to transfer the balance in that account to the account
of the member in the Public Employees Retirement Fund, and by
that transfer the annuity shall be based on the account balance
in the Public Employees Retirement Fund 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 person
who is a member of the system and who has an account in the
Variable Annuity Account or 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 account of that person in the Variable Annuity
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 person who is a member of the
system and who has an account in the Variable Annuity 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 total
account of the member in the system and what the total 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 total 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 total 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 accounts of active and retired members of
the system in the Public Employees Retirement Fund are also
applicable to such accounts in the Variable Annuity Account.
(14)(a) In addition to the transfer provided for in subsection
(9) of this section, a member of the system who has an account in
the Variable Annuity Account may at any time prior to retirement
elect to transfer the balance in that account to the account of
the member in the Public Employees Retirement 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 under
ORS 238.225.
(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
filed with the board, and shall be in such form as the board may
provide by rule.
(d) An election under paragraph (a) of this subsection shall be
in writing and shall be filed with the board. The board 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's total account in
the system as of the effective date of the election is greater
than what the total 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.
(e) As of the effective date of an election under this
subsection, the board shall credit all earnings to the member's
account in the Variable Annuity 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 (d) of this subsection; and
(B) Be the account balance credited by the board to the account
of the member in the Public Employees Retirement Fund if the
election is determined to be effective.
(f) The annuity of a member who makes an effective transfer
under this subsection shall be based on the member's account
balance in the Public Employees Retirement Fund as otherwise
provided in this chapter, and the member shall not receive a
variable annuity as provided in this section.
{ + (15) A participating public employer may elect to have
employer contributions deposited in the Variable Annuity Account.
Deposits in the Variable Annuity Account by a participating
public employer must be equal to the amounts paid into the
Variable Annuity Account by employees of the participating public
employer. The board shall establish separate employer accounts
within the Variable Annuity Account for amounts so deposited.
Upon retirement of a member employed by an employer that has made
deposits under this subsection, the board shall transfer from the
employer account in the Variable Annuity Account to the retiree
reserves those amounts in the employer account that are
attributable to the member. If the earnings on the employer
account in the Variable Annuity Account have been less than the
earnings placed in the employer reserves, the board shall require
that the employer pay such additional employer contributions
under ORS 238.225 as may be necessary to fund the benefits
payable to the member and the beneficiaries of the member.
Amounts deposited in the Variable Annuity Account under this
subsection are not subject to the limitations on investment
imposed by ORS 293.726 (6). + }
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