Generous PERS Pensions Could Fuel Reform Plans

April 10, 2003 ( - A small group of Oregon public workers retiring now will get more from their state pension than they did in salary while on the job.

In fact, according to a report in the Salem (Oregon) Statesman Journal, that will be more the rule than the exception with some state retirees actually doubling their working salaries through the Oregon Public Employees Retirement System (PERS). “The PERS system is providing far more than anyone ever anticipated,” said House of Representatives Majority Leader Tim Knopp, the chairman of the House PERS Committee.

According to the story, more than 2,300 retired public employees already get benefits matching or besting their working pay. But from 2017 to 2021, the median retirement for a Tier 1 employee (members hired before 1996) with a lifetime of service would be 116% of their final salaries. “There likely will be some, yes, theoretically it’s possible,” Jim Voytko, director of the Oregon Public Employees Retirement System (PERS), told the newspaper. “Will it be the norm? No, but it will be above 100% if things stay as they are.”

Voytko’s revelation is the latest to send shock waves through the Oregon Capitol, where state legislators are considering a menu of reforms to the deep-in-debt public pension system. Already Knopp acknowledged that the new revelation would bring more urgency to reform proposals to create a less generous system.

Knopp Proposal Details

Knopp said a key component of his reform plan scheduled to be unveiled next week will be a reduction in the 8% annual growth that’s guaranteed to Tier 1 PERS members. He said he will also propose that the replacement system will be more like 401(k) plans offered in the private sector.

The projection of rising pensions also sent representatives of public employee unions into damage control mode.

“It’s inflammatory,” said Mary Botkin, lobbyist for the American Federation of State, County and Municipal Employees, told the newspaper. “It just fans the flames of outrage and makes it difficult for us to get to the middle ground to find a solution that doesn’t make our members feel that we are selling them out.” None of her members are getting such a payday, she said.The union represents 21,000 workers.

The public pension system has a $16-billion unfunded liability over the next 30 years, because the system lacks the assets to support the promised level of benefits to some 300,000 members and beneficiaries.

Current reform efforts are politically and emotionally charged because any benefit cut means an employee could lose retirement benefits they have been told to expect. Lawsuits are expected if labor unions believe contract rights of existing PERS members are somehow violated.