Use of the 25-year-old tables to figure out when retirees would pass away has ended up costing the fund $135 million and tacked on another $1.5 billion to the system’s shortfall, according to the Oregonian.
The OPERS board has put off dealing with the tables for years, unwilling to do anything that might reduce retirement benefits for public employees. Meanwhile, the board has ignored repeated warnings from its actuary that its use of 1978 tables costs millions of dollars.
The OPERS board also faces a significant test of its political independence from employee groups that now oppose major changes to the system.
The effect of the changes would differ widely among individual OPERS members and would depend on the employee’s age and pension account balance. But OPERS officials looked at a handful of scenarios and estimated that employees who retire five years from now could see their pension checks reduced by as much as 7% to 12%.
OPERS covers 294,000 retired and active public employees in Oregon, and their government employers contribute to their pensions through a payroll charge levied by OPERS.
Fully funded a decade ago, OPERS now faces an $8.5 billion shortfall, the difference between the amount of money the pension fund now has and what it will need to meet its future obligations.
To catch up, OPERS officials say that next year they will have to raise the average payroll charge from 10.7% to 14.7% beginning in July 2003. That means public agencies will spend $260 million more a year to fund OPERS, pension system records show.
Dawn Morgan, OPERS chairwoman told the Oregonian that
PERS estimates that 30% of public employees are eligible to
She worries that any changes will trigger a wave of retirements and leave local governments, state agencies and school districts without experienced employees.
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