The Senate bill, considered a victory for Senate president Gene Derfler who has pressed for reforms to curb PERS’ cost increases, also imposes pension account limits for current employees and beneficiaries, the Associated Press reported.
The measure, SB 1028, now moves to the Oregon House where a key Republican, Rep. Dan Doyle of Salem, also predicted approval, the AP said.
Critics have long argued that PERS provides overly generous benefits to public workers. Recent estimates have shown that the pension fund is facing a shortfall of $7 billion to $8.5 billion – a problem exacerbated by the use of life expectancy tables that are a quarter century old.
New Pension for New Hires
The bill would replace PERS with a yet-to-be-determined retirement plan such as a 401K program for public workers who are hired after January 2004, the AP said.
The bill also would cut costs by changing an existing PERS requirement under which most employee retirement accounts are guaranteed to grow at least 8% a year. The bill instead would specify that PERS accounts could not grow more than 8% a year.
During last week’s Senate debate, Democrats denounced the PERS bill as a “divisive” measure that could stand in the way of a budget deal.
Supporters of the measure said the bill didn’t reflect
any hostility toward state workers.
“A ‘yes’ vote simply says, ‘We believe the system is broken,”‘ said Sen. Roger Beyer, a Molalla Republican who is head of the Senate’s PERS committee.
Other states have not had much luck in moving public employees to a defined contribution retirement program.
Nebraska abandoned its DC plan for a cash balance program, while officials in Florida report that workers there have been slow to take to the state’s new DC offering.