The Senate has approved a plan, which would include both a 401(k)-type investment account and a traditional defined benefit pension while a House version, approved in early May and then amended by the Senate, would include only 401(k)-type accounts, according to the Portland Oregonian.
Both plans would be less expensive than the current Public Employees Retirement System (PERS), which has become an increasingly large portion of state and local governments’ payrolls. But House Republicans note that their plan would cost less than the Senate’s and say they will reject the amendments. If that happens this week, as expected, negotiators would begin working on a compromise.
The pension plan for new employees is the last significant PERS overhaul expected this year, coming after completed moves to update PERS life-expectancy tables used to compute retirement benefits, to suspend cost-of-living increases for recent retirees, and to make other changes to slow or halt the growth of retirement accounts for several years.
PERS had estimated it was $17 billion short of meeting its obligations during the next 25 years. The Legislature’s changes so far have already slashed the pension system’s long-term shortfall by $9.9 billion, said Senator Tony Corcoran, D-Cottage Grove, who heads the Senate panel in charge of PERS reform.
Corcoran said the Senate version would cost government employers about 8% of their payroll, plus contributions to individual accounts outside PERS on behalf of employees. The House plan would restrict PERS costs to 6% of payroll. The current system costs about 12 % plus any outside contributions, he said.
With the Senate plan, most employees retiring after 30 years would get a pension of about 45% of their working pay. Employees also would contribute 6% of their salary into 401(k)-type accounts outside PERS.