The problem is that the Oregon Public Employees Retirement System (PERS) is several months late meeting requirements imposed during the 2003 session of the State Legislature that PERS launch individual retirement accounts by January 1. PERS is yet to work out all the kinks in its recordkeeping system, according to a report in the Oregon Statesman Journal.
So, 160,000 state workers and other public employees don’t have accounts – even though contributions equaling 6% of their salaries were supposed to flow into those accounts starting at the beginning of 2004. The result, according to the newspaper, is that roughly $50 million per month in employer and employee pension contributions is being held back in a state of limbo, rather than being put in stocks, bonds and other PERS investments as they would normally.
The PERS Board approved a temporary remedy last week. The pension fund will urge each government employer to send in a lump sum of money based on an estimate of what pension contributions are owed. Money will be placed into individual worker accounts later.
The goal is to get all the money for the first quarter of the year to PERS by March 31. Then the Oregon Investment Council, which manages PERS investments, could deploy the money by April 1. Once the data reporting system is working well, PERS will begin creating individual accounts, officials said. Those probably will not be operational until at least the fall.
The snafu stems from an ambitious reform package enacted by the 2003 Legislature to curb PERS’ spiking taxpayer costs. All public employees hired after August 28, 2003, are to be covered by a scaled-back pension system called the Oregon Public Service Retirement Plan. Every worker, new and veteran, was supposed to get their own retirement account.
However, the Legislature did not finish its 2003 session until late August. PERS and its software contractors had only four months to customize a data reporting system, then train 865 government employers how to use it, said Laurie Warner, interim PERS executive director. There was no time to work the inevitable bugs out of the system in time to meet the Legislature’s January launch deadline.
Employers need to know how much money to deliver each month for every employee, and that requires a meshing of personnel data with payroll procedures and PERS systems. The question is who makes up for forfeited investment profits caused by a delay in getting the money into the market? Government employers may ask PERS to take responsibility.
« Finance Workers Sport More Frowns