An analysis of retirement records by The Oregonian found that public employees who retired at age 56 earned an average 87% of their working salary. A quarter of the long-time workers won a pension equal to or better than their salary, the newspaper reported.
That’s well more than the typical benefit level in pension plans and, legislators say, a main reason they overhauled the Public Employees Retirement System (PERS) in 2003 to stem rising costs. The changes have been challenged by unions as an unconstitutional violation of workers’ contract rights. The case is before the Oregon Supreme Court, which is scheduled to hear oral arguments in July.
If the changes are overturned, PERS studies show, pension averages will continue to increase for at least 10 years. If they’re upheld, lawmakers say, benefits will drop back. “When you have people retiring in their mid-50s with 100% of their average salary, that’s clearly going to cause a financial problem in the system – and it has,” said Representative Tim Knopp, a Republican who led the overhaul last year.
Public employee unions say many retirees increased their benefits by risking their money in accounts that rise and fall with investment returns, and they hit it big with stock market gains in the 1990s. They also note that beginning in 1979 many employers agreed to pay workers’ 6% contributions to PERS rather than give them pay raises.
The newspaper also found that:
- Among last year’s retirees who had worked two decades or more, more than one in eight equaled or bettered their salary. Their pensions averaged almost 75% of salary.
- On average, 2003 retirees received slightly less than retirees between 1996 to 2002.