Internal Revenue Code and Social Security Limitations
Annually, the Internal Revenue Service revises various dollar limits based on cost-of-living adjustments (COLAs). These revisions are used throughout the PERS plan's statutes and rules, but revisions to the limits must be adopted by the legislature or PERS Board to be effective.
The IRS' revisions that are to be effective for calendar year 2014 have been announced. The proposed rule modifications incorporate these adjustments and make non-substantive edits to update citations and effective dates. These updates are necessary to ensure PERS compliance with the IRC's limits on the amount of annual compensation allowed for determining contributions and benefits, annual benefits, and annual additions to PERS.
Secondly, under ORS 238.082, a Tier One or Tier Two retired member who returns to PERS-covered employment may continue to receive his or her retirement benefits so long as he or she works less than the number of hours he or she can work and not exceed the Social Security annual compensation limits. The modifications to OAR 459-017-0060 adopt the 2014 Social Security earnings limitations. For these increases to be effective, the PERS Board has to adopt these rule modifications.
Data Verification Disputes
In 2010, Senate Bill 897 (2009), codified as ORS 238.285, was passed relating to verification of certain retirement data upon a member's request. ORS 238.285(2) provides the procedure for disputing the accuracy of the data provided in a verification. Members have 60 days from the date of the verification to file a notice of dispute. Upon receipt of the dispute, the board determines the accuracy of the data and provides a written determination to the member that includes an explanation of any applicable statutes and rules. A member may seek judicial review of the decision as provided in ORS 183.484 and rules of the board. This procedure falls outside the standard review process provided in OAR 459-001-0030. The proposed modification to OAR 459-001-0030 clarifies that the administrative review process in OAR 459-001-0030 does not apply to data verification disputes.
Final Average Salary
A recent Internal Audit Report identified certain issues relating to the agency's implementation of statutory provisions relating to determining final average salary for Tier Two and OPSRP members. In both programs, retirement benefits are calculated using the greater of the last 36 months of salary or the highest three years; OPSRP includes an additional requirement that the highest three years be consecutive.
ORS 238.435(3)(c) and 238A.130(2)(c) require the exclusion of "…any salary for any pay period before the first full pay period that is included in the last 36 calendar months of membership under subsection (2)(b)." For employers whose payroll is after the first of the month, strict application of these statutory provisions could lead to less than 36 months of salary used in the member's final average salary. The rule modifications clarify and address the anomaly of salary paid to a member whose pay period may cross over months.
Recovery of Overpayments
ORS 238.715 directs PERS to adopt rules establishing the procedures to be followed in recovering overpayments and erroneous payments. OAR 459-005-0610 outlines several options for the recovery of a debt owed to PERS from a benefit recipient.
Section (6) of the rule currently states: "...PERS shall use one of the following methods to effect a full recovery of any overpayment or erroneous payment...." The proposed rule modifications clarify that PERS is allowed more than one method of recovery.
Also, section (7) of the rule states that if an overpayment is caused solely by the actions of PERS or the employer, that an actuarial reduction method (ARM) will be the preferred method to recover that overpayment unless otherwise ordered by the Board. The edits to this rule remove the designation of a preferred method of collection.
Tier One/Tier Two Division of Benefits
OAR 459-045-0010 was adopted in 1996 to describe how PERS benefits may be divided due to a divorce. The intent of this rule is to further clarify divorce provisions so practitioners can develop court orders that can be administered by PERS and accurately completed related forms that provide PERS with required information.
This rulemaking will clarify the requirements for the division of lump-sum benefits and provide additional design requirements for the PERS divorce forms. Sections (3) and (4) were edited to include lump sums as a benefit that may be divided by a qualified domestic relations order.
Judge Member Beneficiaries
Senate Bill 771 (2013) became effective on June 26, 2013. Prior to passage of the bill, a judge member was prohibited from electing more than one beneficiary to receive death benefits. This bill permits a judge member to elect more than one beneficiary. These modifications conform the administrative rules to the statutory amendment.