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2011 PERS-Related Legislation

Two key PERS-related bills passed in the 2011 legislative session.

HB 2456 (effective January 1, 2012); signed into law August 2, 2011

This bill removed the “tax remedy” provision of HB 3349 (1995) for PERS Tier One members who:

  1. had service time before October 1, 1991,
  2. retire on or after January 1, 2012, and
  3. move out of state.  

This only applies to Tier One members who had PERS service time before October 1, 1991. The tax remedy calculation (based on House Bill 3349) is a maximum of 9.8901 percent increase on benefits earned before October 1, 1991. The tax remedy is calculated as follows:

Divide the number of months of creditable service accrued before October 1, 1991 by the total number of months of creditable service during which the pension income was earned, times (x) the Oregon state tax rate of .098901. This will provide the percent of increase.


HB 2113 (effective upon signage); signed into law August 5, 2011

This bill addressed PERS technical issues.

  • Consistent Legislator Retirement Provisions
Laws created during the 2003 PERS Reforms provided legislators with inconsistent and confusing choices on whether or how to participate in PERS. The new law streamlines and clarifies those choices and is retroactive to August 29, 2003, providing a process to remedy prior invalid elections.
  • Corrects Payment Options for Purchasing Retirement Credit
SB 399 (2009) allows Tier One and Tier Two members to fund retirement credit purchases with pre-tax, trustee-to-trustee transfers from certain retirement plans beginning September 1, 2011. The new law includes three types of purchases that were inadvertently omitted from the 2009 bill.
  • Corrects OPSRP Vesting Anomaly
Members vest in OPSRP either by working 600 or more hours in each of five calendar years or by being an active member when reaching age 65. An anomaly existed where a member who started working after reaching age 65 could only vest by working five years, but a member who started work before age 65 vested immediately upon reaching that age. This bill fixed that anomaly, clarifying that an active member vests at age 65 regardless of years of service. The provision is retroactive to the creation of OPSRP in 2003.
  • Repeals Invalidated Statutes
The Oregon Supreme Court’s Strunk v. PERB decision invalidated several provisions of the 2003 PERS Reforms; the new law conforms the statutes to the decision’s result.
  • Authorizes Roth Deferred Compensation
This implements a recently passed Congressional measure allowing Roth (after tax) contributions to the Oregon Savings Growth Plan.
  • Eliminates Dual Membership Status
New employees become members of the OPSRP Pension Program and Individual Account Program (IAP). Previously, the law stopped certain members from withdrawing funds from OPSRP but not from the IAP. If that person later returned to PERS employment, he/she immediately resumed active OPSRP membership, but had to wait six months before re-establishing IAP membership. Having the same employee be a member in one program and non-member in the other presented irreconcilable administrative challenges for PERS’ operating and employer reporting systems; this new law provides that the member immediately becomes active in both OPSRP and the IAP upon return to employment.