|Q1. When is PERS releasing data to the Statesman Journal and Oregonian and what data is being released?|
A: The court judgment set a release date of March 9, 2012, for the following information:
- Benefit recipient name,
- Gross monthly service or disability retirement allowance,
- Effective retirement date,
- Retirement plan,
- Months of service,
- Final salary, and
- Retirement calculation method.
View the data definitions.
Q2: How current is the data being released?
A: The data reflects the information contained in PERS electronic data bases for monthly benefit recipients on the January 1, 2012 pension roll.
Q3: Will PERS post the data online?
A: We have no plans to post this data at this time.
Q4: Will the Statesman Journal and Oregonian post this data online?
A: We do not know if the newspapers will post the data or how they will use the data. However, the data released to these newspapers on November 21, 2011 (names of benefit recipients and monthly benefit as of October 1, 2011) was posted online by the newspapers.
Q5: Will the data release include the names of alternate payees (those who are entitled to a portion of a PERS benefit due to a divorce) and survivor beneficiaries?
A: Names of alternate payees and survivor beneficiaries are not included in the release; only the benefit amount will show. The words "alternate payee" or "survivor" will show in place of a name.
Q6: Will the information disclose if someone is on a disability retirement?
A: Yes, the information release will show the "plan" under which the member retired: Tier One, Tier Two, Judge, OPSRP, Tier One Disability, Tier Two Disability, etc.).
Q7: Will member job classification (e.g., police officer, educator, etc.) be disclosed?
Q8: What else should I know about the data release?
A: PERS is supplying only data that is accessible in its electronic data bases. A blank field shows in the file when data was not available electronically or when that data was not part of the information release.
PERS has had three IT system conversions since 1980. For each conversion, we uploaded electronic data needed to pay a benefit but left some information in paper form that has been filmed and filed. Some benefit calculations require manual calculation today, so all the related information may not be in electronic form.
Also, older retirement data is likely to be less precise. Using the Retirement Calculation Method data as an example, PERS may have first calculated a benefit using the Full Formula method and then determined that Money Match was the applicable method or vice versa. However, the first calculation could show in the data base rather than the final calculation.
Q9: What makes up "final salary" in the data release?
A: , PERS averaged the high three calendar years' salary over a member's career as reported by employers (view a chart that shows criteria for determining "subject" or "non-subject" salary). Data was aggregated into years based on paid date. The three highest totals were added together and divided by 36 to derive a monthly salary amount. No determination was made whether the amount for a year represents a full or partial year. Amounts were used for a full year even in cases of a partial year. If a benefit recipient did not have three separate years in which salary was earned, the total salary was divided by either 24 or 12 depending on whether the salary was earned all within one or in two separate years.
For this database, salary does not include the 6 percent member contribution if paid by an employer.
Q10. Can I use a member's final salary as reported in this database and the reported January 1, 2012 benefit amount to determine how much salary was replaced at retirement or calculate "replacement ratios"?
No, the correlation between the reported final salary and the reported benefit amount is influenced by a number of factors, all of which have to be accounted for in calculating accurate replacement ratio statistics.
One major factor is that PERS retirees are entitled to a cost-of-living adjustment (COLA) adjustment annually of up to 2 percent (see Question 11) so the monthly benefit amount increases each year, and can compound dramatically over an extended time period. For example, the monthly benefit for someone who retired 20 years ago is about 50% higher today than it was at retirement due to compounded COLAs.
Also, a member may have stopped working for a PERS-covered employer years ago and just recently retired under a "Money Match" benefit. The member's account balance kept growing over time, but the final salary amount stayed the same. Tier One member accounts (those who began working for a PERS-covered employer before January 1, 1996) are guaranteed to have the "assumed rate" credited to their account every year. The assumed rate has been 8 percent since 1989 so Tier One accounts grew by at least that amount annually, and were often credited double digit earnings in the 1980s and 1990s.
Some of the retirees covered in this data release waited more than 25 years between when they stopped working for a PERS-covered employer and when they retired, so comparing their monthly retirement benefit to their final salary is not valid. Also, if a member worked for many years and retired at an advanced age with a Money Match benefit, the benefit would be paid out for a shorter time based on life expectancy. For example, if a member retired at age 73 the anticipated life expectancy of that retiree would only be a few years in actuarial terms. As a result, the member would receive a higher monthly benefit for a shorter time under actuarial calculations than he/she would have if he/she retired with the same overall Money Match benefit at age 60.
PERS conducts an annual Replacement Ratio Study that compares the benefit payment a member receives at retirement to his/her final salary. Since PERS Reform, average final salary replacement ratios have declined dramatically. In 2000, the average member with 30 years of service retired with a benefit of 100 percent of final salary. For a member with 30 years of service who retired in 2011, the ratio fell to 74 percent. The average replacement ratio for all members who retired in 2011 was 50 percent of final salary compared to 68 percent in 2002.
View the replacement ratio trends graph.
View the replacement ratio Study results for 2011.
View the 2011 replacement ratio study averages and medians.
View the 2011 replacement ratio study exclusions.
Q11: How does the cost-of-living adjustment (COLA) affect benefits over time?
A: PERS benefit recipients receive an annual cost-of-living adjustment (COLA). The COLA is based on the federal Consumer Price Index for Oregon, but is capped at no more than 2 percent each year. Over time, the COLA has a compounded effect that increases benefit amounts to keep up with inflation. For example, the monthly benefit of someone who retired in 1991 would be approximately 50% higher today because of the COLA. For more information regarding the impact of inflation and the COLA on the purchasing power of PERS retired members, see the most recent study available on the PERS website.
Q12: What are service time "purchases" and how do they increase a retirement benefit?
A: Statute allows PERS members to purchase certain kinds of service, with several types required to be purchased at "full cost." One example of a service time purchase would be a "waiting time" purchase. PERS members must serve a six-month waiting time before contributions are placed in their PERS member account. A Tier One/Tier Two active or inactive member can purchase the six-month waiting time before contributions began. The member pays the cost of his/her contributions and the employer's contributions. The six months of waiting time are then added to the member's creditable service. Purchases are also allowed for "refunded time," military service, and certain service in other states as a teacher or public safety official, all with certain limitations and qualifications.
View information regarding purchases.
Q13: What are the benefit calculation methods PERS uses? What affects benefit amounts under each method?
A: PERS uses up to four methods (depending on eligibility) to calculate Tier One and Tier Two retirement benefits: Full Formula, Money Match, Formula Plus Annuity, and 50% of Final Salary (only available for Police & Fire Duty Disability). By law, the member (if eligible) is entitled to the calculation method that provides the highest benefit. OPSRP member benefits are only calculated under the Full Formula method (see the Benefit Component Comparisons chart for more detail).
Under Money Match, the member's account balance is matched at retirement by an equal amount from their employers' reserves. The monthly benefit is the combined amount annuitized using the assumed earnings rate and spread over the member's estimated remaining life expectancy.
Under a Money Match retirement calculation, monthly benefit amounts are driven by the size of the member's account balance and their age at retirement. Large account balances for Tier One members accumulated over time, particularly when investment returns generated high earnings during the 1980s and 1990s, combined with the "8 percent guarantee" earnings crediting floor in the low earnings years. Money Match benefits are higher for members who retire at an older age because their account balance is annuitized over a shorter remaining life expectancy. The "8 percent guarantee" is only applicable to Tier One members (who had to start service in 1995 or earlier).
The Full Formula Method multiplies three factors to compute a retirement benefit:
- Final average salary (generally, the member's highest three years)
- Years and months of creditable service, and
- A factor of 1.67 percent for general service employees and 2.0 percent for police and firefighters for Tier One and Tier Two members (reduced to 1.5 percent and 1.8 percent respectively for OPSRP members).
For example, a Tier One member with a final average salary of $6000 per month who retired after 30 years in a general service position would receive a base benefit of $3000 per month (30 X 1.67 = 50%, 50% of $6000 is $3000).
The primary factors that drive a Full Formula benefit are years of service and final average salary, with some potential adjustments (if eligible) for accumulated sick leave, lump-sum vacation payouts, and Oregon state income tax liabilities. (See the Benefit Component Comparisons chart for more detail).
Formula Plus Annuity
The Formula Plus Annuity Method is available only to Tier One members and only if the member started service and made contributions before August 21, 1981. It uses a formula similar to the Full Formula Method to compute the employer monthly portion of the benefit. Multiply 1 percent of the final average salary (FAS) for general service employees (1.35 percent for legislators, police officers, and firefighters) by the years of creditable service. Add the formula total to the monthly annuity payment that the member's account balance provides, which is based on the account balance (with no employer match), the assumed earnings rate annuitization, and the member's life expectancy.
Tier One and Tier Two member benefits can be further influenced by whether the member participated in the Variable Annuity Program, where a portion of their pre-2004 member contributions are invested in a different way (all in equity or "stock" investments) than regular accounts (a diversified investment portfolio that includes equity, fixed income and real estate). If the member's returns in the variable account were better than regular account returns, the member's benefit is adjusted upwards; if not, the benefit is adjusted downwards. Also, any member who retires before "normal" retirement age (that varies by benefit program) has his/her benefit actuarially reduced, since the benefit would be paid over a longer period than normal.
View the benefit calculaton trends chart.
Q14: What has been done to cap or reduce PERS benefits?
A: PERS benefits have been changed dramatically over the past 15 years, beginning with the elimination of the "8 percent investment return guarantee" for everyone hired after 1995. These changes are documented in the History of PERS Benefit Caps and Reductions by Category chart. History of PERS Benefit Caps and Reductions by Category chart. Changes at the federal level have also impacted PERS benefits, including the cap on salary for calculating benefits for anyone hired after 1995 (that limit is currently $250,000).
PERS Reform legislation in 2003 further reduced benefits by diverting Tier One/Tier Two member contributions to the Individual Account Program (IAP) and capping Tier One earnings crediting to "freeze" Money Match benefits. Those reforms also created a reduced-benefit retirement program for new members hired after August 28, 2003 (the Oregon Public Service Retirement Plan – OPSRP). Before PERS Reform, PERS' liabilities were growing at approximately 10 to 12 percent annually. Since Reform, liabilities grow at about 3 to 4 percent annually.
Since PERS Reform, replacement ratios (benefit payment a retired member receives in retirement compared to his/her final salary) have declined. In 2000, the average member with 30 years of service retired with a benefit of 100 percent of final salary. For a member with 30 years of service who retired in 2011, the ratio fell to 74 percent. The average replacement ratio for all members who retired in 2011 was 50 percent of final salary compared to 68 percent in 2002.
Q15: Can I get a copy of this data when it is released?
A: You will need to submit a public records request. Information on how to request public records is posted on the PERS website.
Q16: What will happen if you get additional requests for other information like a retiree's address, age at retirement, or benefit option selected?
A: Oregon Revised Statutes 192.502(12) contains a specific exemption for some of the public records PERS holds. That exemption allows PERS to withhold release of a retiree's address and telephone number – neither of which is included in this data. The public record orders related to this information disclosure concluded that this exemption did not apply to the records sought by the newspapers in these requests; the extent to which that exemption might include a retired member's age at retirement or benefit option selected has not been addressed by the Attorney General at this point.
Q17: When and how did you let retirees know about the data releases?
A: PERS posted information on its website in October 2010 and posted subsequent information in November 2010. Additional information was posted online in December 2010. We also alerted retirees with an article in its December 2010 newsletter, Perspectives, that is mailed to all retirees.
The court judgments were issued in early September 2011 and PERS posted information regarding the public records resolution on its website at that time. We also mailed a letter to all monthly benefit recipients in September 2011 explaining the public records disclosure.