​​​This webpage provides the latest information about the implementation of Senate Bill (SB) 1049 for PERS employers. Visit this page if you are looking for member-specific information.​

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Read a two-page summary for employer reporters on what you need to know about Senate Bill 1049.



​​SB 1049 Overview

SB 1049, signed into law in 2019, makes several adjustments to PERS to slow the increase in employer contribution rates. The Oregon Legislature is the “plan sponsor” for PERS, the system, and has the sole authority to determine the benefit structure for public employees. PERS, the agency, administers the retirement system (the “plan”) for participating public employers, and must follow all state and federal laws.

Employers will see the impact of SB 1049 on employer rates for the 2021–23 biennium. The 2019 Actuarial Valuation, to be presented in fall 2020, will be used to set 2021–23 rates.

The SB 1049 changes include the following, which are explained in more detail after this section:

  • ​UAL re-amortization: The PERS Board implemented a one-time re-amortization of the Tier One/Tier Two unfunded actuarial liability (UAL) over a closed 22-year period, which will set the actuarially determined contribution rates for the 2021–2023 biennium. 
  • Employer rate relief programs: The Employer Incentive Fund (EIF), UAL Resolution Program (UALRP), and School Districts Unfunded Liability Fund are available to help employers reduce their future contribution rates. 
  • Work After Retirement changes: For years 2020–2024, the PERS limitation on hours that a rehired retiree can work is lifted (restrictions apply for some early retirees and some retirees receiving Social Security benefits). Employer contributions will be charged on the payroll of rehired retirees.  
  • Salary Limit: Starting January 1, 2020, members’ annual subject salary that is used to determine contributions and the Final Average Salary (FAS) used in calculating retirement benefits under formula methods is limited to $195,000 (indexed to inflation).
  • Member Individual Account Program (IAP) Redirect: Effective July 1, 2020, a portion of the 6% of salary member contributions to the IAP will be redirected to new Employee Pension Stability Accounts (EPSA), which will help fund each member’s defined benefits provided under Tier One/Two and OPSRP. For Tier One/Two members, the redirected amount will be 2.5% of salary; for OPSRP members, the amount will be 0.75% of salary. The redirection only applies to members earning more than $2,500 a month. 
  • Member Choice: Starting with calendar year 2021, IAP participants will be able to choose their own investment approach by choosing a different Target-Date Fund than the default based on their age. 

Unfunded Actuarial Liability (UAL) Re-amortization Period

Normally, gains and losses are amortized as a percent of projected payroll over a 20-year period (Tier One/Two) or 16-year period (OPSRP).

SB 1049 required a one-time re-amortization of the Tier One/Tier Two UAL over a closed 22-year period at the December 31, 2019, rate-setting valuation, which effectively lowers the increase in contribution rates for the 2021–23 biennium. (There was no change to the OPSRP amortization method.)

The Tier One/Tier Two UAL as of the December 31, 2021, valuation is set to be amortized over a fixed 20-year period as a level percent of projected payroll.


Employer Rate Relief Programs​

The Employer Incentive Fund, UAL Resolution Program, and School Districts Unfunded Liability Fund are three programs established by the Oregon Legislature to help PERS-participating employers reduce their contribution rates in the future.

For details about these programs, go to the Employer Rate Relief Programs webpage.

Work After Retirement

If you choose to hire (or continue employing) any PERS service retiree during 2020 through 2024, most of those retirees (see exceptions below) can work an unlimited number of hours in those calendar years while continuing to receive their pension benefit.

Employer Contributions

Starting in 2020, and through 2024, you are required to pay to PERS your PERS Employer Contribution Rate on any service retiree’s wages (the “PERS rate,” which includes applicable Pension and Post-Retirement Healthcare rates, but not any IAP contributions) as if they were an active member.​

  • 2020 invoice delay: Employers will not be invoiced for rehired retirees until fall 2020. You may want to set aside estimated employer contributions for retiree wages, since the first invoice will include contributions owed on retirees employed from January 1, 2020, through the date of the invoice.

​​Read past employer GovDelivery notifications on this topic:

    • December 2019: Notice on the agency’s short- and long-term plans for reporting and invoicing.
    • January 2020: Clarifications about employer contributions and hiring retirees.
    • March 2020: Additional details about employer contributions and notice of a potential unrecorded liability.

Retiree Eligibility

View the relevant flowchart below to see if your retired employee can work unlimited hours:

Limitations and Considerations

  • PERS is not involved in hiring decisions between employers and employees.
  • Early retirees: Early retirees can work unlimited hours only if they do not work for any PERS-participating employers (this includes temporary work and work under the existing Work After Retirement limits) for at least six full months after their PERS effective retirement date.
  • If the early retiree has not had a complete break from all PERS-participating employment for at least six months from their effective retirement date, the existing limits of working less than 1,040 hours (Tier One/Tier Two members) or less than 600 hours (OPSRP members) applies.
  • Social Security salary limits: If a retiree is receiving Social Security benefits and has not reached “full retirement age” (FRA) under Social Security, the Social Security Administration and PERS have additional limitations on that retiree’s employment. If a retiree has not reached FRA, they may need to limit their hours to stay within the income allowed under the annual Social Security income limits. 

> For your employees

Your rehired retirees can find more detailed information about eligibility and restrictions on the retiree Work After Retirement webpage. 

Salary Limit​

Starting January 1, 2020, SB 1049 changed the definition of “salary” for PERS purposes and created a new $195,000* limitation on subject salary used for PERS benefit calculations and contributions. PERS subject salary is used to determine member Individual Account Program (IAP) contributions, employer contributions to fund the pension program, and the Final Average Salary (FAS) used in calculating retirement benefits under formula methods.

SB 1049 limits the annual salary amount that PERS uses to calculate an employee’s PERS benefits. It does not limit an employee’s actual salary, only the amount that is used to calculate PERS benefits. It only applies to salary paid (and eligible Tier One/Tier Two lump-sum payments) in the year 2020 and beyond.

Note that if you employ a member (including a rehired retiree) for less than 12 months in a calendar year, the member’s subject salary will be limited based upon a “partial year” average limit of $16,250 a month* (including any eligible lump-sum payments for Tier One/Tier Two members). The Partial Year webpage includes a number of examples to help employers correctly report subject salary.

> For your employees 

To help your employees understand how the salary limit affects them, direct them to the member salary limit webpage. Included on that webpage are illustrative examples to help members understand how they may or may not be affected by the changes in SB 1049. Note that the limit affects a very small number of PERS members and that the general examples may not reflect each member’s unique situation.

*The limit is indexed annually to the Consumer Price Index (CPI) [All Urban Consumers, West Region].

Member (IAP) Redirect (July 1, 2020)

For all PERS members earning more than $2,500 a month, a portion of their 6% IAP contributions are now redirected to a new Employee Pension Stability Account (EPSA). The funds in each member’s EPSA will be used to help pay for their future pension benefits. The IAP Redirect is in effect when the PERS system is less than 90% funded**.

The IAP Redirect for eligible members happens behind the scenes in the PERS system. Employers will continue to report as usual and the PERS system will recognize if a member earns above the salary threshold.

There are different rates for Tier One/Tier Two and OPSRP employees that make more than $2,500 a month:

Tier One/Tier Two members (hired before August 29, 2003)

  • 2.5% of the employee’s salary that is currently contributed to their IAP (whether paid by the member or their employer) now goes into their EPSA. The remaining 3.5% of salary will continue to go to the member’s existing IAP account.
  • Members can voluntarily choose to make additional, after-tax contributions of 2.5% into their IAP, allowing their IAP account to remain “whole.” 

OPSRP members (hired after August 28, 2003)

  • 0.75% of the employee’s salary that is currently contributed to the IAP (whether paid by the member or their employer) now goes into their EPSA. The remaining 5.25% of salary will continue to go into the member’s existing IAP account.
  • Members can voluntarily choose to make additional, after-tax contributions of 0.75% into their IAP, allowing their IAP account to remain “whole.” 

Voluntary Contributions and Employer Reporting

PERS Online Member Services (OMS)​ has been updated to give members the ability to elect to participate and make the SB 1049 “IAP voluntary contributions.” 

Employers will be alerted through Work Items in EDX for all employees that elect to make voluntary contributions. Employers will be responsible for deducting the amount from your employees’ paychecks.

Step-by-step guide: How to M​anage an Employee’s Voluntary Contribution

Frequently Asked Questions on Voluntary Contributions for Employers​

Member Redirect Voluntary Contributions Process Map: Employer View

​​> ​​For your employees

You can direct members, based upon when they were hired, to the Tier One/Tier Two or OPSRP IAP redirect member webpages. In April 2020, PERS added animated videos that aim to explain the two parts to a member’s future retirement and what changed with their IAP starting July 1, 2020. In September 2020, PERS added new resources to explain how to elect IAP voluntary contributions​.​

**The latest official actuarial valuation shows that PERS’ funded status including side accounts was 78.6% as of December 31, 2019.

IAP Member Choice (September 2020 choice for 2021 TDFs)

Starting September 2020, nonretired​ ​members will be able to voluntarily make an election, once per year, into which IAP Target-Date Fund (TDF) they want their funds invested. Any eligible choice made by September 30, 2020, will go into effect January 1, 2021.

> For your employees

In September 2020, members will be able to make an election to invest their IAP balance in a TDF that better reflects their retirement savings goals. Full information about Member Choice can be found on the IAP Target-Date ​Funds webpage. Please make sure your employees are aware of this optional investment choice.


The information on this webpage is for general purposes only and is not intended to provide legal or financial advice. If there is any conflict between this webpage and federal law, Oregon law, or administrative rules, the laws and rules shall prevail.

This information may not apply to all employers or all types of members and may not reflect your individual situation. For specific information, contact your employer account representative.

In compliance with the Americans with Disabilities Act, PERS will provide documents on this page in an alternate format upon request. To request this, contact PERS at 888-320-7377 or TTY 503-603-7766.​​​​​​​