MEMBERS

SB 1049 Changes: OPSRP Withdrawals Effective July 1, 2020

 

This web page is intended to provide general information about OPSRP program changes due to Senate Bill (SB) 1049 and may not address your specific situation. This information only pertains to members of the Oregon Public Service Retirement Plan (OPSRP), who were hired after August 28, 2003. If you are considering withdrawing your PERS account(s) and terminating your membership, including all rights to potential retirement benefits earned as of the effective date of the withdrawal, you may want to speak with a financial advisor, tax advisor or other retirement planning professional.


If you are no longer employed by a PERS-participating employer, you may choose to “withdraw” the member contributions and earnings that have accumulated in your Individual Account Program (IAP), as long as certain conditions have been met. Doing so completely cancels your membership in OPSRP/PERS.

Remember that, as a public employee in OPSRP, you have two parts to your retirement benefit: a pension and your IAP. 

Find the full, legal requirements of “withdrawal” in Oregon Revised Statutes (ORS) 238A.120.​​​​​

If you are vested in your OPSRP pension and vested in the IAP, and your effective withdrawal date* is July 1, 2020, or later, you will:

1. Receive the value of your IAP account.

2. Receive the value of your Optional Employer Contribution account (if your employer participates and you are vested in those optional contributions).

​Note that different vesting rules apply if your employer made contributions to the Optional Employer Contributions account; see ORS 238A.340 and Oregon Administrative Rule (OAR) 459-080-0050.

3. Receive the value of your Employee Pension Stability Account (EPSA). 

​Note: EPSA accounts will only be established starting July 1, 2020. As an OPSRP member, you will contribute 0.75% of subject salary to your EPSA account if you make more than $2,500 a month.

4. Completely cancel your membership in the Oregon Public Employees Retirement System, including forfeiting your right to a pension benefit earned as of your effective withdrawal date.

  • This includes losing any retirement credit you have previously earned.
  • This also means you will receive no payment nor withdrawal benefit for the actuarial value of your would-be OPSRP pension (see more in “What does ‘cancel’ or ‘terminate’ my membership mean?”).


If you are not vested in your OPSRP pension/membership and you withdraw, you will:

1. Receive the value of your IAP account, but not any Optional Employer Contributions, if your employer participates.

2. Receive the value of your Employee Pension Stability Account (EPSA).

3. Lose any retirement credit/service credit, as you are terminating your membership.


*Due to existing withdrawal rules, the last “effective withdrawal date” that will follow pre-SB 1049 rules will be June 1, 2020. That would mean you completely stopped working for all PERS-participating employers no later than April 30, 2020, and your withdrawal application is received by PERS no later than June 30, 2020.​​​​

Prior to effective withdrawal dates of July 1, 2020, members vested in the OPSRP Pension Program whose net present value of their OPSRP pension was below $5,000 were able to receive the net present value amount in a lump-sum payment. Those individuals also completely canceled their membership and have no future rights to any PERS benefits. 

Prior to effective withdrawal dates of July 1, 2020, members vested in the OPSRP Pension Program who withdrew their IAP and were ineligible to withdraw their OPSRP pension because the net present value of their withdrawal benefit was over $5,000 did not “cancel” their OPSRP membership, and will be eligible for an OPSRP retirement benefit when they are retirement-age-eligible, as long as they do not subsequently withdraw again, after July 1, 2020. 

Senate Bill 1049 eliminated the withdrawal provisions of the OPSRP Pension Program, including the language that PERS would pay the withdrawing member the actuarial equivalent of the member’s pension benefit upon withdrawal.​ 

If you are vested and you do not withdraw your member account(s), you will be eligible for a monthly pension benefit at retirement.

When you are “vested” in your OPSRP pension, this means you have a right to future benefits, including the value of the contributions your employer​ has made to PERS to pay for your future lifetime, monthly pension benefit.

Starting July 1, 2020, due to Senate Bill 1049 (see Section 5 of the bill), if you choose to withdraw your IAP account balance, this cancels your OPSRP membership. 

Withdrawing and canceling your OPSRP/PERS membership means you:
  • Have no membership rights in the PERS system and completely forfeit your rights to any future benefits, including any potential pension benefit.
  • Have no rights to restore your PERS account(s) or other membership rights.
  • Lose all years of retirement credit you have earned. These years of retirement credit would have been used toward calculating your lifetime, monthly pension benefit.
  • There will be no payment of the net actuarial value of the pension account. Because you choose to withdraw, you forfeit all rights to any type of withdrawal or retirement benefit for your OPSRP/PERS membership, which is funded by your employer.
Unlike some other types of retirement accounts, there is no process to directly or immediately roll over your IAP balance into another account unless you are:

1. Not working for a PERS-participating employer, and 
​2. Completely withdraw your account, following the “Steps to Withdraw,” below, or apply for retirement. 

If you participate in the Oregon Savings Growth Plan (OSGP) or other 403(b) or 457(b) plans, your plan may have loan or hardship withdrawal options. Check with your employer’s human resources or payroll department.

By withdrawing your account(s) you forfeit all membership rights and any future benefits provided by PERS.

Steps to Withdraw

1. Understand the full rules and impacts of withdrawing your account.
2. Fill out the Withdrawal Application and mail or fax it to PERS.
3. Fill out any other necessary tax or acknowledgement forms, including directions on where to send your IAP money.
4. You must also meet a bona-fide separation period (see below).
​5. Most applications will be processed within 120 days from your effective withdrawal date, which is the first of the month in which your withdrawal application is received by PERS, or the first day of the second month after you separate, whichever is later. However, if there is a discrepancy in your account, the processing time may vary and could exceed 120 days. Missing data from your previous employer(s) could cause delays. You must also be eligible to withdraw (see below).

In order to cancel your PERS membership and be eligible to withdraw from the OPSRP Pension Program to receive your IAP balance (whether as a direct payment or as a rollover), you must:

  • Have stopped working for all PERS-participating employers, including any substitute, temporary, and on-call positions, completely separating from all PERS-participating employment.
  • Remain separated from all PERS-participating employment for a full calendar month following the month you terminated employment with your last PERS employer to meet the required bona-fide separation period.
    • The calendar month must run from the first day of the month through the last day. (Example: If you terminate any day in February, you cannot return to work until April 1 or later.)
    • If PERS issues a withdrawal and later discovers you were still employed by a PERS-participating employer or did not meet the required bona-fide separation period you will be forced to return the withdrawal amount(s) into your IAP or other account(s).

Notes about IAP balances
The accounts under the Individual Account Program (IAP) include the employee account, rollover account, employer account of a member, and the Employee Pension Stability Account (EPSA). A member may withdraw their IAP to the extent the member is vested in those accounts under ORS 238A.320.​​​​
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If you have not yet conducted an estimate of your OPSRP pension, you should do so using Online Member Services (OMS) or by calculating the estimate yourself, based on the following formula:

 

General Service (all positions except for Police Officers and Firefighters (P&F)) 

1.5% × years of retirement credit (service) × monthly final average salary = monthly, lifetime pension benefit

 

Police and Fire (P&F)

1.8% × years of retirement credit (service) × monthly final average salary = monthly, lifetime pension benefit

 

Example (Replace with Your Own Numbers)

You are thinking of withdrawing. You have worked 7 years and 9 months in a General Service position. Your retirement credit is therefore 7.75 years (9/12 months = 0.75). 

To get a rough estimate of your final average salary, take your annual salary for the last three years and add them together ($55,000 + $59,000 + $64,000 = $178,000) then divide by 36 ($178,000 / 36 = $4,945 average monthly salary). 

Now, complete the equation:

1.5% × 7.75 × $4,945 = $574.85 lifetime monthly benefit

 

If this member withdraws, the member will forfeit a lifetime monthly benefit of $574.85 a month, that would be payable upon the member retiring at full retirement age of 65. 

Please use your own numbers so you are aware of the benefit you will be forfeiting if you choose to withdraw. You must be vested in OPSRP to be eligible for an OPSRP pension retirement benefit. 

_____ Years of You Work (Retirement Credit) × 1.5% 

            45% of final average salary payable as lifetime pension = 30 years of retirement credit

            30% of final average salary payable as lifetime pension = 20 years of retirement credit

            15% of final average salary payable as lifetime pension = 10 years of retirement credit​​

​​​​​​​​​​​​​​​Special Situations


If you withdraw on or after July 1, 2020, and later are reemployed by a PERS-participating employer: 
  • Any retirement credit you accrued before you withdrew is lost. 
  • You will need to reestablish membership after serving another six-month waiting period.
  • You will only vest​ in your OPSRP pension after again working at least 600 hours in five calendar years in a PERS qualifying position (or working in a PERS qualifying position on or after your 65th birthday).

It depends on your exact situation. Here are some variables to keep in mind:

The last “effective withdrawal date” (EWD) that will follow pre-SB 1049 rules will be June 1, 2020. That would mean you completely stopped working for all PERS-participating employers no later than April 30, 2020, and your withdrawal application is received by PERS no later than June 30, 2020. Note that PERS’ receipt date administrative rules apply. 

If your EWD is July 1, 2020, or later, SB 1049 OPSRP withdrawal rules apply: 

  • You lose all OPSRP retirement credit you have accrued at the time of your IAP withdrawal.
  • You will not receive a withdrawal benefit or future retirement benefit of any kind for the OPSRP pension membership you have at the time you withdraw.

If you were vested in your OPSRP pension when you canceled your OPSRP/PERS membership, all rights to future benefits are lost and you are no longer vested. In addition, because any years of retirement credit are lost, you will have “reset the clock” on both becoming a member, starting new member contributions (usually a six-month waiting period) and in starting to vest in your future (new) pension. See “What if I later come back to work for a PERS-participating employer?” above for vesting information.​​

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 Have Questions?

  • Speak to a financial advisor or other retirement planning professional. PERS cannot recommend a specific financial advisor but there is information you should consider.
  • Contact PERS Member Services via phone or email for questions about the withdrawal process or information about your member account(s).
    • We cannot give you advice about whether to withdraw your member account(s). Withdrawal and canceling your PERS membership is a personal decision.
    • If you are OPSRP pension-vested, while we cannot immediately give you a full estimate of the value of your pension, we can help you calculate an estimate or direct ​you to the Online Member Services (OMS)​ pension estimate calculator.
    • Keep in mind that PERS, the agency, simply administers PERS benefits as determined by the Plan Sponsor (the Oregon Legislature) and in partnership with over 900 ​PERS-participating employers. You may need to contact your PERS-participating employer if you have missing or incorrect data. 
    • ​PERS must administer the retirement system in accordance with all state and federal laws.

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