Public Employees Retirement System

Salary and Contribution Limits
The Internal Revenue Service revises various dollar limits annually based on cost-of-living adjustments. 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 proposed rule modifications incorporate these federal adjustments for calendar year 2020 and are necessary to ensure compliance with the federal limits on the amount of annual compensation allowed for determining contributions and benefits.

Also, under ORS 238.005, 238A.005 and 238A.330, on January 1st of each year, the Board shall adjust the overall salary limit, and the salary threshold for EPSA contributions to reflect cost of living increases from the previous year based on the Consumer Price Index for All Urban Consumers, West Region (All Items), as published by the Bureau of Labor Statistics of the United States Department of Labor.

Board Adoption:              03/29/2021
Effective:                         03/29/2021
Text:                                459-005-0525
                                       459-005-0545
                                       459-080-0400
                                       459-080-0500
                                       PERS Board Adoption Memo

 

Confidentiality of Member's Records
As a state agency that administers retirement benefits for public employees, PERS receives and maintains financial and nonfinancial member information obtained from various public employers and the member throughout a public employee's career. Oregon's public records laws promote the public's right to know how government operates, balanced with the need for efficient government and protecting individual privacy concerns. Under this statutory framework, ORS 192.355(12) protects a member's nonfinancial membership records and an active or inactive member's financial records maintained by PERS from public disclosure. Except as specifically provided in subsections (4) and (5) of 459-060-0020, PERS does not disclose nonfinancial information to employers without member consent. The limited disclosures currently allowed in subsections (4) and (5) do not allow PERS to disclose certain necessary information to the member's participating employer that would enable the employer to properly report wages and pay contributions to PERS. Obtaining member consent for such disclosure would be administratively burdensome and would lead to delays and inefficiencies in employer reporting and remittance of contributions. For example, in some cases it is necessary for the employer to know whether the employee is retired for service or for disability because it impacts the employer's contribution obligations. However, the current rule only allows PERS to disclose whether the member is retired. It does not allow PERS to specify the type of retirement (i.e., service or disability retirement). The rule amendments to subsections (4) and (5) broaden the types of disclosures PERS may communicate to employers in order to administer member benefits.

Board Adoption:             02/01/2021
Effective:                        02/01/2021
Text:                               459-060-0020
                                      PERS Board Adoption Memo

 

Designation of Beneficiary at Retirement and Survivor Benefits
ORS 238.390 pertains to death benefits for Chapter 238 members. For the purpose of determining accrued benefits due a retired member at the time of death, accrued benefits are considered to have ceased as of the last day of the month preceding the month in which the retired member dies. The statute directs that accrued benefits due to a retired member at the time of death are payable to their designated beneficiary or estate. OAR 459-014-0050 as currently written, however, provDeides that when a retired Chapter 238 member dies after the first payment is due, unpaid benefits will be paid to the member's estate. The change brings the rule in line with the statute. 

Board Adoption:             02/01/2021
Effective:                        02/01/2021
Text:                               459-014-0050                                  
                                      PERS Board Adoption Memo

 

Employer Contribution Rate
The work after retirement provisions of SB 1049 allow retired members in all PERS pension programs (Tier 1/Tier 2 and OPSRP) to work unlimited hours for PERS participating employers in calendar years 2020-2024 without impacting their ability to receive retirement benefits. The bill also included a new provision that required employers to pay additional employer contributions on wages of retirees working post-retirement as if they were active members. The additional contributions would be applied to the employer's liabilities, and could be used to pay down an employer's UAL at an accelerated rate. The rules implementing these provisions were adopted in January 2020. Employer rates are reflected as a percentage of covered payroll. The OAR amendments adopted in January 2020 used the term active members instead of covered payroll. The rule amendments correct the terminology for consistency.

Board Adoption:             02/01/2021
Effective:                        02/01/2021
Text:                               459-009-0098
                                      459-009-0070
                                      459-017-0060
                                      459-075-0300
                                      PERS Adoption Memo

 

COVID-19 Mitigation – PHIP Premium Payment and Employer Incentive Fund (EIF)
On March 8, 2020, Governor Kate Brown issued Executive Order 20-03 declaring a state of emergency and instructing state agencies to develop and implement procedures designed to prevent or alleviate the public health threat caused by the COVID-19 outbreak in Oregon.

In response to the COVID-19 outbreak, PERS adopted two temporary rules with mitigating provisions for members and employers. Temporary rules expire after 180 days. The state of emergency has extended longer than anticipated and certain conditions have changed since the original temporary rules where adopted.

At the April 2020 meeting, the board adopted temporary OAR 459-001-0100 suspending all PERS Health Insurance Program (PHIP) policy terminations during the Governor’s state of emergency. The PHIP mitigation provision followed the emergency Health Insurance Order issued by the Department of Consumer and Business Services (DCBS).

At the May 2020 meeting, the board adopted temporary OAR 459-001-0110, which includes the PHIP provision and added provisions concerning mitigation actions with respect to the Employer Incentive Fund (EIF).

In May, DCBS allowed its original emergency order to expire and issued a new emergency Health Insurance Order. The new emergency order requires health insurance providers in Oregon to give policyholders a minimum grace period of 60 days to make any premium payments due. The requirement that health insurance providers indefinitely suspend policy terminations is no longer in effect.

Temporary rules cannot be amended. In order to incorporate the current DCBS provision, the existing temporary rules must be suspended and the provision incorporated into a new rule. Given that the state of emergency is extending longer than anticipated, staff is recommending incorporating a provision into the existing PHIP rule; however, rather than incorporate the precise requirements of the current emergency order, the amendment will instead provide that no person’s PERS-sponsored health insurance coverage will be terminated in a manner contrary to any emergency health insurance order and that any payment due dates will be adjusted to the extent required by the emergency order. This framework will allow staff to respond to changing requirements in real time without needing to engage the board in further rulemaking each time requirements change.

Board Adoption:             12/04/2020
Effective:                        12/04/2020
Text:                               459-009-0092
                                      459-035-0090
                                      PERS Adoption Memo

 

Police Officer and Firefighter Eligibility
ORS 238A.160 and 238A.165 pertaining to normal and early retirement age for OPSRP members provide that police officer and firefighter (P&F) members must hold their positions “continuously” for a period of not less than five years immediately preceding their effective retirement date to qualify for P&F retirement timing. When OAR 459-075-0200 was last updated in 2012, a definition for “continuously” was added to provide clarity to the previously undefined term, providing that it meant a “period of employment during which the member accrues retirement credit in consecutive months without interruption.”

Over time, however, it became clear that the definition as written inadvertently caused any Leave Without Pay (LWOP) period totaling one month or longer to restart the clock on the five year statutory period to qualify for P&F retirement age eligibility. This was an unintended consequence, and staff is now bringing the rule back to the board to address this LWOP issue. The rule has been edited to clarify that continuous employment is when a member is employed in a qualifying position as a P&F member in consecutive months without interruption.

Board Adoption:             12/04/2020
Effective:                        12/04/2020
Text:                               459-075-0200
                                      PERS Adoption Memo

 

EPSA Earnings Crediting on Withdrawal
The Employee Pension Stability Account (EPSA) earnings crediting rule OAR 459-007-0370 was adopted in June 2020 to explain how earnings should be credited upon withdrawal for the EPSA. In situations where there is a delay in processing a withdrawal, under the current rule, it is possible that an EPSA would not receive full earnings crediting required under the statute. To ensure that members receive earnings to the date of distribution, staff has altered the structure of the rule to bring it in line with the IAP withdrawal rule. When withdrawals are processed timely, there is no difference in the effect of the two structures, but the structure of the IAP rule will ensure the member receives earnings to the date of distribution in situations where there is a delay in processing.

Board Adoption:             12/04/2020
Effective:                        12/04/2020
Text:                               459-007-0370
                                      PERS Adoption Memo

 

Disability Definitions – Gambling Income
“Earned income” is defined in OAR 459-015-0001 (Tiers One and Two) and 459-076-0001 (OPSRP). These definitions provide that, in addition to salary and wages, “earned income” includes a variety of “self-employment income” sources, such as “hobby income.” Historically, PERS has considered most gambling winnings to be a form of “hobby income,” and therefore “earned income,” for purposes of disability income limitations. Members have raised concerns about this interpretation, noting that the current definition of “earned income” does not specify how PERS treats gambling income in the disability context. In addition, a member recently challenged PERS’ interpretation of the rule in a contested case hearing, arguing that gambling income should not be considered earned income. An administrative law judge upheld PERS’ interpretation of the rule in that case, noting that many forms of gambling require the application of skill, judgment, and effort, which distinguishes gambling from purely passive forms of income that are excluded from the definition of “earned income.”

To ensure that members have adequate notice of PERS’ treatment of gambling income in the disability context, the adopted rules modify the definition of “earned income” to explicitly include most forms of gambling income. Staff has recognized a need to exclude certain forms of “unskilled” gambling—such a slot machines and lotteries—from this definition in order to avoid extreme or inequitable outcomes for members, particularly in the OPSRP context where receipt of earned income results in discontinuation of a member’s disability benefit. Therefore, the rule excludes gambling income derived from “sweepstakes, lotteries, bingo, keno, or slot machines.” These forms of gambling are reported via IRS Form W-2G and can be easily identified, as the nature of the gambling activity will be susceptible to documentary proof during a member’s disability income review.

Board Adoption:             10/02/2020
Effective:                        10/02/2020
Text:                               459-015-0001
                                      459-076-0001
                                      PERS Board Adoption Memo

 

COVID-19 Mitigation – PHIP Premium Payment and Employer Incentive Fund (EIF)
In May, the Department of Consumer and Business Services (DCBS) issued a new emergency order that requires health insurance providers in Oregon to give policyholders a minimum grace period of 60 days to make any premium payments due. The requirement that health insurance providers indefinitely suspend policy terminations is no longer in effect. The temporary adoption of OAR 459-035-0090 will provide that no person’s PERS-sponsored health insurance coverage will be terminated in a manner contrary to any emergency health insurance order and that any payment due dates will be adjusted to the extent required by the emergency order. This framework will allow staff to respond to changing requirements in real time without needing to engage the board in further rulemaking each time requirements change.

Because temporary OAR 459-001-0110 is being suspended and also impacts EIF mitigation actions, staff are proposing rulemaking regarding the EIF to ensure these provisions remain in effect. The provision extending the payment date for the current application cycle to December 1 in the temporary COVID-19 rule has been incorporated into OAR 459-009-0092, which staff is also presenting for temporary adoption.

Board Adoption:             10/02/2020
Effective:                        10/02/2020 through 03/30/2021
Text:                               459-009-0092 (temp)
                                      459-035-0090 (temp)
                                      PERS Board Temporary Adoption Memo

 

SB 1049 Member Redirect - Voluntary Contributions
During the 2019 Legislative Session, the Oregon Legislature passed Senate Bill (SB) 1049, which made significant amendments to ORS Chapters 238 and 238A. The Member Redirect portion of the bill requires that, effective July 1, 2020, a portion of the member six percent mandatory contribution will be directed to a new Employee Pension Stability Account (EPSA) when the funded status of the plan is below 90% (including side accounts) and the member’s monthly salary is more than $2,500 (indexed for inflation). When those conditions are met, 2.5% of Tier 1 and Tier 2 members’ subject salary will be redirected to the EPSA and 0.75% of OPSRP members’ subject salary will be redirected to the EPSA.

When the redirect is in effect, the legislation includes language allowing members the option of making after-tax contributions to their regular IAP accounts. This option is available only when the mandatory member contributions are being redirected to the EPSA, and only in the amount redirected. Per SB 1049, voluntary member contributions cannot be “picked up” by employers.

PERS has adopted OAR 459-080-0410 to clarify how the voluntary contribution option provided in Senate Bill 1049 will be administered by the agency.

Board Adoption:             07/31/2020
Effective:                        07/31/2020
Text:                               459-080-0410
                                      PERS Board Adoption Memo

 

CARES Act
The federal Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020, and addresses the economic impacts faced by many sectors of the U.S. economy due to the COVID-19 pandemic. The provisions of the CARES Act that are incorporated into OSGP by the current rule amendments include a mandatory waiver of required minimum distributions (RMD) for calendar year 2020 and a mandatory one year delay of plan loan repayments for qualified individuals. The suspension of the RMD requirement applies to all distributions made in calendar year 2020. The delay of loan repayments applies to loan payments that would be due between March 27, 2020 and December 31, 2020, and interest will continue to accrue on the balance of the loan during this time.

Staff evaluated the CARES Act with regard to PERS, as well, and determined that, because the mandatory suspension of RMD applies only to defined contribution plans and PERS is a defined benefit plan, it does not apply to PERS. Therefore, PERS will continue to administer RMDs as usual.

Board Adoption:             07/31/2020
Effective:                        07/31/2020
Text:                               459-050-0075
                                      459-050-0077
                                      459-​050-0080
                                      459-​050-0300
                                      PERS Board Adoption Memo

 

SB 1049 - Redirect of Member Contributions
During the 2019 Legislative Session, the Oregon Legislature passed Senate Bill (SB) 1049, which made significant amendments to ORS Chapters 238 and 238A. The Member Redirect portion of the bill requires that, effective July 1, 2020, a portion of the member 6% mandatory contribution will be directed to a new Employee Pension Stability Account (EPSA) when the funded status of the plan is below 90% (including side accounts) and the member’s monthly salary is more than $2,500 (indexed for inflation). When those conditions are met, 2.5% of Tier 1 and Tier 2 members’ subject salary will be redirected to the EPSA and 0.75% of OPSRP members’ subject salary will be redirected to the EPSA.

Once the funded status of the plan is 90% or greater, member contributions will be deposited at the full 6% contribution level into members’ regular IAP accounts. The redirect, or non-redirect, of member contributions will be based on the funded status of the plan, as determined in a rate setting valuation, and will be applicable until the next rate setting valuation.

While there are many rules included in this package, most are edited only for clarification. The new EPSA is an additional account under the Individual Account Program statutes and the edits are necessary to distinguish it from the existing IAP accounts. Four new rules are added; one to outline the EPSA, and three others to explain the earnings crediting to the EPSA in different circumstances (retirement, withdrawal, and death).

Board Adoption:             06/23/2020
Effective:                        06/23/2020
Text:                               459-005-0370
                                      459-007-0001
                                      459-007-0005
                                      459-007-0320
                                      459-007-0335
                                      459-007-0350
                                      459-007-0360
                                      459-007-0370
                                      459-010-0055
                                      459-070-0001
                                      459-075-0020
                                      459-080-0020
                                      459-080-0200
                                      459-080-0400​
                                      PERS Board Adoption Memo

 

COVID-19 Temporary Rule
On March 8, 2020, Governor Kate Brown issued Executive Order 20-03 instructing state agencies to develop and implement procedures designed to prevent or alleviate the public health threat caused by the Coronavirus (COVID-19) outbreak in Oregon. PERS staff evaluated, and continues to evaluate, the agency’s administrative rules and PERS’ internal processes to determine how members might be negatively impacted due to the COVID-19 outbreak and what, if anything, can be done at the agency level to mitigate that effect. This temporary rule was originally adopted at the April board meeting to address health insurance premiums; that portion of the rule has not changed. The new rule amendments implement mitigating action with respect to the Employer Incentive Fund (EIF).

The Board opened the first EIF application cycle on September 3, 2019. According to OAR 459-009-0092, that application cycle is scheduled to close on August 31, 2020. With the economic downturn due to COVID-19 and the extension of the income tax filing deadline, some employers are reevaluating their budgets and their commitments to make lump sum payments under the EIF program. In light of the economic impact of the COVID-19 pandemic on employers’ budgets, staff recommends the Board extend the application cycle to December 1, 2020. This will allow employers who wish to delay their lump sum payment to request a later date to make their payment.

Board Adoption:             05/29/2020
Effective:                        05/29/2020 through 11/24/2020
Text:                               459-001-0110
                                      PERS Board Adoption Memo

 

CARES Act Temporary Rules
The federal Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020, and addresses the economic impacts faced by many sectors of the U.S. economy due to the COVID-19 pandemic. The provisions of the CARES Act that are incorporated into OSGP by the current rule amendments include a mandatory waiver of required minimum distributions (RMD) for calendar year 2020 and a mandatory one year delay of plan loan repayments for qualified individuals. The suspension of the RMD requirement applies to all distributions made in calendar year 2020. The delay of loan repayments applies to loan payments that would be due between March 27, 2020 and December 31, 2020, and interest will continue to accrue on the balance of the loan during this time.

Board Adoption:             05/29/2020
Effective:                        05/29/2020 through 11/24/2020
Text:                               459-050-0075
                                      459-050-0077
                                      459-050-0080
                                      459-050-0300
                                      PERS Board Adoption Memo

 

Member Choice
The amendments to OAR 459-080-0015 implement the Member Choice provision in SB 1049 (2019). The rule will now provide members with an opportunity to make an election to have their entire non-retired IAP account balance invested in a target date fund (TDF) of their choice (as opposed to the default TDF based on their year of birth) once every calendar year. A member may make one election each calendar year from January through September. A valid election made by a member in a calendar year will be effective January 1 of the following calendar year.

Board Adoption:             05/29/2020
Effective:                        05/29/2020
Text:                               459-080-0015
                                      PERS Board Adoption Memo

 

IRC Limitations
The Internal Revenue Service revises various dollar limits annually, based on cost-of-living adjustments. These revisions are used throughout PERS statutes and rules, but revisions to the limits must be adopted by the legislature or PERS Board to be effective.

The rule modifications incorporate these federal adjustments for calendar year 2020 and are necessary to ensure compliance with the federal limits on the amount of annual compensation allowed for determining contributions and benefits.

Board Adoption:             05/29/2020
Effective:                        05/29/2020
Text:                               459-005-0545
                                      459-080-0250
                                      459-080-0500
                                      PERS Board Adoption Memo