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Recently Adopted PERS Administrative Rules

Comment on Administrative Rules

PERS Administrative Rules (Chapter 459 can be found on the Oregon State Archives website.)

  

Proposed Administrative Rules

Optional or Alternative Retirement Plans
Under Oregon law, a small group of participating public employers may offer their own retirement plans to their eligible employees, as an alternative to PERS. Such option is currently available to the public universities, Oregon Health & Science University (OHSU), community colleges, and most recently Harney County Health District (HCHD). The non-PERS retirement plans are known as optional retirement plans (ORP) or alternative retirement plans (ARP). Eligible employees of such employers may make an irrevocable election to participate in the ORP/ARP or PERS, which cannot be changed for any subsequent employment with that employer or employer group.  PERS created administrative rules to address impacts to PERS membership for persons eligible to participate in an ORP or ARP in order to track elections, manage membership status changes, and effectuate any necessary employee fund transfers. 

During a recent review of those administrative rules, staff discovered that the agency’s rules require updates. Current PERS administrative rules are specific to statutory provisions for employees of the public universities (ORS 243.800) and OHSU (353.250). They do not cover community colleges (ORS 341.551) or HCHD (ORS 237.750). The proposed amendments broaden the rules to include these additional employers who are allowed to offer a different retirement plan in place of PERS, in order to bridge the gap between the statutes and rules. They also add clarification to explain that the membership standards provided in OAR 459-010-0003 and 459-075-0010 are used to establish membership, as well as to maintain active membership once membership has been established.

Draft Rules:         459-005-0310
        459-005-0350
        459-005-0370
        459-010-0003         
        459-075-0010
Notice of Rulemaking: ORP-ARP Rules (amended)

Division of Benefits Rules Impacted by SB 1049

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). The member’s EPSA account will be used to fund benefits provided to the member or the member’s beneficiary that are accrued by the member on and after July 1, 2020. If the balance of the EPSA account exceeds the cost of the benefits accrued on and after July 1, 2020, the excess amount will be refunded to the member or their IAP beneficiary in a lump sum. 

The EPSA is an additional account under the Individual Account Program (IAP) statutes. The proposed amendments clarify that, as an account under the IAP, any division of the IAP in a divorce decree applies to the EPSA as well. Additionally, the EPSA is not used to determine the amount of the pension benefit; it is used only to help fund the benefits under the pension programs. The amendments to the rules explain that the EPSA is not subject to being awarded independently in a divorce decree. In the event there is no benefit to which the EPSA is applied or the balance of the EPSA exceeds the amount necessary to fund a benefit under the pension program, the member’s AP will receive the same percentage of the excess EPSA as the decree awards of the member’s IAP. 

Another provision of SB 1049 (2019) amended the withdrawal provisions for the OPSRP Pension Program. All members wishing to withdraw an account are required to withdraw all their PERS accounts (“withdraw from one, withdraw from all”); however, prior to SB 1049 (2019), OPSRP Pension Program members were not allowed to withdraw from the OPSRP Pension Program if the net present value of their future pension was greater than $5,000. Under SB 1049 (2019), OPSRP Pension Program members who withdraw their IAP account under ORS 238A.375, terminate their membership in the system, meaning both the IAP and the OPSRP Pension Program. 

Staff recognized that the change in the OPSRP withdrawal provision could negatively impact a divorced member’s alternate payee (AP). If an OPSRP member whose pension benefit is divided by a divorce decree were to withdraw their IAP, under the new withdrawal provisions, that withdrawal would terminate the member’s membership in both the IAP and the OPSRP Pension Program, thereby forfeiting any and all pension benefits for themselves and their AP. The amendments to the rules establish a new requirement for divorce decrees of OPSRP members and the default administration of a decree that is silent regarding the new requirement. If all or a portion of a member’s OPSRP pension benefit is awarded in a decree, the decree must also state whether or not the member may withdraw from the IAP under 238A.375. If the decree is silent on the ability to withdraw the IAP, the member will not be able to withdraw from the system.

Draft Rules:         459-005-0001
        459-045-0012
        459-045-0014
        459-045-0034
Notice of Rulemaking: Divorce Rules

Salary and Contribution Rates

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 prop​​​osed rule modifications incorporate these federal adjustments for calendar year 2021​ 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.

Draft Rules:         459-005-0525
        459-005-0545
        459-080-0400
        459-080-0500
Notice of Rulemaking: Salary and Contribution Limits

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 proposed rule amendments to subsections (4) and (5) broaden the types of disclosures PERS may communicate to employers in order to administer member benefits.

Draft Rules:                      459-060-0020
Notice of Rulemaking:      Confidentiality of Member's Records


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, provides 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 proposed change brings the rule in line with the statute.

​Draft Rules:                      459-014-0050
Notice of Rulemaking:      Designation of Beneficiary at Retirement and Survivor Benefits

 

Work After Retirement Payroll
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 proposed rule amendments correct the terminology for consistency.

Draft Rules:                   459-009-0098
                                      459-009-0070
                                      ​459-017-0060
                                      ​459-075-0300
Notice of Rulemaking:   WAR Payroll


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.

Draft Rules: 459-009-0092
        459-035-0090
Notice of Rulemaking: COVID-19 Mitigation

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.

Draft Rules: 459-075-0200

EPSA Earnings Crediting on Withdrawal and Work After Retirement Payroll
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. 

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 proposed rule amendments correct the terminology for consistency.

Draft Rules:         459-007-0370
        459-009-0070
        459-017-0060
        459-075-0300


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 proposed rules modify the definition of “earned income” to explicitly include most forms of gambling income. Staff have 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.


​Draft Rules:                       459-015-0001
 ​                                         459-076-0001​

Notice of Rulemaking:       Disability Definitions


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

Draft Rule:                       459-080-0410​
Notice of Rulemaking:     Member Redirect – Voluntary Contributions


CARES Act
OAR 459-050-0075: A new section (7) was added to the rule to implement the federal CARES Act optional withdrawal provision, which allows qualified individuals to take an in-service withdrawal of no more than $100,000 from their OSGP account balance during calendar year 2020. The withdrawn amount may be redeposited back into OSGP within three years of the withdrawal.

OAR 459-050-0077: A new section (13) was added to the rule to implement the federal CARES Act mandatory provision that provides a one-year loan repayment delay for qualified individuals with an outstanding loan at OSGP and a payment due date between March 27 and December 31 of this year.

OAR 459-050-0080: Sections (1) and (2) of the rule were amended to reflect the change of RMD age under the federal SECURE Act from 70½ to 72 starting on January 1, 2020.

OAR 459-050-0300: Sections (1) and (9) of the rule were amended to reflect the change of RMD age under the federal SECURE Act from 70½ to 72 starting on January 1, 2020. A new section (13) was added to the rule to implement the CARES Act RMD waiver for 2020. Plan participants are not required to take an RMD this year.

Draft Rules:                     459-050-0075
                                        459-050-0077
                                        459-050-0080
                                        459-050-0300

Notice of Rulemaking:     CARES Act


COVID-19 Mitigation
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. At this time we have identified the following areas for temporary rulemaking efforts:

Health Insurance Premium Payments

While Governor Brown’s Executive Order 20-03 is in place, no person’s PERS-sponsored health insurance coverage shall be terminated for failure to make payment of monthly contributions by the applicable due date.

PERS does anticipate updating this rule in May to include any immediate changes necessary to implement the federal CARES Act and any additional exceptions identified as necessary to accommodate Governor Brown’s Executive Order.

Draft Rule:                     459-001-0100
Temporary Adoption:     COVID-19
 
Member Redirect
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.
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).

Draft Rules:                   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   

Notice of Rulemaking:  ​Member Redirect



Rulemaking Schedule updated June 4, 2021

​OAR
Topic
Notice to Public
Notice to Board​


​​Public
Hearing

Public comment ends Expected adoption
​459-005-0310
​459-005-0350
​459-005-0370
459-010-0003
459-075-0010​
Optional/Alternative
Retirement Plan
​5/28/21
​6/4/21
​TBD
6/25/217/23/21​​
​459-005-0001
459-045-0012
459-045-0014
459-045-0034
Divorce​5/28/21
​6/4/21
​TBA
​6/25/21
​7/23/21
459-007-0007​
Assumed Rate
​8/02/21
​7/23/21
​TBD
​8/24/21
​10/01/21
​Various
​OSGP
​10/01/21
​10/01/21
​TBD
​10/25/21
​12/03/21
​Various
​Disability
​10/01/21
​10/01/21
​TBD
10/25/21
​12/03/21
​TBD
RMD Requirement​12/03/21
​12/03/21
​TBD
​12/23/21
​1/31/22