Public Employees Retirement System (PERS)
- PERS Tier I - Hired before 1/1/96
- PERS Tier 2 - Hired from 1/1/96 through 8/28/03
- OPSRP - Hired 8/29/03 and after
PERS Tier 1/Tier 2
Beginning January 1, 2004, your 6% PERS member contributions (whether paid by yourself or your employer) will go into your Individual Account Program (IAP). You retain your existing PERS Chapter 238 Program (Tier 1/Tier 2) regular and variable accounts, but any future member contributions will be deposited into your IAP, not into your Tier 1/Tier 2 member account.
Oregon Public Service Retirement Plan (OPSRP)
The 72nd Oregon Legislature created the Oregon Public Service Retirement Plan (OPSRP). Public employees hired on or after August 29, 2003 become part of OPSRP, unless membership was previously established in PERS. If a public employee is already in their 6-month waiting period for PERS membership, that employee becomes part of the PERS plan.
OPSRP is a hybrid (defined contribution/defined benefit) pension plan with two components: the Pension Program (defined benefit) and the Individual Account Program (defined contribution). A defined benefit plan is benefit-based and uses predictable criteria such as a pension determined by salary x length of service x factor. A defined contribution plan has no guarantee. Members make contributions; employers may or may not also make contributions. When a member retires, they receive the contributions plus any earnings or losses that have accrued.
OPSRP is administered by PERS, the agency. The PERS Board is directed to adopt any rules necessary to administer OPSRP, and such rules are to be considered part of the plan for IRS review purposes. The Oregon Investment Council will invest plan assets.
This portion of OPSRP provides a life pension funded by employer contributions. Benefits are calculated with the following formula for members who attain normal retirement age:
Police and Fire (P&F): 1.8 percent x final average salary x years of service. Normal retirement age for a P&F member is age 60 or age 53 with 25 years of retirement credit. To be classified as a P&F member, the individual must have been employed continuously as a P&F member for at least five years immediately preceding retirement.
General Service: 1.5 percent x final average salary x years of service. Normal retirement age for a general service member is age 65 or age 58 with 30 years of retirement credit.
"Final average salary" is the higher of (1) the average gross salary or adjusted total gross earned over the three calendar years in which you earned the largest total salary from one or more PERS-participating employers, even if one of those years was less than a full calendar year, or (2) your total gross salary or adjusted total gross earned over the last 36 months divided by the actual number of calendar months of active service within that 36-month period. In determining final average salary, lump sum payments you receive for accrued vacation time and "excess" overtime is not included. Excess is defined as overtime paid above the "average" paid to employees of that class during the time period being averaged, as established by PERS rule.
Individual Account Program (IAP)
The IAP is a defined contribution retirement program for all active Tier 1/Tier 2 and OPSRP members. The legislature created the IAP in 2003 to provide an individual account-based retirement benefit for new workers hired on or after August 29, 2003 and for Tier 1/Tier 2 members active on and after January 1, 2004. The IAP benefit is in addition to other retirement program benefits (i.e. Tier 1, Tier 2 or OPSRP).
Contributions - Effective January 1, 2004, 6% of your salary (whether paid by yourself or your employer) has been placed into your IAP account. The IAP can have earnings or losses and administrative fees are deducted from the fund's earnings as part of the annual crediting process. You are automatically vested in your IAP account when your account is established.
Earnings - Earnings are credited annually to your account. This allows PERS to work with employers to ensure that member contributions are accurate and complete before allocating earnings on a year-end balance basis.
Statements - Annual statements are mailed to active and inactive IAP members after earnings are credited each year.
Portability - Your membership in the IAP is portable, meaning that once you become an IAP member, you will remain a member if you later leave one employer to work for another participating employer in a qualifying position.
Withdrawal - If you are an inactive member, you may elect at any time to withdraw your IAP account, to the extent you are vested. Withdrawn funds are subject to federal income taxes plus an additional 10 percent tax unless you elect a direct-transfer rollover into an Individual Retirement Account (IRA) or other tax-qualified plan. PERS must withhold 20 percent federal tax on the taxable portion of your refund unless you elect a direct-transfer rollover. You can roll over only the taxable portion of your refund (that portion of your account that has not been previously taxed). Your withdrawal payment should be mailed to you within 90 days after PERS receives all needed documentation including a Notice of Separation from your employer(s).
Retirement - At retirement, you can receive your IAP account balance as a lump-sum payment or in equal installments over a 5, 10, 15 or 20-year period. Your withdrawal payment should be mailed to you within 90 days after PERS receives all needed documentation including a Notice of Separation from your employer(s). For IAP members who are also or were Tier One/Tier Two members, IAP benefits are in addition to any other PERS retirement benefit the member is entitled to. If a retired member dies before all installment payments are completed, the beneficiary is entitled to receive the remaining installment payments and may choose to receive the remaining amount in a lump-sum payment.
Disclaimer: This information is being provided as a general resource and is subject to change. All PERS related benefits and calculations are based solely on the rules and regulations set forth by PERS, Oregon Administrative Rules, and Oregon Revised Statutes.