January 1st,
2003
Retiring
Oregon PERS members are allowed to utilize the
Double-Lump Sum Option. PERS Officers, Management and
Staff follow PERS regulations and Oregon Revised Statute
by allowing members to retire, return to work in a PERS
covered position, and work less than 1,039 hours within
the first six months of reemployment without risk to
benefits or exposure to penalties. Members follow rules
and begin to roll all their money from PERS throughout
2003 and up to February 26th, 2004.
February 24th, 2004
Steve Rodeman, Oregon PERS’
Manager of Policy Analyst Group, confirmed Double-Lump
Sum Option availability for returning to work with less
than 1,039 hours during the first six months. David
Bailey, Oregon PERS’ Deputy Director and Steve Delaney,
PERS Legislative Liaison, have also recently confirmed
the Double-Lump Sum Option for returning PERS retiree’s
under the 1,039 hour method within the first six months.
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February 26th, 2004
PERS
announces an “abrupt” change to its policy regarding the
Double-Lump Sum Option and returning to work.
David
Bailey, Oregon PERS’ Deputy Director suddenly resigns.
His last day is tomorrow.
The
Oregon School Board Association begins to circulate an
email announcing “PERS previously provided incomplete
information…” regarding the Double-Lump Sum Option and
returning to work.
PERS
immediately began calling members retiring as of March 1
to tell them that if they were planning to return to
work after taking the “double-lump sum” retirement
option, then they can’t work at all for 6 calendar
months. If they do, they would have to pay all of the
money back.
If PERS
were to find-out that a member took the double-lump sum
option and then returned to work, and did not change
their retirement option within 60 days of the first paid
benefit, PERS would send the member an invoice, and
potentially send it to collections if it were not
repaid.
Members
that had chosen the Double-Lump Sum Option and planned
to return to work under the 1,039 hour method begin to
be notified that they must repay all benefits received.
However, members who retire under any option other than
the total lump-sum option can return to work for a
PERS-covered employer within the first six months under
the 1,039 rule without having to repay benefits.
PERS
announces that the Attorney General’s (AG) office will
issue a ruling by the March 1st, 2003
deadline regarding the abrupt change to the Double-Lump
Sum Option and returning to work. Many members that were
set to retire, collect interest for 2003 and pro-rata
through the date of their check in 2004 in the Regular
Account and return to work under the “1,039” hour rule
are unable to make an informed decision. Members are
forced to put their plans on hold until AG’s office
advises PERS Board.
February 27th,
2004
Last day to turn in your PERS forms
if you’re planning on retiring by March 1, 2004.
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March 1st, 2004
Deadline
for receiving interest in the Tier One Regular Account
for 2003 and pro-rata through 2004 until check arrives.
AG’s
office to issue opinion on reemployment of retired
members that chose double-lump sum option utilizing
1,039 hour rule - Postponed.
Members
unable to make an informed decision regarding retirement
by March 1st deadline without possible risk
to career, benefits and/or penalties.
March 8th, 2004
AG’s office to issue opinion on
reemployment of retired members that chose double-lump
sum option utilizing 1,039 hour rule - Postponed.
March 11th, 2004
AG’s office to issue opinion on
reemployment of retired members that chose double-lump
sum option utilizing 1,039 hour rule - Postponed.
March 19th, 2004
AG’s office to issue opinion on
reemployment of retired members that chose double-lump
sum option utilizing 1,039 hour rule - Postponed.
March 24th, 2004
AG’s office to issue opinion on
reemployment of retired members that chose double-lump
sum option utilizing 1,039 hour rule - Postponed.
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April 12th, 2004
“Temporary Rule” issued by PERS Board for members
choosing to return to work in a PERS covered position
after retirement within the first six months. Temporary
Rule states members who return to work after retirement
may work no more than 599 hours (originally 1,039 hours)
within the first six months after retirement without
having to pay back any benefits.
Update: Total Lump-Sum Retirement Option and Returning
to Work (From
PERS)
At its
April 12, 2004 meeting, the PERS Board adopted a
temporary
Oregon Administrative Rule that defines the standards for
returning to work in a PERS-covered position within six
months of retirement for members who chose the total
lump-sum option. The rule clarifies that those members
can work 599 hours or less in that time period without
having to repay benefits, if the member is designated by
his/her employer as a casual, emergency, or seasonal
worker as defined in the rule.
The
temporary rule is retroactive to January 1, 2004. At its
June 10, 2004 meeting, the Board is expected to consider
a permanent rule that would be retroactive to January 1,
2003 the date the total lump sum option became
available.
Once the
six-month period following retirement ends, the member
can work unlimited hours without having to repay
benefits, but the employer must begin making
contributions as the member will again become an active
member.
PERS has
not tracked the hours of members who retired with the
total lump sum option and returned to work for a
PERS-covered employer. If PERS receives information that
a member has exceeded the 600-hour limit, we will
evaluate and resolve each instance on a case-by-case
basis depending on the facts and circumstances of the
member’s individual situation.
Based on
statute, members who retire under any option other than
the total lump-sum option can return to work for a
PERS-covered employer under the 1039 rule without having
to repay benefits. Under that rule, a member may work up
to 1,039 hours in a calendar year.
A member
can cancel his/her retirement up to the date of the
first benefit check and can change his/her retirement
option up to 60 days after the date of the first benefit
payment.
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The Cost of PERS Board’s Delay
Illustration: Oregon PERS member, Married, Eligible
to retire, Tier One member with $300,000 in Regular
Account as of Year-end 2002, all numbers are
approximate.
1.) If your retirement date was scheduled for the
March 1st, 2004 deadline to enable you to
collect the assumed rate in your Regular Account.
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A
Solution to the Reinterpretation of PERS Policy
1.)
PERS members who followed the direction of PERS
Officers, Managers and Staff should not be penalized.
2.)
The Double-Lump Sum Option became available as a
Payment Option on January 1st, 2003 to TIER
ONE PERS Members.
3.) Regarding the Double-Lump Sum Option and
returning to work, PERS Members should not be penalized
for adhering to the 1,039 hour limitation during the
first six months of reemployment as directed by PERS
Officers, Managers and Staff.
4.)
PERS Members who retired by March 1st,
2004 received the assumed rate of 8% for 2003 and
pro-rata through the date of their check in 2004.
5.) An “Abrupt” policy change was announced on
February 26th 2004 at the direction of the
PERS Board by the Department of Justice from the
Attorney General’s office two business days prior to the
March 1st 2004 Deadline. This “Abrupt” policy
change caused unnecessary confusion effectively not
allowing PERS Members the ability to make an informed
decision regarding their retirement by March 1st
2004.
6.) PERS Members must have a reasonable amount of
time in order to make an informed decision.
7.) Due to the confusion caused by the 43-day delay
from the PERS Board in making the Attorney General’s
verbal opinion public, PERS Members were effectively
shut-out from making an informed decision by the March 1st
2004 Deadline.
8.) PERS Members should have a window of opportunity
to exercise their right to receive the benefits of the
March 1st 2004 Deadline. This window of
opportunity should extend through July 31st,
2004 allowing PERS Members a reasonable amount of time
in order to make an informed decision.
9.) PERS Members should continue to be allowed to
choose any Payment Option that makes the most financial
sense for their specific circumstances.
10.)
The Double-Lump Sum Option for those that elect
to return to work after retirement in a PERS Covered
Position should be retroactive to January 1st,
2003 as the Legislators intended. The Legislators also
intended the 1,039-hour limitation to those that return
to work after retirement in a PERS Covered Position
within the first six months should apply equally to all
Payment Options.
11.)
A Clear, concise across-the-board rule outlining
the consequences if any, should be put into place that
applies equally and evenly to all PERS Members that
retire and return to work in a PERS Covered Position who
exceed the 1,039 hour rule within the first six months
of reemployment.
12.)
The benefits to the State of Oregon are enormous.
They include:
§
No costs incurred to keep knowledge
base – Advertising, Screening, Interviewing, Hiring,
Training, etc.
§
No PERS contributions for Retirees
hired back for the first six months (minimum).
§
Retention of Experienced People.
§
Avoid Costs and Expenses of losing
Valuable and Experienced People.
§
Improved Morale.
§
Reduce Overhead – Dramatically Less
expensive than Double-Dipping Method, Tier One vs.
Individual Account Program.
