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, he or she receives the contributions plus any earnings or losses that have accrued.
A Tier One or Tier Two PERS member who has a six-month service break becomes a member of OPSRP for any subsequent employment upon rehire.
Beginning January 1, 2004, PERS member contributions will go into the Individual Account Program (IAP) portion of OPSRP. PERS members retain their existing PERS accounts, but any future member contributions will be deposited in the member’s IAP, not into the member’s PERS account.
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 P&F members 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 general service members is age 65 or age 58 with 30 years of retirement credit.
“Final average salary” is the higher of the average of the highest three consecutive years (or less if the member was employed for less than three years) or 1/3 of total salary in the past 36 months. In determining final average salary, “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.
Years of service are earned by working 2,000 hours or more per calendar year. Working 600 to 2,000 hours per year provides a prorated share of a year’s retirement credit (i.e., hours worked divided by 2,000).
Individual Account Program (IAP)
For current PERS members, the 6 percent employee contribution (whether made by the employee or “picked up” by the employer) may not be made into the member's PERS account effective January 1, 2004. Instead, active Tier One and Tier Two PERS members will make payments equaling 6 percent of salary to the IAP portion of OPSRP.
OPSRP members contribute 6 percent of salary to the IAP, and employers may agree to pay the 6 percent contribution. An employer picking up, paying, or assuming member contributions must continue to do so until December 31, 2005. Thereafter, the employer must continue to do so unless the employer notifies the PERS Board in writing of a change in the employer’s policy.
Member contributions are to be placed in an “employee account.” Accounts are to be credited with earnings and losses. Administrative costs of the plan are to be charged to these accounts.
At retirement, the member may receive the IAP as a lump-sum payment or in equal installments over a 5, 10, 15, or 20-year period. If a retired member dies before the installment payments are completed, the beneficiary may receive the remaining installment payments or choose a lump-sum payment.