Oregon PERS There and back again
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Transcript of Oregon PERS There and back again
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Oregon PERSThere and back again
2009 OASBO Summer ConferenceEagle Crest Resort
July 31,2009
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Oregon PERS - There and back again
1. 2009 Legislative Update
2. Actuarial Assumptions
3. Board Decisions – what will they cost?
4. Rates – up, up, & away!
5. Retire – now or later?
6. PERS Board Meetings – yes you can help!
7. Questions
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2009 Legislative Update
Many PERS-related bills introduced
19 bills considered
8 bills adopted
Effective on January 1, 2010 – unless the bill includes an emergency clause – then bill is effective upon signing by the Governor
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2009 Legislative Update
Housekeeping bills (signed by Governor):
HB 2157 Federal Tax Reconnect
HB 2704 Elimination of Workers’ Comp Offset
SB 112 Return to Work Retirees (emergency clause; retroactive back to 2004)
SB 5539 PERS 2009-11 Budget
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2009 Legislative Update
Housekeeping bills (awaiting Governor’s action):
HB 2873 Public Employees Retirement Benefits (emergency clause)
SB 399 Trustee to Trustee Transfer for Eligible Purchases at Retirement
SB 897 PERS Coalition Omnibus (emergency clause)
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2009 Legislative Update
Important bill for K-12 (awaiting Governor’s action):
HB 3401 Use of Excess Amount in Side Accounts (emergency clause)◦ Will require an IRS ruling ◦ Would allow use of excess side account dollars to offset IAP
contributions◦ Losses in side accounts since December 2007 make this an
unlikely resource
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Actuarial Assumptions
Mercer (PERS Actuaries) presentations to PERS Board:
May 29, 2009:http://www.oregon.gov/PERS/section/financial_reports/Financial_Modeling_52909.pdf http://www.oregon.gov/PERS/section/financial_reports/Exp_Study_52909.pdf
July 16, 2009:http://www.oregon.gov/PERS/section/board_information/board_information_index.shtml
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Actuarial Assumptions
May 29, 2009 – Economic assumptions considered for adjustment:
Regular investment return (deferred to 7/16)Variable investment return (deferred to 7/16)Health cost trend ratesOPSRP admin expenses
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Actuarial Assumptions
May 29, 2009 – Actuarial methods considered for adjustment:
Eliminate PUC amortizationShorten certain amortization periodsAllocation of liability for service segments
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Actuarial Assumptions
May 29, 2009 – Actuarial methods considered for adjustment:
Clarify adjustments to contribution rate collar
Clarify amortization of new side accounts & new transition liabilities
Exclusion of negative rate guarantee reserve
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Actuarial Assumptions
July 16, 2009 – Investment returns/ demographic assumptions considered for adjustment:
Regular investment returnVariable investment returnGenerational mortality tableRetirement service levels
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Actuarial Assumptions
July 16, 2009 – Investment returns/ demographic assumptions considered for adjustment:
Merit salary increasesDisability ratesTermination rates
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Board Decisions
July 16, 2009 – Board action:
Approved generational mortality tables
Opposed reduction of assumed investment rates (saved us 1.5%)
Approved other adjustments as recommended by Mercer
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Board Decisions
Impact of changes (ignoring rate collar):
Mortality assumptions
Other Assumptions and Methods
Total
Tier 1/Tier 2 OPSRPNormal
Cost Rate
UAL RateNormal
Cost Rate
UAL Rate
0.2%
0.0%
0.2%
0.5%
(3.0%)
(2.5%)
0.2%
(0.3%)
(0.1%)
0.0%
0.0%
0.0%
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Rates - up, up, & away
2009-11 Biennium (school pool rates):
Reduced by ~3.6% - 14.1%
Some districts with large side accounts have negative PERS rates
If system funding level does not exceed 80% by 12/31/2009, rate collar could double to 6% (pool rate = 20%)
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Rates - up, up, & away
2011-13/2013-15 Biennia (all employers):
Modeling indicates rates will increase 6% for 2011-13
Modeling also indicates an additional increase of 6% in 2013-15
Strong likelihood of PERS rates = 26% of payroll before 6% contribution to the IAP
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Rates - up, up, & away
Other rate considerations:
Side account rate relief expected to drop from an average of 8% down to 2% - 4% over the next 18 years
Unlikely to have side account resources available after 2027
Modeling projects future rates exceeding 30%
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Retire – now or later?
Board approved methods and assumptions impact the 12/31/2008 & 12/31/2009 actuarial valuations
Board will adopt actuarial equivalence factors for 2010 & 2011 at its November meeting
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Retire – now or later?
Many changes effective January 1, 2010
Check “Benefit Estimate Calculator” often
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PERS Board Meetings
Meetings held at PERS Headquarters in Tigard
Meetings begin at 1:00 PM
Agendas available on PERS website (click “Board” tab, then meeting date)
Remaining 2009 meetings:◦ September 25, 2009 – system-wide actuarial results◦ November 20, 2009 – adoption of actuarial equivalence
factors for 2010 & 2011
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Questions?
PERS Headquarters:11410 SW 68th ParkwayTigard, OR 97223
http://www.oregon.gov/PERS/index.shtml
Phone: 503-598-7377Toll free: 888-320-7377Fax: 503-598-0561
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Thank you!
C. Lance Colley, Chief Operations Officer
Roseburg Public Schools
541.440.4027
Janice Essenberg,Director, AdministrativeServicesDavid Douglas SD
503.261.8212