Office of the Chancellor

Human Resources Div.

P.O. Box 3175

Eugene, OR  97403-0175

Fax:  (541) 346-5783

Phone: (541) 346-5766

http://www.ous.edu
 
 

 

Date:    May 24, 2004

From:   Denise Yunker, Retirement Committee

            OUS Human Resources Division

Re:       2005 Legislative Concept to Amend the Optional Retirement Plan (ORP) Authorizing Statute

 


Issue

 

1.     Inclusion of indirect contributions in ORP contribution rates with continued coupling to PERS Total Employer Contribution Rate

 

2.     Revision of eligibility, membership, and commencement of contributions for adjunct and part-time employees.

 

Proposal Summary

 

  1. Amend ORS 243.800(8) and (9) to acknowledge contributions payments other than those made directly to PERS, as in debt service payments on bond issues. 

 

  1. An amendment specifically addressing part-time unclassified employees and adjunct faculty corrects plan funding problems related to lost earnings requirements of the optional retirement plan. This changes the timing of first contributions for new employees with indeterminate duration appointments, and continues the current practice of providing contributions in subsequent years of employment. 

 

Policy Implications

 

1.     If PERS and ORP contributions continue to be coupled, this amendment is necessary to allow contributions for PERS and ORP participants to comply with ORS 243.800(9). Currently, PERS employer contribution rates plus debt service exceed the ORP contribution rate based on the amortized bond issue payments. Current provisions are the closest approximation of equal rates permitted under statute.

 

2.     The amendment deviates from the PERS contribution requirement for pension benefits funded by the employer contribution. For the employee-funded IAP accounts, PERS has proposed employers and employees make lump sum contributions once 600 hours are worked in a calendar year. Where employees’ contributions are not paid by employers, the lump sum, retroactive payment significantly will decrease take home pay in the month the 600 hours’ contribution is deducted.

 

Proposal Language

 

243.800 Optional retirement plan for certain academic and administrative higher education employees. (1) (a) Notwithstanding any provision of ORS chapter 238 or ORS 243.910 to 243.945, the State Board of Higher Education may establish and administer an optional retirement plan for administrative and academic employees of the Oregon University System. who are eligible for membership in the Public Employees Retirement System. The optional retirement plan must be a qualified plan under the Internal Revenue Code, capable of accepting funds transferred under subsection (7) of this section without the transfer being treated as a taxable event under the Internal Revenue Code, and willing to accept those funds. Retirement and death benefits shall be provided under the plan by the purchase of annuity contracts, fixed or variable or a combination thereof, or by contracts for investments in mutual funds.

 

 

 

 

 

(1)(b) Administrative and academic employees appointed to positions expected to equal at least 600 hours in a calendar year and eligible for PERS membership under ORS 238.015 or ORS 238a.100, become plan participants after 6 months service uninterrupted by no more than 30 working days during the six month’s period.

 

(1)(c) Administrative and academic employee appointed to positions not expected to require 600 hours in a calendar year become plan participants after 6 months service uninterrupted by no more than 30 working days during the six month’s period and completion of 600 hours of service.

 

(1)(d) Administrative and academic employees who work fewer than 600 hours in calendar years subsequent to initially qualifying for participation in the optional retirement plan remain active participants, making employee contributions and receiving employer contributions to the plan on each worked month’s subject salary.  

 

.  .  .

(8) An employee participating in the optional retirement plan authorized by this section shall contribute monthly an amount equal to the percentage of the employee’s salary that the employee would otherwise have contributed as an employee contribution for IAP retirement benefits to the Public Employees Retirement System if the employee had not elected to participate in the optional retirement plan.

(9) The State Board of Higher Education shall contribute monthly to the optional retirement plan authorized under this section the percentage of salary of each employee participating in the plan equal to the percentage of salary that would otherwise have been contributed as an employer contribution on behalf of the employee for PERS and OPSRP pension benefits to the Public Employees Retirement System if the employee had not elected to participate in the optional retirement plan.

Fiscal Impact

 

  1. Variable, depending on cost of bond debt service compared to actuarially determined amortized payments transferred from the PERS lump sum side account to employer contribution accounts.

 

  1. No change from current practice for the ORP.

 

Legal Review

 

Pending