PERS Risk-Sharing Proposal 6-5-17

Today, SB 1068 was introduced in the Legislature.  The bill would ask public employees to pay more for their retirement plans, using a 2% risk-sharing framework, in order to control the growing costs of our PERS pensions. (The defined benefit pension.) Our union cannot support this plan, or any cuts to member benefits. However, we have had the opportunity to provide feedback on the proposal and help shape it to ensure that, were it to pass, it is legal and minimizes the impact on members’ retirement.

You’ll be hearing a lot about “risk-sharing” over the next several weeks, and we’ve broken down what you need to know about the proposal below. But first, some background on PERS and how our union is approaching this situation.In recent years the employer costs for PERS — the money that our employers pay into our pensions — has been increasing quickly. Employer costs jumped by $850 million this biennium and they will continue to climb for the next 6 years. As these costs rise, they contribute to the budget deficit and draw funding away from public services and the funds available for salaries and benefits.The deficit has put all Oregon public workers in a difficult situation. The current “bargaining pot” for state workers isn’t enough to cover steps, cost of living adjustments, and current health care costs. University workers are facing layoffs or hiring freezes. Local governments are facing huge increases to their PERS costs. And all Oregonians who rely on the public services that SEIU members provide are facing program cuts.Public employees are not to blame for this situation. The rising PERS costs are largely attributable to the Wall Street crash of 2008, which has resulted in lower investment returns, and to retirees living longer than expected. We believe public employees have to take part in solving this situation. If we don’t, our opponents in the legislature will dictate the terms of the conversation. This is what happened in 1995 and 2003 when PERS unions took a “no on everything” position, and lost.Just like in those years, the proposals are unacceptable. Anti-worker legislators have suggested eliminating the individual account program (IAP), creating a new 4th tier with no defined benefit pension, or making other adjustments that would cut 30 to 40 percent of members’ retirement benefits. These radical changes cannot be allowed to pass.

Here’s a quick overview of SB1068:

  • The proposal would divert 2 percent from employees’ IAP contributions into a risk-sharing pool. The pool would be available to stabilize rising employer costs for pensions. This plan would phase in with a 1 percent reduction in retirement contributions next year and another 1 percent reduction in retirement contributions the following year.
  • There would be no impact on take home pay.
  • This proposal would not ask us to pay down the unfunded liability, which is primarily comprised of money owed to retired Tier 1 PERS recipients. Under this plan, all PERS-covered workers would contribute toward the cost of their own pension.
  • Union members would be able to negotiate with their employer on whether to “back-fill” the 2 percent into their IAP account. This means that during the next contract negotiation members could fight for a 2 percent COLA or fight to put an additional 2 percent toward making their retirement whole again.

SEIU 503 will not support cuts to member benefits. If the risk-sharing proposal were coupled with significant revenue reform, our union’s position on that package will be based on the details of that plan: Does it generate revenue that will fund schools, services, and improved wages and benefits for members? Does it keep the core defined benefit pension intact? Does it ward off other, more damaging PERS cuts? These are some of the questions that will guide our union’s engagement with the Legislature over the next few weeks.

If you have additional questions about the risk sharing proposal, please email pers@seiu503.org.

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