The Associated Press
SALEM The state pension board gave preliminary approval to a union-backed update of its obsolete life expectancy tables.
If ratified Feb. 25, the updated tables would reduce worker pensions by $442 million over several years, saving taxpayers an estimated $53 million per year.
But it's far from the $2.3 billion over several years or a $192 million annual impact projected when the pension board first voted to update its mortality tables last August.
Possible taxpayer savings declined to $134 million per year when many public employees rushed to retire to avoid any impact from the changing policy, said Jim Voytko, executive director of the Public Employees Retirement System. That trend has continued in the first two weeks of 2003, with more than 1,300 state workers putting in for retirement to avoid possible reductions in their benefits.
The financial impact shrank further Tuesday when the PERS Board decided to pick a benefits-calculation method suggested by public employee unions instead of the method recommended by PERS staff.
The board retreated from its earlier position based on legal advice, said member Elizabeth Harchenko, who also is director of the state Department of Revenue.
"In order for us to comply with the Internal Revenue Code requirements and not to violate (worker) contract rights, these are the things that we must do," she said.
PERS' failure to modernize its 1978 mortality tables has forced taxpayers to subsidize worker pensions. Public employees are living five years longer than in 1978, but their pension checks aren't adjusted to last that long. PERS is under attack for racking up a $14.8 billion shortfall, forcing skyrocketing government pension costs.
James Sanderson of Salem, a retired state worker, welcomed Tuesday's decision, saying it's unfair for PERS to change the benefits calculations promised to workers.
"You can understand the unfairness to the taxpayers' side," he said. "But imagine what they would say, if in some major part of their life, someone came along and said, 'You played it a certain way; now we're going to go back and change it."'
Still, the PERS Board decision may not sit well with Gov. Ted Kulongoski and the Legislature, who have promised to fix PERS.
House Majority Leader Tim Knopp, R-Bend, said the Legislature will consult its own attorneys to see what can be done with the mortality tables.
"The House PERS Committee will look at the mortality-tables issue, and if we believe that it can be implemented legally in a shorter time frame to maximize savings, I'd be inclined to go there," said Knopp, who heads the committee.