By CHARLES E. BEGGS
Of The Associated Press
SALEM - The Oregon House easily passed a measure Thursday to cut public employee pension costs by changing benefit calculations to protect those near retirement while shaving benefits for younger workers.
The measure sent to the Senate on a 51-8 vote requires the Public Employees Retirement System to replace life-expectancy tables by July 1.
Analysts estimate the change would save state and local government employers about $140 million a year.
Workers are living about five years longer than when the current mortality tables used to calculate benefits were adopted in 1978. That means the system must pay benefits longer without having the money saved for that.
So taxpayers have had to make up the difference, adding to the pension system's estimated $14.8 billion long-term shortfall.
Officials estimate using modern life-expectancy calculations will shrink the shortfall by $1.6 billion.
The measure, HB 2004, guarantees that workers who choose not to retire by July won't receive lower benefits than if they had quit by then.
"This does not remove a single dollar from a member's account," said House Majority Leader Tim Knopp, R-Bend, who has spearheaded work on reforming the deficit-plagued system that covers 294,000 current and former government workers.
But on average, future monthly pension benefits will decline by stretching payments over a longer period.
Workers who are close to retirement will likely use the June 30 cutoff date as the basis for their benefits.
Most workers are guaranteed an 8 percent annual return on their pension accounts, which will likely be the basis of lawsuits should the bill become law.
For example, workers who retire after July 1, but use June 30 as the cutoff date on which to base their retirement, wouldn't get the 8 percent factored in to their final pension for the extra time worked.
Public employee unions argue the change would violate contract rights. The bill provides that any lawsuit would go directly to the state Supreme Court.
The bill "seeks to resolve the problem only in the pocketbooks of public employees," said an opponent of the measure, Rep. Mary Nolan, D-Portland.
A backdrop is a ruling by Marion County Circuit Judge Paul Lipscomb ordering the pension board to implement new life-expectancy tables "immediately" because the board had breached its fiduciary duties by using outdated tables.
"We would not be here" acting on the bill if the board had met its responsibilities, said Rep. Robert Ackerman, D-Eugene, who supported the bill. "All we are saying is follow the law."
