The Associated Press

SALEM — The rush to retire for state employees may prove to be a financial mistake for many, officials say.

More than 700 public employees have filed to retire by March 1, and thousands more are considering whether to retire by then, said David Bailey, deputy director of the Oregon Public Employees Retirement System.

"I would say that a retirement spike in March is likely," Bailey said.

But he added: "Frankly, I don't think there should be a spike if people are looking at what's the best thing to do."

Veteran public employees are being enticed by a provision in a 2003 PERS reform allowing them to escape a freeze on their regular pension accounts if they retire by March 1.

If they wait until April or later to retire, they avoid a separate freeze in their cost-of-living adjustments upon retirement that could prove to be more costly, Bailey said.

"Most people are better off waiting until after that changeover. The reason is that the COLA catches you up pretty quick," he said.

Gary Carighan, 58, an Oregon State Hospital social worker, said he and his wife are both wondering if it's time to retire. If they leave by March, they get a guaranteed 8 percent increase in their regular PERS accounts for 2003, plus the first two months of 2004.

But the initial advice of Carighan's financial adviser confirms Bailey's warning. It might be better for Carighan to wait and avoid the 2 percent annual cost of living freeze that goes along with early retirement.

"It's still hard for me to believe," Carighan said.

There also are other factors to weigh before retiring. One is the $800 monthly health insurance bill that Carighan faces without a job.

PERS officials do not provide any financial advice, and everybody's situation is different, they say.

Some workers plowed a lot of their money into variable retirement accounts that are invested in the stock market. They aren't affected by the pension freeze and grew tremendously in 2003.

It's also uncertain how long the freeze on regular account earnings and the cost of living freeze will last. Nor is it certain that either freeze will hold up in court. Both changes are being appealed by a coalition of labor unions.

The surge in retirement this year comes on the heels of a record-shattering level of retirements in 2003. Many public employees filed to retire when the 2003 Legislature made dramatic changes in the PERS system.