The Associated Press
PORTLAND - Public employees who retired after 30 years on the job at age 56 earned on average 87 percent of their working salary, according to an analysis of retirement records by The Oregonian newspaper.
The review of the record number of public employees who retired last year showed one in four longtime workers got a pension equal to or better than their salary, the newspaper reported in Tuesday editions.
That's well more than the typical benefit level in pension plans - and, legislators say, a main reason they overhauled the Public Employees Retirement System last year to curtail rising costs.
The changes, which helped spur the record retirements as workers raced to avoid lower pensions, have been challenged by unions as an unconstitutional violation of workers' contract rights. The case is before the Oregon Supreme Court, which is scheduled to hear oral arguments in July.
If the changes are overturned, PERS studies show, pension averages will continue to increase for at least 10 years. If they're upheld, lawmakers say, benefits will decline.
"When you have people retiring in their mid-50s with 100 percent of their average salary, that's clearly going to cause a financial problem in the system - and it has," said Rep. Tim Knopp, R-Bend, who led the overhaul last year.
Public employee unions say many retirees increased their benefits by risking their money in accounts that rise and fall with investment returns, and they hit it big with stock market gains in the 1990s. They also note that beginning in 1979 many employers agreed to pay workers' 6 percent contributions to PERS rather than give them pay raises.
Last year's changes took effect July 1, and most of the 12,000 state, local government and school employees who retired in 1993 did so by that date. That was more than in the two previous years combined.
Through a public records request, The Oregonian examined records detailing most of those retirements. The Oregonian focused on about 5,400 who had worked at least 20 years within PERS employment.
The newspaper found that:
- Among last year's retirees who had worked 20 years or more, more than one in eight equaled or bettered their salary. Their pensions averaged almost 75 percent of salary.
- On average, 2003 retirees received slightly less than retirees between 1996 to 2002. The drop may have been caused by losses in accounts that rise and fall with stock market returns.
- No other statewide pension system has benefits that match the PERS retirements in 2003. Jim Voytko, former PERS executive director who prepared a report on other state plans for the Legislature, said average benefit levels were higher than any pension system he has reviewed.
In pension systems that base benefits on a formula, the most common provides 45 percent after 30 years of service, said Dallas Salisbury, president and chief executive officer of the Employee Benefit Research Institute, a nonprofit in Washington, D.C.
The most generous plans offer 75 percent after 30 years, he said.
In the private sector, the more lucrative pension plans aim to provide 75 percent after 30 years when combined with Social Security, Salisbury said.