How these numbers were calculated
Today, 6% of a PERS member salary goes into their Individual Account Program. Rep. Knute Buehler has called for taking those dollars away from PERS members and using them to pay the state’s obligation to retired public employees. He has also proposed capping final annual salary to a fixed number, with no adjustment for inflation.
This calculator shows the combined loss to pension and individual account programs from the Buehler retirement benefit cuts using the PERS board assumed rate of return of 7.2% for the IAP and normal salary increases.
Background on PERS
Fifteen years ago, Oregon dramatically reduced pensions and retirement benefits for newly hired public employees. The average public employee pension is about $2,300 a month, or less than $30,000 a year.
But in the 2008 recession, the state pension fund suffered investment losses along with many other retirement accounts, and now the state has a 22 billion-dollar unfunded liability over the next 20 years to pay the pensions for retirees.
Cutting retirements further will not reduce the unfunded liability because that debt comes from people already retired.
Before the 2008 Wall Street crash triggered the great recession, Oregon’s pension system was 105% funded. The state is now making up those investment losses.