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ORP Contribution Concepts IFS-Sponsored Presentation. Denise Yunker, Benefits Director Human Resources Division, OUS [email protected] Goals for ORP Rates. Competitive – including total compensation Stable - reduced rate volatility Sustainable – responsive to budget and funding limits.

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orp contribution concepts ifs sponsored presentation

ORP Contribution ConceptsIFS-Sponsored Presentation

Denise Yunker, Benefits Director

Human Resources Division, OUS

[email protected]

slide2

Goals for ORP Rates

  • Competitive – including total compensation
  • Stable - reduced rate volatility
  • Sustainable – responsive to budget and funding limits
ors 243 800
ORS 243.800

(9) The State Board of Higher Education shall

  • contribute monthly to the optional retirement plan … the percentage of salary of each employee
  • … equal to the percentage of salary that would otherwise have been contributed as an employer contribution on behalf of the employee
  • to the Public Employees Retirement System
  • if the employee had not elected to participate in the optional retirement plan.
slide4

Measure 29 Bond Sale and Payment to PERS

  • November 2003 – March 2004
  • Why Measure 29 reduced ORP contributions
  • Measure 29 Correction
    • How much
    • When
  • What’s Next?
2003 pers reform
2003 PERS “Reform”
  • Created two pension plans and the IAP
    • PERS pension – hired before 8/29/04
    • OPSRP pension - hired on or after 8/29/04
    • IAP – all PERS members
  • Legal challenges to benefit changes pending
  • Set employer rate at 11.31%
  • Directed employee 6% to IAP
reason to amend ors 243 800 9
Reason to Amend ORS 243.800(9)
  • PERS and ORP are “apples and oranges”
    • Employer contribution rate changes do not affect PERS benefits, but significantly change ORP participants’ retirement account growth
  • New PERS/OPSRP plan funding could decrease employer contribution rate; market returns could increase it
  • Frequent contribution rate changes undermine dollar cost averaging and retirement planning for ORP participants
employer orp rate options
Employer ORP Rate Options
  • Revise portions of the statutory language and retain PERS Total Employer Cost Rate
  • Adopt PERS Normal Cost Rate
  • Adopt a Fixed Rate
  • Set a “floor” rate in combination with any of the above
employer total cost rate
Employer Total Cost Rate
  • Made up of:
    • Normal cost
    • Accrued actuarial liability
    • Asset valuation
    • Actuarial gains and losses
  • Affected by investment performance; asset smoothing that delays recognition of gains and losses; Employee entry age changes, turnover, wage changes
employer normal cost rate
Employer Normal Cost Rate
  • Normal Cost Rate – Annual cost associated with service accrued during the current year
  • Oregon PERS – uses Entry Age Normal method
  • Normal cost is average level percentage of payroll from entry age to retirement age
  • Can increase or decrease over time due to changes in:
    • Actuarial funding method
    • Actuarial assumptions
    • Plan benefits
    • Employee demographics
fixed employer rates
“Fixed” Employer Rates

Options:

  • Actuarially determined rates based on projected retirement account goals
  • “Market” based to be competitive
  • Recognition of total compensation effects
slide11

Goals for ORP Rates

  • Competitive – including total compensation
  • Stable - reduced rate volatility
  • Sustainable – responsive to budget and funding limits
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