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ORP Contribution Concepts IFS-Sponsored Presentation. Denise Yunker, Benefits Director Human Resources Division, OUS denise_yunker@ous.edu. 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

denise_yunker@ous.edu


Orp contribution concepts ifs sponsored presentation

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.


Orp contribution concepts ifs sponsored presentation

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


Orp contribution concepts ifs sponsored presentation

Goals for ORP Rates

  • Competitive – including total compensation

  • Stable - reduced rate volatility

  • Sustainable – responsive to budget and funding limits