The Future of the Public Employee Retirement System
Due to Wall Street misdeeds that led to the 2008 economic crisis, public and private pensions for millions of Americans have suffered significantly. As a result, here in Oregon, we are faced with having to clean up the mess made by bad-behaving investment banks and others who abused our financial system.
Oregon’s Public Employee Retirement System (PERS), which manages retirement accounts for tens of thousands of middle class Oregonians, remains one of the best funded and well-managed public pension systems in the United States. Additionally, economic activity generated by PERS has sustained nearly 30,000 Oregon jobs and added $881 million in wages to Oregon’s economy. Oregon has also collected an estimated $125 million in income taxes from PERS retirees – money that supports schools, health care, and public safety services.
Given the continued fallout from the economic crisis, there are important steps we can take in Oregon to ensure sustainability of PERS and mitigate the impact of Wall Street’s misconduct on our schools and local communities.
It’s critical that we not only pursue sound public policy on PERS that honors the deal that taxpayers made with public employees, but that we also seek to ensure that every Oregonian has a decent retirement. Oregonians who have worked hard and played by the rules their whole life should not have to retire into poverty and then have to rely on taxpayer-funded services for the care they need.
Principles for Ensuring Retirement Security for All Oregonians
Ensure Sustainability and Help Protect Middle Class Families
We need to do what we can to make up for Wall Street’s misdeeds, fulfill our promise to retired Oregonians and lessen the impact on schools, health care and public safety.
Toward that end, we call upon the PERS Board to review whether the malevolence of Wall Street in 2008, (in which investments of PERS dropped by about 36 percent) can be recaptured over a longer period of time to help smooth the dramatic impact on schools, seniors and families. Despite PERS’ wise investment strategies and recent solid returns, more time is needed to offset these losses. The good news is that this may also provide short-term employer rate relief without jeopardizing the security of the fund or passing the cost on to future generations.
We will also encourage the PERS Board and their actuaries to continue their careful review of the assumed rate of return to ensure that PERS remains one of the strongest and well-funded pension plans in the country.
Make Everybody Play by the Rules
We support policies that treat retirees equally, by requiring all retired Oregonians to pay their fair share of taxes owed on retirement income. Need to soften this since our stance is “we have retirees who are impacted by these policies.
Increase Transparency and Accountability
The economic crisis was a wake-up call for us to pay more attention and demand a higher level of accountability from our financial system. We believe that greater accountability and transparency will result by bringing certain financial and investment functions under the authority of the State Treasury.
In doing so, we can keep a closer watch on how Oregon’s tax dollars are invested, and we can significantly reduce wasteful spending on unnecessary fees to out-of-state corporations who don’t have any ties to Oregon.
Don’t Play Politics with People’s Lives
Too often we see politicians speak in sound bites and make promises they cannot deliver on or that, upon careful review, are harmful to Oregon families. We have already seen candidates calling for immediate and drastic changes to PERS without any evidence that this is the right thing to do.
We cannot let politics drive our decision making. Rash decision making will lead to bad public policy and unintended consequences that will impact middle class families and cost tax payers millions of dollars.
Ensure Every Oregonian has a Decent Retirement
It is not enough for us to ensure that PERS is a well-run system that fulfills the promise to retirees and provides an economic benefit to the entire community. We need to aggressively pursue policy solutions that will ensure that every Oregonian will have ability to be self-reliant in their retirement.
Currently, just over half of the private sector workforce in Oregon participates in an employer-sponsored retirement plan. We can provide more Oregonians access to retirement security by giving private sector workers access to a low-risk investment option for their personal retirement funds. By simply allowing a payroll deduction to go straight to an individual retirement fund that is overseen by the Oregon Investment Council, employers will have no obligation to fund the system and there is no expense to taxy payers.
Additionally, Oregon can provide small businesses -the economic engines in our local communities - a clearinghouse to evaluate the retirement plan options available for businesses. Such a clearinghouse would provide transparency and only promote retirement plans that are certified and reliable.
After decades in the workforce and contributing directly to the health of the community, we owe our seniors and most vulnerable nothing less.
A decent retirement will help keep seniors out of poverty and living with dignity. It will also save tax payers money. Without retirement security, many Oregonians will be forced to rely on taxpayer-funded services for the care they need. Secure retirement plans create jobs and help fund schools, health care, and public safety services for all Oregonians.