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Out-of-State PERS Retirees Information

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Dear Oregon PERS Retirees,

The Oregon Legislature passed SB 822 during the 2013 Legislative Session that will impact you as an out-of-state resident. Many of you have received a recent letter from PERS informing you that you are no longer entitled to a tax remedy as a result of your out of state residency. You can read more on the PERS website at www.oregon.gov/pers. This letter will provide you with:

  1. What is SB 822 and what does it mean to you as an out-of-state resident?
  2. What is OEA doing about it and where can you find out more information?

1. What is SB 822 and what does this mean to me as an out-of-state resident (provided by PERS)?

Senate Bill 822 (2013) eliminated the tax remedy for benefit recipients who do not pay Oregon state income tax on their PERS benefits because they do not reside in Oregon. This is because the benefit increase was provided as a remedy for subjecting PERS benefits to Oregon state income tax.

The new law requires PERS to adjust the tax remedy once a year on January 1. Residency Status Certification forms must be received by December 15 to be effective for the following year. For 2014 only, PERS will restore the tax remedy for 2014 if we receive your certification form before February 15, 2014, and you are entitled to the tax remedy. PERS will provide a retroactive payment for any months the tax remedy amount was withheld if you are entitled to the tax remedy and if it receives your certification form before February 15, 2014.

The tax remedy amount may have been withheld from your January 1, 2014 benefit payment. If you have provided, or do provide, PERS with a Residency Status Certification form on or before January 22, 2014 and you are entitled to the remedy, we will restore the amount of your tax remedy beginning with your February 1, 2014 payment.

For alternate payees, your state of residence determines if you are eligible for the tax remedy if your divorce decree set up a separate PERS account for you. If your PERS benefit payment is a percentage of your ex-spouse’s benefit, you do not receive an independent tax remedy. If your former spouse resides in a state other than Oregon and no longer receives the tax remedy, the benefit amount you receive may also decrease. PERS is working to determine the account status for alternate payees and restore the tax remedy for those alternate payees who are entitled to the payment increase. PERS will provide a retroactive payment for any months the tax remedy amount was withheld if you are entitled to the tax remedy.

Residency Status Certifications received on or after February 15, 2014 will be effective with the payment received on January 1, 2015.  An FAQ and the residency status certification form are available below:

2. What is OEA doing about it and where can I get more Information?

The PERS Coalition (OEA and its labor coalition partners) are challenging these cuts to public employees through litigation. You can find periodic updates to the litigation at: http://bennetthartman.com/pers.php5. Below is some general information about the litigation provided by the PERS Coalition attorneys.

PERS Litigation Disclaimer

This website was prepared to provide general information about the PERS cases Bennett, Hartman, Morris & Kaplan, LLP is handling on behalf of individual members of public sector labor unions participating in the PERS Coalition, a group organized to protect the pension interests of their members. This website does not, and is not intended to, provide legal advice. Neither transmission nor receipt of information contained in this website will create an attorney-client relationship, and Bennett, Hartman, Morris & Kaplan, LLP does not represent you based on your visit or review of this website.

Senate Bill 822 Challenge

Senate Bill 822’s Senate Bill 822’s passage affects the amount of the cost-of-living adjustment (COLA) payable to benefit recipients as of August 1, 2013, and in subsequent years. The bill also eliminates the tax remedy benefit for recipients who do not pay Oregon state income taxes because they do not reside in Oregon. The bill contains a provision allowing persons who are adversely affected to request review by the Oregon Supreme Court within 60 days after the effective date of the Act. On behalf of the PERS Coalition and its members, we have filed a challenge to those parts of the bill which we believe violate our clients’ rights.

Specifically, the challenge alleges that PERS members have a contract right and a property interest in their COLAs and tax remedy benefits provided by chapter 796, Oregon Laws 1991 (SB 656). The changes made by Senate Bill 822 constitute an impairment of contract under the Oregon and U.S. Constitutions, a taking of property without proper compensation, and a breach of contract. A copy of the petition we have filed can be accessed through the link below. As additional important pleadings are filed in the case, we will provide links to the documents on this site.

Pleadings

Given the great number of PERS participants impacted by PERS litigation, we cannot respond to individual questions about PERS issues or about how current litigation may impact individual rights. Finally and most importantly, if you have questions about your individual rights or need legal advice we strongly urge you to contact an attorney who can review your personal issues and circumstances and provide advice about your legal rights. If you do not have an attorney you can call the Oregon State Bar’s referral service (503) 684-3763, which can suggest an attorney in your area.

The Oregon Education Association will also provide information on its website as new information becomes available. www.oregoned.org.