It was a day of good news on a number of fronts.
The one I'd like to talk about here is the news I got from my friend and former partner, Greg Macpherson, who is a representative in the Oregon Legislature. Macpherson has 25 years' experience as a pension lawyer, and I can tell you from personal experience that he is one bright dude with his heart in the right place.
Macpherson's office sent me an e-copy of his latest newsletter, which announces that he is working on trying to fix the PERS mess. For those who aren't familiar with it, PERS is the Oregon Public Employees' Retirement System, and it is very sick indeed. It has promised pension benefits to public employees so irresponsible that some will get twice as much money each month after they retire than they got when they were at the height of their careers. The outlandish benefits are threatening to bankrupt state and local governments, and they are already affecting state and municipal credit. The State Supreme Court has complicated the problems by holding that certain aspects of PERS can't be changed, no matter how ludicrous the windfall to the retirees.
But it is apparently possible to fix some matters prospectively, and that's what Macpherson is attempting to do. Here's the story from the newsletter:
Rep. Greg Macpherson unveiled a nonpartisan blueprint for a new retirement plan for public employees on Tuesday, and declared that the proposal meets the legislative PERS Committee's requirement for a system that is "affordable, reliable, sustainable and simple."Whatever you might think of lawyers generally, this is a case for the special expertise that only an employee benefits pro like Macpherson can provide. I wish him the best in his efforts.
Macpherson, who serves on the House PERS Committee, outlined a proposal for a new system, called the Oregon Retirement Plan, that includes a "core defined-benefit plan" paid by employers, and a companion "defined-contribution" plan paid by members.
"This plan preserves the best features of both," said Macpherson, who is a lawyer with 25 years of professional experience in designing and running pension programs. "But it avoids the problems that created the present crisis in cost to employers and unfunded liability."
Macpherson pointed out that many public employers now pay more than 20 percent of their payroll in PERS payments. The new plan would keep that cost down to slightly over eight percent for most employers.
"This is well within the ballpark for other public pension plans around the country," Macpherson said.
The Oregon Retirement Plan would establish guaranteed pensions for retirees that pay them 45 percent of their final average salaries. The plan would also establish supplemental individual accounts, to which employees could contribute up to six percent of their salaries�a cost that employers could choose to pick up. The supplemental account would function much like a 401-K account. The individual account combined with the pension is expected to provide retirees with between 64 and 73 percent of their working salaries.
The Governor's office has expressed support for this approach to solving the long-term PERS problem, Macpherson said. "I have worked closely with the Governor's office in developing this proposal. His people support the concept and direction. They agree that it's the right vehicle for long-term PERS reform."
Representative Macpherson has presented the plan to his colleagues on the PERS Committee. The committee is expected to vote on a successor plan within the next week.