Oregon Supreme Court upholds PERS cuts


Last year’s changes to Oregon’s Public Employee Retirement System (PERS) are here to stay. In a unanimous decision announced Aug. 6, the Oregon Supreme Court said lawmakers can cut prospective benefits going forward, just not benefits that employees have already earned.

SB 1049, the 2019 law, was a response to underfunding of the public pension system stemming from the 2008 financial market losses. Among other measures, lawmakers “redirected” some member contributions to their 401(k)-style individual retirement accounts to shore up the pension system’s finances, and capped final salary at $195,000 for the purpose of calculating pension benefits.

To try to overturn those changes, a coalition of public employee unions filed suit last August on behalf of nine public employees.

Since 2004, Oregon public employees have been required to contribute 6% of their salaries to the defined-contribution component of PERS. Under SB 1049, employees making over $30,000 a year will have 0.75% diverted, or 2.5% for those hired before 1996, who are in the more generous “Tier One” part of the system. The diversion will continue until the system is considered 90% funded.

Plaintiffs argued that the changes impaired their contractual rights under the state constitution. The court disagreed.

The changes affect employees of the State of Oregon and more than 900 other public employers—city and county governments and school, fire and special purpose districts.


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