Are you ready to retire and working on your PERS retirement application? Among the forms you will need to complete is one from the IRS called a W-4P. This form is used to declare tax withholdings from pension and annuity payments. 

The IRS revised its W-4P tax form in January, and PERS began accepting the new form on November 1.

You can find the new W-4P form included in the retirement application packet on the Tier One/Tier Two Forms webpage.

Thank you to the more than 6,300 members who took our 2022 member satisfaction survey earlier this year.

Your feedback will be used to help improve our services and how we assist you.

A presentation of survey results is available in the PERS Board’s September meeting packet online. The survey presentation begins on page 44 of the packet.

You also can listen to an audio recording of the full board meeting online.

At PERS, a “subject salary” is used to determine member Individual Account Program (IAP) contributions, employer contributions to fund the pension program, and the final average salary for calculating retirement benefits under formula methods. In 2020, Senate Bill (SB) 1049 began changing limits on subject salaries. The limits can vary each year based on the Consumer Price Index.

For more details about SB 1049 and salary limits, read the Senate Bill 1049 (2019) — Member Information, SB 1049 Changes: Salary Limit, and Partial Year Salary Limits webpages.

Naming your beneficiaries and keeping those designations current is a critical part of retirement planning.

Here’s why: If you have not designated a beneficiary prior to your death, PERS will pay the balance of your member account to your estate at the time of your death.

Locating next of kin can be challenging and substantially delay payment of your benefits to your survivors. To avoid delays, PERS encourages members to complete and submit beneficiary forms for your pension and your Individual Account Program (IAP) account. Submit beneficiary forms directly to PERS; turning them into your employer doesn't count.

If you have designated a beneficiary and die before retirement, PERS will pay the amounts in your Tier One or Tier Two member account and your IAP account to your designated beneficiary.

If your death meets certain criteria, your employer may pay your beneficiary an additional amount that matches the value of your Tier One or Tier Two member account.

If your spouse is your sole Tier One or Tier Two beneficiary, they can receive the Optional Spouse Death Benefit (OSDB), which is a lifetime monthly payment based on your salary and service credit, if certain conditions are met:

• You are working for a PERS-participating employer at the time of your death, or your death is within 120 days after your employment ended.
• Survivors immediately notify PERS about your death.
• Your spouse completes an OSDB estimate/election form that PERS sends them. PERS must receive the form from your spouse within 60 days from your date of death. Postmarks do not count.

When your survivors or executor notify PERS of your death, PERS will ask them to provide the date of death, city and state where the death occurred, a photocopy of the death certificate, and their contact information.

Processing death benefits typically can take months. To avoid processing delays, consider keeping your beneficiary designations current. Again, your survivors or executors should notify PERS of your death as soon as possible.

If you have questions, you can contact PERS at any time, but you may especially want to do this when major life events occur. Major events include marriage, divorce, or the death of a beneficiary.

By Richard Horsford
PERS Chief Financial Officer

The PERS Board is charged with crediting earnings to the various PERS funds each year.

This process begins shortly after the close of a calendar year and finishes near the end of the first quarter of the new year.

Two of the most common questions I am asked is why the various earnings crediting rates differ from the annual earnings as reported by Oregon State Treasury and why those differences vary from fund to fund.

To explore these questions, it is first important to understand that while the PERS Board is responsible for making sure that earnings are credited, Oregon laws and Oregon Administrative Rules (OARs) define how these earnings are to be credited to most funds. The one exception is the Contingency Reserve, which the board has discretion to replenish if the fund balance goes below $50 million.

In addition to the earnings crediting that happens at the end of the year, other fund activities take place throughout the year.

For example, when members retire and/or withdraw their funds during the year, a calculation is done to determine and credit the amount of earnings attributable to their account up to that point.

At the same time, new money is constantly coming into the plan in the form of employer and member contributions. These new funds are deposited throughout the year as they are received and are subject to earnings for only the portion of the year that remains.

The timing of these two factors — member retirements and new employer or member contributions — accounts for most differences between PERS’ effective earnings crediting rates and the earnings reported by Treasury.

Looking at various funds, this tends to be more pronounced in the “younger” funds where the amount of new money being added to the fund is larger (more of the money in the fund is only there for a portion of the year after it is received).

Also, per OAR, PERS deducts administrative expenses from each fund. In 2021, expenses amounted to about 0.1% of fund balances.

In the end, PERS is a complicated retirement system, and applying earnings within it is equally complex. We take this complex process seriously to ensure that earnings for all of our funds are correctly calculated and credited.

If you are about to retire and reviewing your health insurance options, visit the PERS Health Insurance Program (PHIP) website. The website offers information about PHIP eligibility rules; Medicare, non-Medicare, and dental plans; PHIP rates; and answers to other health insurance questions. 

Contact PHIP at 1-800-768-7377 or visit the PHIP website for more information.

Oregon PERS paid about $4.43 billion in benefits to retired members or their beneficiaries living in Oregon in 2021. The $4.43 billion figure does not include payments from the Individual Account Program (IAP).

PERS conducts an annual economic impact study to show how benefits paid to PERS retirees support the state’s economy. Funding for PERS retirement benefits comes mostly from investment earnings on contributions previously paid by PERS members and public employers.

The financial impact of PERS benefits is not limited to $4.43 billion. Benefit payments also generate tax revenue and support jobs and related wages.

When adjusted to include tax revenue, jobs and wages, the value of PERS retirement payments to Oregon’s economy grows to $4.83 billion.

Read the full Economic Impact Study 2021 online.

Are you planning to retire in the near future? Don’t wait until the last minute to prepare.

Check out these helpful resources from PERS to get ready:

• Review PERS’ I Want to Retire webpage and follow the instructions.
• Attend an education session. 
• Schedule a retirement application assistance session (RAAS). 
• Get a written benefit estimate when you are within 24 months of being eligible to retire. You also can create estimates online earlier through your Online Member Services (OMS) account.

Also, keep the following important points in mind:

• It can take up to 92 days from your retirement date (not the date of your application submission) for your first pension benefit to be paid.
• Once PERS receives your application, we will review your account information and reconcile data with your employer(s) as needed. Data discrepancies can sometimes cause your finalized benefit amount to differ from benefit estimates you received earlier. Remember that benefit estimates are just that — estimates.
• Filling out your application correctly, checking your personal information in OMS or on your member annual statement, and getting benefit estimates can help you avoid delays in the processing of your application. If you find errors in your personal/account information, contact your employer for corrections.
• Individual Account Program (IAP) retirement benefits can typically take from 90 to 120 days to process and complete payments or rollovers. Processing is done both by PERS and Voya, which administers IAPs for PERS.

If you have questions, contact Member Services for assistance.