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The PERS retirement package
Only employees who are PERS members receive PERS benefits at retirement. When they retire, their PERS retirement package will have two to three parts:
PENSION
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A defined-benefit program that can provide payments for life. Payment size is based on a formula described in the next article.
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INDIVIDUAL ACCOUNT PROGRAM (IAP)
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A defined-contribution program that provides an individual account into which the employee or employer or both contribute. Retirees have multiple options for how to receive their IAP funds at retirement.
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OREGON SAVINGS GROWTH PLAN (OSGP)
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An optional deferred compensation program. OSGP enables members to defer some of their pay until retirement on a pre-tax or after-tax basis (if their employer participates in the program).
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Read more about each of these programs in employer reporting guide 16, Reporting a Retirement.
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How PERS calculates pensions
PERS’ calculation specialists calculate each retiree’s pension using this basic equation:
 1. Benefit factor percentage
The percentage PERS uses to calculate a member’s pension depends on their PERS plan, job classification, and retirement formula. Percentages for most employees range from 1.5% to 2%.
Learn more
Employers — employer reporting guide 16, Reporting a Retirement, “How Pensions Are Calculated” section on page 13.
Tier One/Tier Two employees — Tier One/Tier Two Overview and Benefit Calculation webpage, section “How Is My Tier One/Tier Two Pension Calculated?”
Oregon Public Service Retirement Plan employees — OPSRP Overview and Benefit Calculation webpage, “How Does PERS Determine How Much Pension I Get Paid?”
2. Years of service/service credit
Years of service, also called service credit, are the number of years and months the employee was an active, qualifying member of PERS. The total years of service sum excludes the following:
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Wait time for Tier One/Tier Two. This is the six-month period that an employee worked before becoming a member. Service credit for wait time is automatically given to members of the Oregon Public Service Retirement Plan (OPSRP) but not Tier One or Tier Two.
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Non-qualifying years. These are calendar years when an employee did not work at least 600 hours for a PERS-participating employer and, thus, did not qualify for benefits.
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Leave without pay (LWOP). Any month during which the employee took an unpaid leave of at least 11 working days does not earn service credit (there are exceptions).
Learn more
Employer reporting guide 11, Reporting a Leave, “Service Credit” section on page 9.
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Service credit considerations
Tier One/Tier Two members
Tier One and Tier Two members who qualify can buy service time for certain situations. The purchase allows them to make up time they lost by taking a leave of absence or working other employment. Employees can learn more on the Tier One/Tier Two Purchases webpage.
Employees who took a leave of absence
Some types of unpaid leave can earn service credit, as explained in employer reporting guide 11, Reporting a Leave, page 10.
School employees
School employees who do not work in June, July, August, or half of December can still receive PERS service credit for those months. Learn how it works in the December Employer News article, “Receiving Service Credit for Summer Months.”
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3. Final average salary (FAS)
PERS calculates each employee’s final average salary in two ways and chooses the largest result.
FAS calculation methods per program
Tier One and Tier Two
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Average salary* earned in their three highest earning calendar years.
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OR
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Their average gross salary* earned over the last 36 months before their retirement date.
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OPSRP
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Average salary* earned in their three highest earning consecutive calendar years.
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OR
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Their average gross salary* earned over the last 36 months before their retirement date.
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*Salary included in FAS is capped at the salary limit in effect for each year, listed on the Salary Limit employers webpage.
Other pay included in FAS
FAS can include other pay, depending on PERS plan:
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Tier One
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Tier Two
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OSPRP
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FAS includes —
Lump-sum payments for accrued vacation time and compensatory time.
About half of their unused sick leave if their employer participates in the Unused Sick Leave program (unless Money Match calculation method is used).
IAP contributions paid by the employer (EPPT).
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FAS includes —
Lump-sum payments for compensatory time.
About half of their unused sick leave if their employer participates in the Unused Sick Leave program (unless Money Match calculation method is used).
IAP contributions paid by the employer (EPPT).
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FAS excludes —
Lump-sum payments for accrued vacation time and compensatory time.
Unused sick leave.
IAP contributions.
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Learn more
Employees — Tier One/Tier Two FAS webpage or the OPSRP FAS webpage.
Employers — Unused Sick Leave Program FAQ and employer reporting guide 17, Calculating Unused Sick Leave at Termination or Retirement.
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Navigating the road to retirement
Employees can have a smooth retirement journey by making these four stops along the way.
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STEP 1 — Are they ready?
Three years before they will be eligible to retire, employees can access PERS services to help them determine the right time to retire. Advise them to follow the four steps below.
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Get a benefit estimate.
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Employees within two years of retirement can request an estimate created by PERS. Instructions for requesting an estimate are on the Benefit Estimates webpage.
Employees can also request a data verification to ensure that the information PERS has on file matches their own employment records. Employers, learn more in the data verification FAQ.
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Read their preretirement guide.
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Preretirement guides provide complete information about the retirement process, options for receiving funds, choosing beneficiaries, and more.
Preretirement guides.
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STOP 2 — Fill out the retirement application.
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Employees can fill out the application online or on paper. They must choose a retirement date that is within 90 days and lands on the 1st of a month.
If a retiree applicant needs help making decisions about their PERS retirement, they should talk to a financial advisor. PERS Member Services can explain the questions on the form, but they cannot give financial advice. Important Information About Choosing a Financial Advisor webpage.
Retirement application packets
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The Tier One/Tier Two retirement application packet is seven pages. Section H offers 13 options for receiving retirement income. Section J, Spousal Consent, requires a notary.
Eight of the retirement options include leaving your pension to a beneficiary. These are called survivorship options. Beneficiaries can include a person, several people, or an organization. The more of your pension you choose to leave to a beneficiary or beneficiaries, the lower your monthly pension payment will be.
Beneficiary options are explained starting on page 10 of the Tier One/Tier Two Preretirement Guide. The guide also lists other forms that may be required.
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The OSPRP retirement application is four pages. Section G offers five options for receiving retirement income. Section J, Spousal Consent, requires a notary.
If an OPSRP member is married or has a registered domestic partner, their pension benefit may only be left to their spouse or partner unless the spouse or partner consents to a different option. Unmarried OPSRP members can leave their IAP money to anyone, such as children, parents, or a charity.
Beneficiary options are explained starting on page 9 of the OPSRP Preretirement Guide. The guide also lists other forms that may be required.
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Considerations for Police and Fire members
Tier One/Tier Two Police and Fire employees have the option to purchase “units,” which are explained on the Police and Firefighter Unit Benefits webpage.
A police officer or firefighter may also have additional retirement forms to complete.
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STOP 4 — Turn in the application.
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Your employee can mail, fax, or drop off their completed application, accompanying forms, and required documents.
Your employee must submit their retirement application within 90 days of their retirement date and no later than the day before their retirement date.
Employees will receive their first benefit payment within 92 days of their retirement date. IAP benefit payment is normally paid within 120 days. Retirees can make changes to their retirement options up to 60 days after the issue date of their first benefit payment.
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Employer reporters
Adding wages or changing data after retirement
Immediately after retirement
After your employee retires and you submit their final wages and termination record, you may continue to report any additional final wages for up to 30 days after the status date on their termination record. Wages for pay dates 30 days after the termination date will not post to the member’s account.
If they are working for you as a retiree, you must hire them as a retiree and report their wages as retiree wages, as explained in employer reporting guide 8, Hiring a PERS Retiree.
Past 240 days after Notice of Entitlement
Retirees, PERS’ staff, and employers are unable to make changes to a retiree’s account past about eight months after the employee receives their Notice of Entitlement. To learn more, read employer announcement 104, “Deadline to Make Changes to Retiree’s Account.”
Making changes to pension payments
Direct retirees to the Benefit Payment Resources webpage to see when their payments will arrive, if they will receive a cost-of-living adjustment, how to change their address, or how to switch to automatic deposits.
Working after retirement
PERS retirees may return to work for a PERS-participating employer and continue receiving their retirement benefits. Learn about rules and restrictions on the employer Work After Retirement webpage.
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Gold star awards
Congratulations to 713 PERS-participating employers for posting 100% of their 2023 Regular reports by year-end. This is 61% more than last year.
Your excellent work has earned you a Superhero Gold Star Award!
Remember: If you are having challenges reporting on time, contact your ESC representative for help.
New online resources
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RHIA credit explained
If your invoice shows that you have a positive balance in your Retirement Health Insurance Account (RHIA), there are two things you should know:
1. This is due to an adjustment to an employee’s account to correct past reporting. The correction would be to data prior to 2019, when PERS was still charging a RHIA rate.
2. This credit cannot be moved to another fund type to pay an invoice. PERS funds (e.g., pension, IAP, RHIA) must be kept separate. The credit will remain until there is an invoice charge for RHIA.
Employer satisfaction survey
The annual employer satisfaction survey kicks off May 1. This year’s survey is trimmed down to make it more concise and easier to complete.
We want to hear from every employer contact. What is PERS, the agency, doing right? What can we do better?
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Need help?
Contact the Employer Service Center to ask questions and get one-on-one reporting help.
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