The primary components and differences among the PERS Tier One and Tier Two programs, the Oregon Public Service Retirement Plan (OPSRP) pension program, and the Individual Account Program (IAP) are shown below. Tier One covers members hired before January 1, 1996; Tier Two covers members hired between January 1, 1996, and August 28, 2003; and OPSRP covers members hired after August 28, 2003. The IAP is an account-based benefit that includes member contributions plus annual earnings and losses, made on and after January 1, 2004.
Starting July 1, 2020,
Senate Bill (SB) 1049 (2019) requires that members earning more than the
current monthly salary threshold have a portion of their 6% IAP contributions redirected to a new Employee Pension Stability Account (EPSA). The money in each member’s EPSA is used to pay for part of their future pension benefit.
| Benefit components | Tier One Pension | Tier Two Pension | OPSRP Pension | IAP |
|---|
| Normal retirement age | 58 (or 30 yrs.); P&F: age 55 or 50 w/25 yrs. | 60 (or 30 yrs.); P&F: age 55 or 50 w/25 yrs. | 65 (58 w/ 30 yrs.); P&F: age 55 (see "For OPSRP P&F" below this chart) or 53 w/ 25 yrs. | Members retire from IAP when they retire from Tier One, Tier Two, or OPSRP. |
| Early retirement age | 55 (50 for P&F) | 55 (50 for P&F) | 55. 50 for P&F (see "For OPSRP P&F" below this chart). | Members retire from IAP when they retire from Tier One, Tier Two, or OPSRP. |
| Regular account earnings | Guaranteed assumed rate annually (currently 6.9%) | No guarantee; market returns | N/A; no account balance. Member contributions are held in the IAP account. | No guarantee; market returns |
| Variable account earnings | Market returns on 100% global equity portfolio | Market returns on 100% global equity portfolio | N/A; no member account | N/A |
| Retirement calculation methods | Money Match, Full Formula, or Formula + Annuity (if eligible) | Money Match or Full Formula | Formula | Various account payout options or rollover |
| Full Formula benefit factor | 1.67% general; 2.00% P&F | 1.67% general; 2.00% P&F | 1.50% general; 1.80% P&F | N/A |
| Formula + Annuity benefit factor | F | A
| N/A | N/A |
| Oregon state income tax remedy | Payable to
eligible benefit recipients who pay Oregon state income tax because they reside in Oregon. | No tax remedy provided | No tax remedy provided | No tax remedy provided |
| IAP contributions are paid on lump-sum vacation payouts | Yes | Y | es | o | Yes for Tier One and Tier Two; no for OPSRP. |
| Are lump-sum vacation payouts included in FAS?* | Yes | No | No | N/A |
| Unused sick leave included in FAS* | Yes, if employer participates in the sick leave program. | Yes, if employer participates in the sick leave program. | No | N/A |
| Vesting | Active member in each of five calendar years | Active member in each of five calendar years
| Five calendar years w/ at least 600 hours qualifying service or normal retirement age | Immediate upon receiving account contributions. |
| COLA (after retirement) | Up to 2% annually for service on or before October 1, 2013, and a blended COLA for subsequent service | N/A; no COLA provided |
P&F = police and firefighters; FAS = final average salary; COLA = cost-of-living adjustment; N/A = not applicable
Note: PERS uses three methods to calculate Tier One retirement benefits: Full Formula, Formula + Annuity (for members who made contributions before August 21, 1981), and Money Match. PERS uses two methods to calculate Tier Two retirement benefits: Full Formula and Money Match. PERS uses the method (for which a member is eligible) that produces the highest benefit amount. OPSRP Pension Program benefits are based only on a formula method.
For OPSRP P&F: To retire at the early or normal retirement age for a police officer or firefighter, the retirement credit in the last 60 months before you are eligible for P&F retirement (early or normal age) must be classified as P&F.
*Beginning January 1, 2020, SB 1049 changed the definition of “salary” for PERS purposes and
created new limitations on annual “subject salaries,” which may affect how PERS calculates a member’s pension and contributions.
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