Opinion ID: 3053286
Heading Depth: 2
Heading Rank: 1

Heading: PERS and Refund Annuities

Text: PERS is a statutory retirement plan for state and local government employees in Oregon. Many retired PERS members receive a monthly “service retirement allowance” composed of two parts: (1) a “refund annuity” and (2) a life pension.1 The amount of the refund annuity depends upon three variables: (1) life expectancy rates for persons in the retiree’s age group; (2) assumed interest rates; and (3) the size of the retiree’s account balance at the time of retirement. The first two variables, life expectancy and assumed interest rates, are “actuarial equivalency factors” (“AEFs”) used to convert the third variable, the retiree’s account balance at the time of retirement, into the monthly refund annuity. See Or. Rev. Stat. § 238A.005(2). PERS governing statutes mandate that the refund annuity be “the actuarial equivalent of accumulated contributions, if any, by the member and interest thereon at the time of retirement.” Or. Rev. Stat. § 238.300. Thus, to convert a sum of money to a refund annuity, the PERS actuary multiplies that sum of accumulated contributions by the appropriate AEF from an annuity table adopted by Oregon’s Public Employee Retirement Board (“Board”), the governing authority for PERS. For example, if a retiree had accumulated $100,000 in contributions and earnings, and the appropriate AEF for that retiree was 8.32 per $1,000, the retiree would receive a monthly refund annuity payment of $832 until death.