Oregon Statute | Act | Code |Title 22 Public Officers And Employees| US Code - US Statute | Chapter 238a Oregon Public Service Retirement Plan

For the purposes of this chapter:

(1) “Active member” means a member of the pension program or the
individual account program of the Oregon Public Service Retirement Plan
who is actively employed in a qualifying position.

(2) “Actuarial equivalent” means a payment or series of payments
having the same value as the payment or series of payments replaced,
computed on the basis of interest rate and mortality assumptions adopted
by the board.

(3) “Board” means the Public Employees Retirement Board.

(4) “Eligible employee” means a person who performs services for a
participating public employer, including elected officials other than
judges. “Eligible employee” does not include:

(a) Persons engaged as independent contractors;

(b) Aliens working under a training or educational visa;

(c) Persons, other than workers in the Industries for the Blind
Program under ORS 346.190, provided sheltered employment or make-work by
a public employer;

(d) Persons categorized by a participating public employer as
student employees;

(e) Any person who is an inmate of a state institution;

(f) Employees of foreign trade offices of the Economic and
Community Development Department who live and perform services in foreign
countries under the provisions of ORS 285A.090 (13);

(g) An employee actively participating in an alternative retirement
program established under ORS 353.250 or an optional retirement plan
established under ORS 341.551;

(h) Employees of the Oregon University System who are actively
participating in an optional retirement plan offered under ORS 243.800;

(i) Any employee who belongs to a class of employees that was not
eligible on August 28, 2003, for membership in the system under the
provisions of ORS chapter 238 or other law;

(j) Any person who belongs to a class of employees who are not
eligible to become members of the Oregon Public Service Retirement Plan
under the provisions of ORS 238A.070 (2);

(k) Any person who is retired under ORS 238A.100 to 238A.245 or ORS
chapter 238 and who continues to receive retirement benefits while
employed; and

(L) Judges.

(5) “Firefighter” means:

(a) A person employed by a local government, as defined in ORS
174.116, whose primary job duties include the fighting of fires;

(b) The State Fire Marshal, the chief deputy state fire marshal and
deputy state fire marshals; and

(c) An employee of the State Forestry Department who is certified
by the State Forester as a professional wildland firefighter and whose
primary duties include the abatement of uncontrolled fires as described
in ORS 477.064.

(6) “Fund” means the Public Employees Retirement Fund.

(7)(a) “Hour of service” means:

(A) An hour for which an eligible employee is directly or
indirectly paid or entitled to payment by a participating public employer
for performance of duties in a qualifying position; and

(B) An hour of vacation, holiday, illness, incapacity, jury duty,
military duty or authorized leave during which an employee does not
perform duties but for which the employee is directly or indirectly paid
or entitled to payment by a participating public employer for services in
a qualifying position, as long as the hour is within the number of hours
regularly scheduled for the performance of duties during the period of
vacation, holiday, illness, incapacity, jury duty, military duty or
authorized leave.

(b) “Hour of service” does not include any hour for which payment
is made or due under a plan maintained solely for the purpose of
complying with applicable workers’ compensation laws or unemployment
compensation laws.

(8) “Inactive member” means a member of the pension program or the
individual account program of the Oregon Public Service Retirement Plan
whose membership has not been terminated, who is not a retired member and
who is not employed in a qualifying position.

(9) “Individual account program” means the defined contribution
individual account program of the Oregon Public Service Retirement Plan
established under ORS 238A.025.

(10) “Member” means an eligible employee who has established
membership in the pension program or the individual account program of
the Oregon Public Service Retirement Plan and whose membership has not
been terminated under ORS 238A.110 or 238A.310.

(11) “Participating public employer” means a public employer as
defined in ORS 238.005 that provides retirement benefits for employees of
the public employer under the system.

(12) “Pension program” means the defined benefit pension program of
the Oregon Public Service Retirement Plan established under ORS 238A.025.

(13) “Police officer” means a police officer as described in ORS
238.005.

(14) “Qualifying position” means one or more jobs with one or more
participating public employers in which an eligible employee performs 600
or more hours of service in a calendar year, excluding any service in a
job for which benefits are not provided under the Oregon Public Service
Retirement Plan pursuant to ORS 238A.070 (2).

(15) “Retired member” means a pension program member who is
receiving a pension as provided in ORS 238A.180 to 238A.195.

(16)(a) “Salary” means the remuneration paid to an active member in
return for services to the participating public employer, including
remuneration in the form of living quarters, board or other items of
value, to the extent the remuneration is includable in the employee’s
taxable income under Oregon law. Salary includes the additional amounts
specified in paragraph (b) of this subsection, but does not include the
amounts specified in paragraph (c) of this subsection, regardless of
whether those amounts are includable in taxable income.

(b) “Salary” includes the following amounts:

(A) Payments of employee and employer money into a deferred
compensation plan that are made at the election of the employee.

(B) Contributions to a tax-sheltered or deferred annuity that are
made at the election of the employee.

(C) Any amount that is contributed to a cafeteria plan or qualified
transportation fringe benefit plan by the employer at the election of the
employee and that is not includable in the taxable income of the employee
by reason of 26 U.S.C. 125 or 132(f)(4), as in effect on August 29, 2003.

(D) Any amount that is contributed to a cash or deferred
arrangement by the employer at the election of the employee and that is
not included in the taxable income of the employee by reason of 26 U.S.C.
402(e)(3), as in effect on August 29, 2003.

(E) Retroactive payments made to an employee to correct a clerical
error, pursuant to an award by a court or by order of or pursuant to a
conciliation agreement with an administration agency charged with
enforcing federal or state law protecting the employee’s rights to
employment or wages, which shall be allocated to and deemed paid in the
periods in which the work was done or in which the work would have been
done.

(F) The amount of an employee contribution to the individual
account program that is paid by the employer and deducted from the
compensation of the employee, as provided under ORS 238A.335 (1) and
(2)(a).

(G) The amount of an employee contribution to the individual
account program that is not paid by the employer under ORS 238A.335.

(H) Wages of a deceased member paid to a surviving spouse or
dependent children under ORS 652.190.

(c) “Salary” does not include the following amounts:

(A) Travel or any other expenses incidental to employer’s business
which is reimbursed by the employer.

(B) Payments made on account of an employee’s death.

(C) Any lump sum payment for accumulated unused sick leave,
vacation leave or other paid leave.

(D) Any severance payment, accelerated payment of an employment
contract for a future period or advance against future wages.

(E) Any retirement incentive, retirement bonus or retirement
gratuitous payment.

(F) Payment for a leave of absence after the date the employer and
employee have agreed that no future services in a qualifying position
will be performed.

(G) Payments for instructional services rendered to institutions of
the Department of Higher Education or the Oregon Health and Science
University when those services are in excess of full-time employment
subject to this chapter. A person employed under a contract for less than
12 months is subject to this subparagraph only for the months covered by
the contract.

(H) The amount of an employee contribution to the individual
account program that is paid by the employer and is not deducted from the
compensation of the employee, as provided under ORS 238A.335 (1) and
(2)(b).

(I) Any amount in excess of $200,000 for a calendar year. If any
period over which salary is determined is less than 12 months, the
$200,000 limitation for that period shall be multiplied by a fraction,
the numerator of which is the number of months in the determination
period and the denominator of which is 12. The board shall adopt rules
adjusting this dollar limit to incorporate cost-of-living adjustments
authorized by the Internal Revenue Service.

(17) “System” means the Public Employees Retirement System. [2003
c.733 §1; 2005 c.152 §1; 2005 c.332 §2; 2005 c.728 §4]Note: Section 3, chapter 332, Oregon Laws 2005, provides:

Sec. 3. The amendments to ORS 238.005 and 238A.005 by sections 1
and 2 of this 2005 Act apply only to members of the Public Employees
Retirement System who die on or after the effective date of this 2005 Act
[June 29, 2005]. [2005 c.332 §3] For the purpose of
computing hours of service under this chapter, an eligible employee shall
be credited with 40 hours of service for each calendar week in which the
employee was employed in a qualifying position unless otherwise shown by
records maintained by the participating public employer. [2003 c.733 §1a]OREGON PUBLIC SERVICE RETIREMENT PLAN (1) The
Oregon Public Service Retirement Plan is established. The purpose of the
Oregon Public Service Retirement Plan is to provide career public
employees with a secure and fair retirement income at an affordable,
stable and predictable cost to the taxpayers. The Oregon Public Service
Retirement Plan is composed of a pension program and an individual
account program. The pension program and the individual account program
are separate accounts for purposes of federal income tax qualification,
and the assets of each program must be held as part of the trust
established by ORS 238.660 for the exclusive benefit of the participants
and beneficiaries. It is the intent of the Legislative Assembly that
pursuant to section 414(k) of the Internal Revenue Code the individual
account program be established and maintained as a tax-qualified defined
contribution governmental plan for the purposes of sections 72(d) and 415
of the Internal Revenue Code. The Public Employees Retirement Board may
create separate accounts within the Public Employees Retirement Fund for
the pension program and the individual account program.

(2) Notwithstanding any provision of ORS chapter 238, any person
who is employed by a participating public employer on or after August 29,
2003, and who has not established membership in the Public Employees
Retirement System before August 29, 2003, is entitled to receive only the
benefits provided under the Oregon Public Service Retirement Plan for
periods of service with participating public employers on and after
August 29, 2003, and has no right or claim to any benefit under ORS
chapter 238 except as specifically provided by this chapter.

(3)(a) Any person who is an active member of the Public Employees
Retirement System on August 28, 2003, is entitled to receive the benefits
provided by ORS chapter 238 for all service performed before, on and
after August 29, 2003, unless the person has a break in service on or
after August 29, 2003. If the person has a break in service on or after
August 29, 2003, the person is entitled to receive the benefits provided
by ORS chapter 238 for all creditable service performed before the break
in service, and the benefits provided under the Oregon Public Service
Retirement Plan for periods of service with participating public
employers after the break in service.

(b) Except as provided in this subsection, a person has a break in
service for the purposes of this subsection if the person performs no
service with a participating public employer in a qualifying position for
a period of six consecutive months.

(c) If a person leaves employment with a participating public
employer for purposes that would qualify the person for family leave
under ORS 659A.150 to 659A.186, the person has a break in service for the
purposes of this subsection only if the person performs no service with a
participating public employer in a qualifying position for a period of 12
consecutive months after leaving employment with the participating public
employer.

(d) If a person leaves employment with a participating public
employer for career development purposes pursuant to written
authorization of the participating public employer under a written policy
of the employer that applies generally to the class of employees to which
the member belongs, the person has a break in service for the purposes of
this subsection only if the person performs no service with a
participating public employer in a qualifying position for a period of 12
consecutive months after leaving employment with the participating public
employer.

(e) A person does not have a break in service for the purposes of
this subsection by reason of any period of time during which the person
leaves employment with a participating public employer for the purpose of
serving as a member of the Legislative Assembly during a legislative
session.

(f) A person does not have a break in service for the purposes of
this subsection by reason of any period of time during which the person
is absent from employment with a participating public employer and
receives a disability retirement allowance under ORS 238.320.

(g) A person does not have a break in service for the purposes of
this subsection by reason of any period of time during which the person
leaves employment with a participating public employer based on the
seasonal nature of the person’s employment as long as the person returns
to employment with the public employer before the expiration of 12 full
calendar months.

(4) A person establishes membership in the system before August 29,
2003, for the purposes of this section if:

(a) The person is a member of the system, or a judge member of the
system, on August 28, 2003; or

(b) The person performed any period of service for a participating
public employer before August 29, 2003, that is credited to the six-month
period of employment required of an employee under ORS 238.015 before an
employee may become a member of the system.

(5) Except as provided in this chapter, ORS chapter 238 does not
apply to the Oregon Public Service Retirement Plan.

(6) The provisions of this section do not apply to a person elected
or appointed as a judge as defined in ORS 238.500. [2003 c.733 §2; 2005
c.332 §6; 2005 c.808 §9]Note: Section 7, chapter 332, Oregon Laws 2005, provides:

Sec. 7. (1) ORS 238A.025 (3)(f) applies to any period of time
before, on or after August 29, 2003, during which an employee is entitled
to receive a disability retirement allowance under ORS 238.320.

(2) ORS 238A.025 (3)(g) applies to any period of time on or after
August 29, 2003, during which an employee leaves employment with a
participating public employer based on the seasonal nature of the
employment. [2005 c.332 §7]Note: Section 2a, chapter 733, Oregon Laws 2003, provides:

Sec. 2a. (1) Any person who is an inactive member of the Public
Employees Retirement System on August 28, 2003, is entitled to receive
the benefits provided by ORS chapter 238 for all service performed before
August 29, 2003. Except as provided in subsection (2) of this section,
the person is eligible only to receive the benefits provided under the
Oregon Public Service Retirement Plan for periods of service with
participating public employers on and after August 29, 2003, unless the
person returns to a qualifying position without a break in service as
described in ORS 238A.025 (3). If the person returns to a qualifying
position without a break in service as described in ORS 238A.025 (3), the
person shall be treated in the same manner as provided by ORS 238A.025
(3) for persons who are active members of the system on August 28, 2003.
If the person has a break in service as described in ORS 238A.025 (3),
but returns to a qualifying position before January 1, 2004, the person
is entitled to receive the benefits provided by ORS chapter 238 for all
creditable service performed before January 1, 2004, and the benefits
provided under the Oregon Public Service Retirement Plan for periods of
service with participating public employers on and after January 1, 2004.

(2) A person who is an inactive member of the Public Employees
Retirement System on August 28, 2003, does not have a break in service as
described in ORS 238A.025 (3) if:

(a) The person is vested, as defined in ORS 238.005, on August 28,
2003; and

(b) The person returns to qualifying employment before January 1,
2006, with the same participating public employer that employed the
person immediately before the person became an inactive member.

(3) The provisions of this section do not apply to a person elected
or appointed as a judge as defined in ORS 238.500. [2003 c.733 §2a; 2005
c.332 §8] Subject to such direction
and oversight as may be provided by the Legislative Assembly, the Public
Employees Retirement Board shall take all steps necessary to develop and
implement a dedicated information technology system to manage the Oregon
Public Service Retirement Plan established by ORS chapter 238A. The board
shall ensure that the essential record keeping components of the
information technology system are in operation as soon as practicable.
The board shall ensure that the information technology system is designed
to support the current and future business and technology needs of the
Public Employees Retirement System arising out of the implementation of
ORS chapter 238A. [2003 c.733 §83]Note: 238A.030 was enacted into law by the Legislative Assembly but
was not added to or made a part of ORS chapter 238A or any series therein
by legislative action. See Preface to Oregon Revised Statutes for further
explanation.ADMINISTRATION(1) The Oregon Public Service Retirement
Plan is part of the Public Employees Retirement System and is
administered by the Public Employees Retirement Board.

(2) ORS 238.225, 238.229, 238.231, 238.445, 238.450, 238.455,
238.458, 238.460, 238.465, 238.470, 238.600, 238.601, 238.605, 238.610,
238.615, 238.618, 238.630, 238.635, 238.640, 238.645, 238.655, 238.660,
238.661, 238.665, 238.675, 238.692, 238.694, 238.695, 238.696, 238.698,
238.700, 238.705, 238.710 and 238.715 apply to the Oregon Public Service
Retirement Plan.

(3) The Oregon Investment Council shall invest the assets of the
Oregon Public Service Retirement Plan as a part of the Public Employees
Retirement Fund. Except as provided by subsection (4) of this section,
the investment of Oregon Public Service Retirement Plan assets is subject
to the provisions of ORS 293.701 to 293.820. The Oregon Investment
Council may invest assets of the individual account program and pension
program differently than the other assets of the Public Employees
Retirement System.

(4) Investment of the assets of the Oregon Public Service
Retirement Plan is not subject to the limitations imposed by ORS 293.726
(6).

(5) The board may contract with a private provider for the
administration of the individual account program. The board is not
subject to the provisions of ORS chapter 279A or 279B in awarding a
contract under the provisions of this subsection. The board shall
establish procedures for inviting proposals and awarding contracts under
this subsection. [2003 c.733 §§3,3a; 2005 c.808 §§15,16]Note: Section 46, chapter 733, Oregon Laws 2003, provides:

Sec. 46. As soon as practicable after August 29, 2003, the Public
Employees Retirement Board shall submit the provisions of ORS chapter
238A to the Internal Revenue Service and seek approval of the pension
program and individual account program as parts of a tax-qualified
governmental retirement plan under the Internal Revenue Code. [2003 c.733
§46; 2005 c.808 §21]PARTICIPATION BY PUBLIC EMPLOYERS (1) All public employers
participating in the Public Employees Retirement System on August 29,
2003:

(a) Shall continue to be participating public employers for the
purpose of the Oregon Public Service Retirement Plan;

(b) Shall provide benefits under the pension program established
under ORS 238A.100 to 238A.245 for eligible employees who are members of
the pension program; and

(c) Shall participate in the individual account program.

(2) Any participating public employer that provided retirement
benefits under ORS chapter 238 for some but not all of the employees of
the participating public employer on August 28, 2003, need not provide
benefits under the Oregon Public Service Retirement Plan for any class of
employees who were not members of the system on August 28, 2003.

(3) Any public employer that is not a participating public employer
on August 28, 2003, may become a participating public employer under the
pension program or the individual account program, or both. A public
employer may become a participating public employer under this subsection
only for the purposes of service performed by eligible employees of the
public employer on or after the date the public employer elects to
participate in the program. [2003 c.733 §4]PENSION PROGRAM(Membership) (1) Except
as provided by subsection (2) of this section, an eligible employee who
is employed in a qualifying position on or after August 29, 2003, by a
public employer that is participating in the pension program and who will
not receive benefits under ORS chapter 238 for service with the
participating public employer pursuant to the provisions of ORS 238A.025
becomes a member of the pension program on the first day of the month
after the employee completes six full calendar months of employment. The
six-month requirement may not be interrupted by more than 30 consecutive
working days.

(2) A person who is elected or appointed to an office with a fixed
term other than as a member of the Legislative Assembly, or who is
appointed by the Governor to an office as head of a department, may elect
not to become a member of the pension program by giving the Public
Employees Retirement Board written notice not later than 30 days after
taking office. An election under this subsection also operates as an
election not to become a member of the individual account program. An
election under this subsection is irrevocable during the term of office
for which the election is made. [2003 c.733 §5] Membership under the pension
program terminates when:

(1) A member dies;

(2) A member withdraws under ORS 238A.120; or

(3) A member forfeits retirement credit under ORS 238A.145. [2003
c.733 §6](Vesting) (1) A member of the pension program becomes
vested in the pension program on the earliest of the following dates:

(a) The date on which the member completes at least 600 hours of
service in each of five calendar years. The five calendar years need not
be consecutive, but are subject to the provisions of subsection (2) of
this section.

(b) The date on which an active member reaches the normal
retirement age for the member under ORS 238A.160.

(c) If the pension program is terminated, the date on which
termination becomes effective, but only to the extent the pension program
is then funded.

(2) If a member of the pension program who is not vested in the
pension program performs fewer than 600 hours of service in each of five
consecutive calendar years, hours of service performed before the first
calendar year of the period of five consecutive calendar years shall be
disregarded for purposes of determining whether the member is vested
under subsection (1)(a) of this section.

(3) Solely for purposes of determining whether a member is vested
under this section, hours of service include creditable service, as
defined in ORS 238.005, performed by the person before the person became
an eligible employee, as long as the membership of the person under ORS
chapter 238 has not been terminated under the provisions of ORS 238.095
on the date the person becomes an eligible employee. [2003 c.733 §7](Withdrawal)
(1) A vested inactive member may withdraw from the pension program if:

(a) The actuarial equivalent of the member’s benefit under the
pension program at the time of withdrawal is $5,000 or less; and

(b) The inactive member has separated from all service with
participating public employers and with employers who are treated as part
of a participating public employer’s controlled group under the federal
laws and rules governing the status of the system and the fund as a
qualified governmental retirement plan and trust.

(2) Upon withdrawal under this section, the Public Employees
Retirement Board shall pay the withdrawing member the actuarial
equivalent of the member’s benefit in a lump sum.

(3) If a vested inactive member withdraws from the pension program
under this section and is thereafter reemployed by a participating public
employer:

(a) The person may reestablish membership in the pension program
only for the purpose of service performed after the person is reemployed;
and

(b) Any service performed before the withdrawal may not be credited
toward the period of service required by ORS 238A.100 or 238A.115 or
toward the accrual of retirement credit under ORS 238A.140, 238A.150 or
238A.155.

(4) For the purposes of this section, the actuarial equivalent of a
member’s benefit does not include any value attributable to adjustments
to the benefit under ORS 238A.210. [2003 c.733 §8; 2005 c.152 §2](Computation of Benefit) (1) Upon retiring at normal
retirement age, a vested pension program member shall be paid an annual
pension for the life of the member as follows:

(a) For service as a police officer or firefighter, 1.8 percent of
final average salary multiplied by the number of years of retirement
credit attributable to service as a police officer or firefighter.

(b) For service as other than a police officer or firefighter, 1.5
percent of final average salary multiplied by the number of years of
retirement credit attributable to service as other than a police officer
or firefighter.

(2) Notwithstanding any provision of ORS 238A.100 to 238A.245, the
annual benefit payable to a member under the pension program and under
any other tax-qualified defined benefit plan maintained by the
participating public employer may not exceed the applicable limitations
set forth in 26 U.S.C. 415(b), as in effect on August 29, 2003. The
Public Employees Retirement Board shall adopt rules for the
administration of this limitation, including adjustments in the annual
dollar limitation to reflect cost-of-living adjustments authorized by the
Internal Revenue Service.

(3) The board shall make no actuarial adjustment in a member’s
pension calculated under this section by reason of the member’s
retirement after normal retirement age. [2003 c.733 §9] (1) Except as provided in
subsection (3) of this section, for purposes of the computation of
pension program benefits under ORS 238A.125, “final average salary” means
whichever of the following is greater:

(a) The average salary per calendar year paid to an active member
in the three consecutive calendar years of membership that produce the
highest average salary, including calendar years in which the member was
employed for less than a full calendar year. If the number of consecutive
calendar years of active membership before the effective date of
retirement of the member is three or less, the final average salary for
the member is the average salary per calendar year paid to the member in
all of those years, without regard to whether the member was employed for
full calendar years.

(b) One-third of the total salary paid to an active member in the
last 36 calendar months of membership before the effective date of
retirement of the member.

(2) For the purposes of calculating the final average salary of a
member under subsection (1) of this section, the Public Employees
Retirement Board shall:

(a) Include any salary paid in or for the calendar month of
separation from employment;

(b) Exclude any salary for any pay period before the first full pay
period that is included in the three consecutive calendar years of
membership under subsection (1)(a) of this section; and

(c) Exclude any salary for any pay period before the first full pay
period that is included in the last 36 calendar months of membership
under subsection (1)(b) of this section.

(3) For purposes of the computation of pension program benefits
under ORS 238A.125 of a person employed by a local government as defined
in ORS 174.116, “final average salary” means whichever of the following
is greater:

(a) The average salary per calendar year earned by an active member
in the three consecutive calendar years of membership that produce the
highest average salary, including calendar years in which the member was
employed for less than a full calendar year. If the number of consecutive
calendar years of active membership before the effective date of
retirement of the member is three or less, the final average salary for
the member is the average salary per calendar year earned by the member
in all of those years, without regard to whether the member was employed
for full calendar years.

(b) One-third of the total salary earned by an active member in the
last 36 calendar months of membership before the effective date of
retirement of the member.

(4) For purposes of calculating the final average salary for a
member during any period in which the member worked in a qualifying
position that requires fewer than 2,000 hours of service in a calendar
year, the salary of the member for that period is the salary that would
have been paid if the member had worked in the same position on a
full-time basis.

(5) For the purposes of calculating the final average salary of a
member under this section, the salary of the member does not include any
amounts attributable to hours of overtime that exceed the average number
of hours of overtime for the same class of employees as established by
rule of the Public Employees Retirement Board. The Oregon Department of
Administrative Services shall establish by rule more than one overtime
average for a class of state employees based on the geographic placement
of the employees. [2003 c.733 §10; 2005 c.332 §16; 2005 c.808 §34](Retirement Credit) (1) A pension program
member shall accrue no retirement credit for any calendar year in which
the member has fewer than 600 hours of service. A member may not accrue
more than one full year of retirement credit in any calendar year.

(2) When an eligible employee becomes a member under ORS 238A.100,
the board shall credit the eligible employee with retirement credit for
the period of employment required of the employee under ORS 238A.100.

(3) Except as provided in this section, a pension program member
shall accrue one full year of retirement credit for each calendar year in
which the member has 2,000 hours of service or more.

(4) Except as provided in this section, a pension program member
shall accrue a prorated year of retirement credit for each calendar year
in which the member has 600 hours of service or more but fewer than 2,000
hours of service. The prorated retirement credit shall be calculated by
dividing the number of hours of service by 2,000.

(5) If an active member of the pension program works as a school
employee for one or more participating public employers during a calendar
year, and the number of hours of service required for a full-time school
employee employed by the participating public employer or employers is
less than 2,000, the member accrues retirement credit for the calendar
year as follows:

(a) The member accrues one full year of retirement credit for the
calendar year if the member’s hours of service as a school employee are
equal to or greater than the number of hours of service required of a
full-time school employee employed in the same position or a comparable
position by the participating public employer or employers during the
calendar year.

(b) The member accrues a prorated year of retirement credit for
each calendar year in which the member has at least 600 hours of service
but less than the number of hours of service required of a full-time
school employee employed in the same position or a comparable position by
the participating public employer or employers during the calendar year.
The prorated retirement credit shall be calculated by dividing the number
of the member’s hours of service as a school employee by the number of
hours of service required of a full-time school employee in the same
position or a comparable position.

(c) The Public Employees Retirement Board shall adopt rules
governing the accrual of retirement credit on a prorated basis by an
active member who works in both a school employee position and another
qualifying position during the same calendar year, or who works as a
school employee for more than one participating public employer during
the same calendar year.

(6) An active member of the pension program who works as an
academic employee of a community college during a calendar year:

(a) Accrues one full year of retirement credit for the calendar
year if the member is employed 1.0 full-time equivalent on a nine-month
or 12-month basis.

(b) Accrues a prorated year of retirement credit for each calendar
year in which the member performs the services of less than 1.0 full-time
equivalent. The member is entitled to prorated retirement credit under
this paragraph in an amount determined by dividing by 1,200 the number of
hours calculated to be the equivalent of the percentage in excess of
0.375 full-time equivalent for a member employed on a 12-month basis, or
in excess of 0.50 full-time equivalent for a member employed on a
nine-month basis.

(7) For purposes of this section, “school employee” means:

(a) A person who is employed by a common school district, a union
high school district or an education service district;

(b) An employee of the State Board of Higher Education or the
Oregon Health and Science University who is engaged in teaching or other
school activity at an institution of higher education;

(c) An employee of the Department of Human Services, the Oregon
Youth Authority, the Department of Corrections or the State Board of
Education who is engaged in teaching or other school activity at an
institution supervised by the authority, board or department; and

(d) An employee of a community college district other than an
academic employee. [2003 c.733 §11; 2005 c.332 §§4,21]Note: Section 5, chapter 332, Oregon Laws 2005, provides:

Sec. 5. The amendments to ORS 238A.140 by section 4 of this 2005
Act apply to service by an employee of the Oregon Health and Science
University on or after August 29, 2003. [2005 c.332 §5]Note: Section 22, chapter 332, Oregon Laws 2005, provides:

Sec. 22. Section 20 of this 2005 Act [238A.142] and the amendments
to ORS 238A.140 by section 21 of this 2005 Act apply to all service
performed by an academic employee of a community college on or after
August 29, 2003. [2005 c.332 §22] (1)
Subject to ORS 238A.140 (6), an academic employee of a community college
who during a calendar year is employed 0.375 full-time equivalent on a
12-month basis, or is employed 0.50 full-time equivalent on a nine-month
basis, is considered to have performed 600 hours of service in the
calendar year for all purposes under this chapter.

(2) Subject to ORS 238A.140 (6), an academic employee of a
community college who during a calendar year is employed 1.0 full-time
equivalent on a nine-month or 12-month basis is considered to have
performed 1,200 hours of service in the calendar year for all purposes
under this chapter.

(3) The governing body of a community college shall determine the
duties of an academic employee of the community college that constitute a
full-time equivalent in any discipline or academic activity for the
purposes of this section. [2005 c.332 §20]Note: See second note under 238A.140. (1) A pension program member
who is not vested forfeits all retirement credit if the member performs
fewer than 600 hours of service in each of five consecutive calendar
years. A forfeiture under this section takes effect at the end of the
fifth calendar year.

(2) If a pension program member forfeits retirement credit under
this section and is subsequently reemployed by a participating public
employer:

(a) The person may acquire retirement credit under the pension
program only for the purpose of service performed after the person is
reemployed; and

(b) Any service performed before the forfeiture may not be credited
toward the period of service required by ORS 238A.100 or 238A.115, or
toward the accrual of retirement credit under ORS 238A.140, 238A.150 or
238A.155. [2003 c.733 §12](1) Notwithstanding any other provision of ORS 238A.100 to
238A.245, an eligible employee who leaves a qualifying position for the
purpose of performing service in the uniformed services, and who
subsequently returns to employment with a participating public employer
with reemployment rights under federal law, is entitled to accrue
retirement credit, credit toward the probationary period required by ORS
238A.100 and credit toward the vesting requirements of ORS 238A.115 under
rules adopted by the Public Employees Retirement Board pursuant to
subsection (2) of this section.

(2) The board shall adopt rules establishing benefits and service
credit for any period of service in the uniformed services by an employee
described in subsection (1) of this section. For the purpose of adopting
rules under this subsection, the board shall consider and take into
account all federal law relating to benefits and service credit for any
period of service in the uniformed services, including 26 U.S.C. 414(u),
as in effect on August 29, 2003. Benefits and service credit under rules
adopted by the board pursuant to this subsection may not exceed benefits
and service credit required under federal law for periods of service in
the uniformed services. [2003 c.733 §13] (1)
Notwithstanding any other provision of ORS 238A.100 to 238A.245, an
active member of the pension program described in subsection (2) of this
section who becomes disabled shall accrue retirement credit and hours of
service credit for vesting purposes for the period during which the
member is disabled.

(2) The provisions of this section apply only to:

(a) A member who has accrued 10 years or more of retirement credit
before the member becomes disabled; or

(b) A member who becomes disabled by reason of injury or disease
sustained while in the actual performance of duty.

(3) Retirement credit accrues under this section only for as long
as the member remains disabled or until the member reaches the normal
retirement age under ORS 238A.160.

(4) If a disabled member does not return to employment with a
participating public employer after the period of disability, the member
shall receive a pension under ORS 238A.180, 238A.185 or 238A.190 upon
retirement based on an adjusted salary. The adjusted salary shall be the
salary paid to the disabled member on the date the member left active
employment with the participating public employer by reason of
disability, adjusted for each year after the member left employment and
before the member’s effective date of retirement to reflect
cost-of-living changes, based on the Portland-Salem, OR-WA, Consumer
Price Index for All Urban Consumers for All Items, as published by the
Bureau of Labor Statistics of the United States Department of Labor.
Adjustments under this subsection may not exceed a two percent increase
or decrease for any year. An adjustment shall be made under this
subsection only for calendar years in which the member is disabled for at
least six months during the year.

(5) A pension program member is considered to be disabled for the
purpose of this section if the member is found, after being examined by
one or more physicians selected by the Public Employees Retirement Board,
to be mentally or physically incapacitated for an extended duration and
unable to perform any work for which qualified, by reason of injury or
disease that was not intentionally self-inflicted. [2003 c.733 §14] If a
member is eligible to receive retirement benefits under both this chapter
and ORS chapter 238 by reason of a break in service under ORS 238A.025,
the Public Employees Retirement Board shall treat all service for which
retirement credit is granted under ORS chapter 238 as though it were
retirement credit under this chapter for the purpose of any statute in
this chapter that requires that a member have a specified amount of
retirement credit as a condition of retiring or receiving any other
benefit under this chapter. [2005 c.332 §12]Note: 238A.157 was added to and made a part of ORS chapter 238A by
legislative action but was not added to any smaller series therein. See
Preface to Oregon Revised Statutes for further explanation.(Retirement) (1) Except
as provided in subsections (2) and (3) of this section, normal retirement
age for a member of the pension program is the earlier of:

(a) 65 years of age; or

(b) 58 years of age if the member has 30 years or more of
retirement credit.

(2) Normal retirement age for a member of the pension program who
retires from service as a police officer or firefighter, and who has held
a position as a police officer or firefighter continuously for a period
of not less than five years immediately preceding the effective date of
retirement, is the earlier of:

(a) 60 years of age; or

(b) 53 years of age if the member has 25 years or more of
retirement credit.

(3) Normal retirement age for a member of the pension program who
retires from service as a school employee as defined by ORS 238A.140 is
the earlier of:

(a) 65 years of age; or

(b) 58 years of age if the member has been an active member in 30
or more calendar years.

(4) The normal retirement date of a member is the first day of the
month beginning on or after the date the member reaches normal retirement
age. [2003 c.733 §15; 2005 c.808 §35] (1)
Except as provided in this section, earliest retirement age for a member
of the pension program is 55 years of age.

(2) Earliest retirement age for a member of the pension program who
retires from service as a police officer or firefighter is 50 years of
age if the member has held a position as a police officer or firefighter
continuously for a period of not less than five years immediately before
the effective date of retirement. Earliest retirement date for a member
described in this subsection is not later than the date the member
reaches 55 years of age.

(3) If a member has a break in service under ORS 238A.025 and is
entitled to receive a retirement allowance under ORS chapter 238 in
addition to a pension under this chapter, earliest retirement age under
this chapter is the age attained by a member when the member could first
make application for retirement under the provisions of ORS 238.280.

(4) A member of the pension program who has reached earliest
retirement age may retire on an early retirement date that is the first
day of any month on or after the member has reached earliest retirement
age. [2003 c.733 §16; 2005 c.332 §13](1) An active member of the pension program who is 70-1/2 years of
age or older must retire not later than April 1 of the calendar year
following the calendar year in which the member terminates employment
with all participating public employers. An inactive member of the
pension program must retire not later than April 1 of the calendar year
following the calendar year in which the member attains 70-1/2 years of
age.

(2) Notwithstanding any other provision of ORS 238A.100 to
238A.245, the entire interest of a member of the pension program must be
distributed over a time period commencing no later than the required
beginning date set forth in subsection (1) of this section, and must be
distributed in a manner that satisfies all other minimum distribution
requirements of 26 U.S.C. 401(a)(9) and regulations implementing that
section, as in effect on August 29, 2003. The Public Employees Retirement
Board shall adopt rules implementing those minimum distribution
requirements. [2003 c.733 §17](Pension) Upon retiring on normal
retirement date or thereafter, a member of the pension program who is
vested shall be paid an annual pension for the life of the member,
calculated as provided in ORS 238A.125. The annual pension provided for
under this section shall be paid in equal monthly installments, payable
as of the first day of each calendar month, beginning on the later of the
member’s normal retirement date or the member’s effective date of
retirement and ending on the first day of the month in which the member
dies. [2003 c.733 §18] A member of the pension program who is
vested may retire with a reduced pension that is the actuarial equivalent
of the pension provided for in ORS 238A.180 at any time on or after the
member’s earliest retirement date as described in ORS 238A.165. [2003
c.733 §19] (1) Before the effective date of
retirement of a member of the pension program, the member may elect to
convert the pension calculated under ORS 238A.180 or 238A.185 into the
actuarial equivalent pension as follows:

(a) A pension payable monthly during the member’s life and, after
the death of the member, continuing at the same monthly amount for the
life of a beneficiary named by the member in a written designation filed
with the Public Employees Retirement Board at the time of election.

(b) A pension payable monthly during the member’s life and, subject
to modification under subsection (2) of this section, after the death of
the member, continuing at the same monthly amount for the life of a
beneficiary named by the member in a written designation filed with the
board at the time of election.

(c) A pension payable monthly during the member’s life and, after
the death of the member, continuing at one-half of the monthly amount
paid to the member for the life of a beneficiary named by the member in a
written designation filed with the board at the time of election.

(d) A pension payable monthly during the member’s life and, subject
to modification under subsection (2) of this section, after the death of
the member, continuing at one-half of the monthly amount paid to the
member for the life of a beneficiary named by the member in a written
designation filed with the board at the time of election.

(2) A retired member who elects to receive a pension under
subsection (1)(b) or (d) of this section shall receive the pension that
the member would have received on the effective date of retirement under
ORS 238A.180 or 238A.185 adjusted by the actual amount of any
cost-of-living or other post-retirement adjustments made to the original
allowance since the effective date of retirement, if:

(a) The spouse or other beneficiary dies after the member retires;
or

(b) The marriage relationship or other relationship with the
beneficiary is terminated after the member retires.

(3) An increased benefit under subsection (2) of this section is
first effective on the first day of the month following the date on which
one of the events specified in subsection (2) of this section occurs.

(4) If a member of the pension program is married on the effective
date of retirement, or there exists any other person on the effective
date of retirement who is constitutionally required to be treated in the
same manner as a spouse for the purpose of retirement benefits, the
pension payable to the member shall be as provided in subsection (1)(c)
of this section with the spouse or other person as beneficiary, unless:

(a) The member has selected a different pension provided for in
subsection (1) of this section with the spouse or other person as
beneficiary; or

(b) The member submits to the board a document signed by the spouse
or other person, acknowledged by a notary public, consenting to a
different option or a different beneficiary.

(5) Subsection (4) of this section does not apply to a pension
benefit that is paid in a lump sum under ORS 238A.195. [2003 c.733 §20;
2005 c.332 §14] If the monthly pension benefit
payable to a member of the pension program under ORS 238A.180 is less
than $200, or the monthly death benefit payable to the beneficiary of a
deceased member under ORS 238A.230 is less than $200, the Public
Employees Retirement Board shall convert the benefit into a lump sum that
represents the actuarial equivalent of the present value of the pension
or death benefit and pay that amount to the member or the deceased
member’s beneficiary in lieu of a pension or death benefit under ORS
238A.100 to 238A.245. [2003 c.733 §21] (1) Once every two
calendar years, the Public Employees Retirement Board shall adopt
actuarial equivalency factor tables for the purpose of computing the
payments to be made to members of the pension program and their
beneficiaries and alternate payees under ORS 238.465. The tables may be
adopted in conjunction with the biennial evaluation of the Public
Employees Retirement System required by ORS 238.605. Tables adopted under
this section must use the best actuarial information on mortality
available at the time the board adopts the tables, as provided by the
actuary engaged by the board. Actuarial equivalency factor tables adopted
under this section become effective on January 1 of the calendar year
following adoption of the tables by the board. All computations of
payments must use the actuarial equivalency factor tables that are in
effect on:

(a) The effective date of retirement for any member or alternate
payee;

(b) The date that the first payment is due for any person receiving
a death benefit under ORS 238A.230; or

(c) The date that the first payment is due after any recalculation
of payments that is not attributable to error, including but not limited
to recalculations under ORS 238.465 (2).

(2) The board may not defer or delay implementation of the
actuarial equivalency factor tables adopted under this section. [2003
c.733 §22](Cost-of-Living Adjustment) (1) As soon as practicable
after January 1 each year, the Public Employees Retirement Board shall
determine the percentage increase or decrease in the cost of living for
the previous calendar year, based on the Portland-Salem, OR-WA, Consumer
Price Index for All Urban Consumers for All Items, as published by the
Bureau of Labor Statistics of the United States Department of Labor.
Before July 1 each year, the board shall adjust every pension payable
under ORS 238A.180, 238A.185 and 238A.190, every disability benefit under
ORS 238A.235 and every death benefit payable under ORS 238A.230 by
multiplying the monthly payment by the percentage figure determined by
the board. If a person has been receiving a pension or benefit for less
than 12 months on July 1 of a calendar year, the board shall make a pro
rata reduction of the adjustment based on the number of months that the
pension or benefit was received before July 1 of the year. The adjustment
shall be made for the payments payable on August 1 and thereafter.

(2) An increase or decrease in the benefit payments under this
section may not exceed two percent in any year. A pension or death
benefit may not be adjusted to an amount that is less than the amount
that would have been payable if no cost-of-living adjustment had been
made since the pension or death benefit first became payable. [2003 c.733
§23](Employer Contributions) (1) A participating public
employer shall make employer contributions to the Public Employees
Retirement Board at intervals designated by the board in the amounts
determined by the board under ORS 238.225. All participating public
employers shall be considered to be a single employer for the purposes of
the employer contributions under ORS 238.225 that are required for
funding the pension program established under ORS 238A.025.

(2) For the purpose of the actuarial computation required under ORS
238.225, the board shall separately establish the liability of
participating public employers for police officers and firefighters under
the pension program and shall require that public employers that employ
police officers and firefighters who are members of the pension program
make contributions for those employees based on the liability established
under this subsection. [2003 c.733 §24; 2005 c.808 §17](Death Benefit) (1) If a member of the pension
program who is vested dies before the member’s effective date of
retirement, the Public Employees Retirement Board shall pay the death
benefit provided for in this section to the spouse of the member or to
any other person who is constitutionally required to be treated in the
same manner as a spouse for the purpose of retirement benefits.

(2)(a) The death benefit to be paid under this section shall be for
the life of the spouse or other person who is constitutionally required
to be treated in the same manner as a spouse, and shall be the actuarial
equivalent of 50 percent of the pension that would otherwise have been
paid to the deceased member.

(b) For the purpose of paragraph (a) of this subsection, the amount
of the pension that would otherwise have been paid to the deceased member
shall be calculated:

(A) As of the date of death if the member dies after the earliest
retirement date for the member under ORS 238A.165; or

(B) As if the member became an inactive member on the date of death
and thereafter retired at the earliest retirement date if the member dies
before the earliest retirement date for the member under ORS 238A.165.

(3) The death benefit provided under this section is first
effective on the first day of the month following the date of death of
the member. The surviving spouse or other person entitled to the death
benefit may elect to delay payment of the death benefit, but payment must
commence no later than December 31 of the calendar year in which the
member would have reached 70-1/2 years of age.

(4) Notwithstanding any other provision of ORS 238A.100 to
238A.245, distributions of death benefits under the pension program must
comply with the minimum distribution requirements of 26 U.S.C. 401(a)(9)
and the regulations implementing that section, as in effect on August 29,
2003. The board shall adopt rules implementing those minimum distribution
requirements. [2003 c.733 §25; 2005 c.332 §15](Disability Benefit) (1) Subject to subsection (3) of this
section, an active member of the pension program described in subsection
(2) of this section who becomes disabled shall receive a disability
benefit in the amount of 45 percent of the salary of the member
determined as of the last full month of employment before the disability
commences.

(2) The provisions of this section apply only to:

(a) A member, other than a school employee as defined by ORS
238A.140, who has accrued 10 years or more of retirement credit before
the member becomes disabled;

(b) A member who is a school employee as defined by ORS 238A.140
and who was an active member in 10 or more calendar years before the
member becomes disabled; or

(c) A member who becomes disabled by reason of injury or disease
sustained while in the actual performance of duty.

(3)(a) Except as provided by paragraph (b) of this subsection, the
sum of the monthly amount of the disability benefit under this section
and of any monthly payment by reason of temporary total disability or
permanent total disability under the provisions of ORS chapter 656 may
not exceed 75 percent of the member’s monthly salary, determined as of
the date the member becomes disabled. The Public Employees Retirement
Board shall reduce any disability benefit payable under this section in
the amount determined to be necessary by the board to meet the limitation
imposed by this subsection.

(b) This subsection does not affect cost-of-living adjustments
under ORS 238A.210, and increases in the monthly amount of the disability
benefit under this section due to those cost-of-living adjustments may
not be considered by the Public Employees Retirement Board in determining
whether the limitation imposed by this subsection has been exceeded.

(4) A disability retirement pension under this section shall be
paid until:

(a) The member is no longer disabled; or

(b) The member attains normal retirement age under ORS 238A.160.

(5) A member is considered to be disabled for the purpose of this
section if the member is found, after being examined by one or more
physicians selected by the board, to be mentally or physically
incapacitated for an extended duration and unable to perform any work for
which qualified, by reason of injury or disease that was not
intentionally self-inflicted. [2003 c.733 §25a; 2005 c.808 §36] (1) A participating public
employer shall contribute to the pension program, at intervals designated
by the Public Employees Retirement Board, all amounts determined by the
board to be actuarially necessary to adequately fund the disability
benefits to be provided under ORS 238A.235 and the reasonable costs of
administering the provision of those benefits. The board shall
periodically determine the liabilities attributable to the disability
benefits and shall set the amount of contributions to be made by
participating public employers, and by other public employers who are
required to make contributions on behalf of members, to ensure that those
liabilities will be funded no more than 40 years after the date on which
the determination is made. All participating public employers shall be
considered to be a single employer for the purposes of the contributions
required under this section.

(2) For the purpose of the actuarial computation required under
subsection (1) of this section, the board shall separately establish the
liability of participating public employers for police officers and
firefighters, and shall require that public employers that employ police
officers and firefighters make contributions for those employees based on
the liability established under this section. [2003 c.733 §25b](Reemployment of Retired Members) (1)
Except as provided in subsection (3) of this section, the Public
Employees Retirement Board shall cease making pension payments to a
retired member of the pension program who is reemployed by a
participating public employer in a qualifying position. A retired member
of the pension program who is employed in a qualifying position becomes
an active member of the pension program without serving the probationary
period provided for in ORS 238A.100.

(2) If a retired member of the pension program is reemployed under
the provisions of this section, any option chosen by the member under ORS
238A.190 is canceled, and upon retiring thereafter the member may elect
any option provided for in ORS 238A.180 and 238A.190. The board shall
recalculate the pension of the member upon subsequent retirement.

(3) A retired member of the pension program who becomes a member of
the Legislative Assembly shall continue to receive the pension elected by
the member. A retired member of the pension program who becomes a member
of the Legislative Assembly may not elect under ORS 237.650 to become an
active member of the Oregon Public Service Retirement Plan or a
legislator member of the state deferred compensation plan. [2003 c.733
§26]INDIVIDUAL ACCOUNT PROGRAM(Membership)
Except as provided in ORS 238A.100 (2), an eligible employee who is
employed in a qualifying position on or after August 29, 2003, by a
public employer that is participating in the individual account program
and who will not receive benefits under ORS chapter 238 for service with
the participating public employer pursuant to the provisions of ORS
238A.025 becomes a member of the individual account program on the first
day of the month after the employee completes six full calendar months of
employment. The six-month probationary period may not be interrupted by
more than 30 consecutive working days. [2003 c.733 §29](1) Except as provided in subsection (2) of this section, all
members of the Public Employees Retirement System who established
membership in the Public Employees Retirement System before August 29,
2003, as described in ORS 238A.025 become members of the individual
account program on January 1, 2004.

(2) A member of the Public Employees Retirement System may not be a
member of the individual account program during any period of time during
which the member is required to make contributions to the system under
ORS 238.200.

(3) Solely for the purpose of determining the amount of the
employee contribution for persons who become members of the individual
account program under this section, whether paid by the employee or by
the employer, the Public Employees Retirement Board shall use the
definition of “salary” provided by ORS 238.005. If a person who is
subject to this subsection has a break in service as described in ORS
238A.025, the board shall use the definition of “salary” provided by ORS
238A.005 for the purpose of determining the amount of the employee
contribution to the individual account program for all service by the
member after the break in service. [2003 c.733 §33; 2005 c.332 §17] Membership under the individual
account program terminates when:

(1) A member dies; or

(2) An inactive member receives a distribution of the vested
accounts of the member under ORS 238A.375. [2003 c.733 §30](Vesting) (1) A member of the individual account program
becomes vested in the employee account established for the member under
ORS 238A.350 (2) on the date the employee account is established.

(2) A member who makes rollover contributions becomes vested in the
rollover account established for the member under ORS 238A.350 (4) on the
date the rollover account is established.

(3) If an employer makes employer contributions for a member under
ORS 238A.340, the member becomes vested in the employer account
established under ORS 238A.350 (3) on the earliest of the following dates:

(a) The date on which the member completes at least 600 hours of
service in each of five calendar years;

(b) The date on which an active member reaches the normal
retirement age for the member under ORS 238A.160;

(c) If the individual account program is terminated, the date on
which termination becomes effective, but only to the extent the account
is then funded;

(d) The date on which an active member becomes disabled, as
described in ORS 238A.155 (4); or

(e) The date on which an active member dies.

(4) If a member of the individual account program who is not vested
in the employer account performs fewer than 600 hours of service in each
of five consecutive calendar years, hours of service performed before the
first calendar year of the period of five consecutive calendar years
shall be disregarded for purposes of determining whether the member is
vested under subsection (3)(a) of this section.

(5) Solely for purposes of determining whether a member is vested
under subsection (3)(a) of this section, hours of service include
creditable service, as defined in ORS 238.005, performed by the person
before the person became an eligible employee, as long as the membership
of the person under ORS chapter 238 has not been terminated under the
provisions of ORS 238.095 on the date the person becomes an eligible
employee. [2003 c.733 §31](Employee Contributions) (1) A member of the individual
account program must make employee contributions to the individual
account program of six percent of the member’s salary.

(2) Employee contributions made by a member of the individual
account program under this section shall be credited by the board to the
employee account established for the member under ORS 238A.350 (2). [2003
c.733 §32] (1) A
participating public employer may agree, by a written employment policy
or by a collective bargaining agreement, to pay the employee contribution
required under ORS 238A.330. The policy or agreement need not include all
members of the individual account program employed by the employer.

(2) An agreement under this section to pay the required employee
contribution may provide that:

(a) Employee compensation be reduced to generate the funds needed
to make the employee contributions; or

(b) Additional amounts be paid by the employer for the purpose of
making the employee contributions, and employee compensation not be
reduced for the purpose of generating the funds needed to make the
employee contributions.

(3) A participating public employer must give written notice to the
Public Employees Retirement Board at the time that a written employment
policy or collective bargaining agreement described in subsection (1) of
this section is adopted or changed. The notice must specifically indicate
whether the agreement is as described in subsection (2)(a) or (b) of this
section. Any change in the manner in which employee contributions are to
be paid applies only to employee contributions made on and after the date
the notice is received by the board. [2003 c.733 §34](Employer Contributions) (1) A participating public
employer may agree, by a written employment policy or agreement, to make
employer contributions for members of the individual account program
employed by the employer. The percentage of salary paid as employer
contributions may not be less than one percent of salary or more than six
percent of salary, and must be a whole number. A participating public
employer may make an agreement under this section for specific groups of
employees employed by the public employer.

(2) If a participating public employer makes employer contributions
under this section and the member for which the contributions are made
fails to vest in the employer account under the provisions of ORS
238A.320, the Public Employees Retirement Board shall apply the
contributions in the employer account against other obligations of the
employer under the Oregon Public Service Retirement Plan. [2003 c.733 §36](Individual Accounts) (1) Upon any
contributions being made to the individual account program by or on
behalf of a member of the program, the Public Employees Retirement Board
shall create the account or accounts described in this section. Each
account shall be adjusted at least annually in accordance with rules
adopted by the board to reflect any net earnings or losses on those
contributions and to pay the reasonable administrative costs of
maintaining the program to the extent the earnings on the assets of the
program are insufficient to pay those costs. The adjustments described in
this subsection shall continue until the account is distributed to the
member or forfeited.

(2) The board shall establish an employee account, which shall
consist of the employee contributions made by or on behalf of the member
as adjusted under subsection (1) of this section.

(3) If the public employer agrees to make employer contributions
under ORS 238A.340, the board shall establish an employer account, which
shall consist of the employer contributions made on behalf of the member
as adjusted under subsection (1) of this section.

(4) If the board accepts rollover contributions on behalf of the
member, the board shall establish a rollover account, which shall consist
of the rollover contributions made by the member as adjusted under
subsection (1) of this section. Contributions and the earnings
attributable to the contributions must be accounted for separately.

(5) The board shall provide an annual statement to each active and
inactive member of the program that reflects the amount credited to the
accounts established under this section. The statement shall reflect
whether the member is vested in the employer account under the provisions
of ORS 238A.320. [2003 c.733 §37](Rollover Contributions) (1) The Public Employees
Retirement Board may accept rollover contributions from a member of the
individual account program or from an eligible retirement plan from which
the member is entitled to an eligible rollover distribution. The board
may accept rollover contributions under this section only if the amounts
contributed qualify as eligible rollover distributions under the federal
income tax laws governing tax-qualified retirement plans and, if the
rollover contribution is made by the member, the contribution is paid to
the individual account program within the time limits established by the
federal income tax laws governing tax-qualified retirement plans.

(2) The board shall adopt rules and establish procedures for
determining whether to accept a rollover contribution under this section
and shall require such documentation as may be necessary to ensure that
the receipt of a rollover contribution does not jeopardize the status of
the individual account program as a tax-qualified governmental plan.
[2003 c.733 §38](Limitation on Contributions) Notwithstanding any
other provision of ORS 238A.300 to 238A.415, the annual addition to the
employee and employer accounts of a member of the individual account
program for a calendar year, together with the annual additions to the
accounts of the member under any other defined contribution plan
maintained by the participating public employer for a calendar year, may
not exceed the lesser of $40,000, or 100 percent of the member’s
compensation for that calendar year. For purposes of this section,
“annual addition” has the meaning given that term in 26 U.S.C. 415(c)(2),
as in effect on August 29, 2003, and “compensation” has the meaning given
the term “participant’s compensation” in 26 U.S.C. 415(c)(3), as in
effect on August 29, 2003. The Public Employees Retirement Board shall
adopt rules for the administration of this limitation, including
adjustments in the annual dollar limitation to reflect cost-of-living
adjustments authorized by the Internal Revenue Service. [2003 c.733 §39](Withdrawal by Inactive Member) (1) An
inactive member of the individual account program may elect to receive a
distribution of the amounts in the member’s employee account, rollover
account and employer account to the extent the member is vested in those
accounts under ORS 238A.320 if the inactive member has separated from all
service with participating public employers and with employers who are
treated as part of a participating public employer’s controlled group
under the federal laws and rules governing the status of the system and
the fund as a qualified governmental retirement plan and trust.

(2) If an inactive member of the individual account program who is
not vested in the employer account receives a distribution under
subsection (1) of this section, the employer account of the member is
permanently forfeited as of the date of the distribution.

(3) If an inactive member receives a distribution under subsection
(1) of this section and is subsequently reemployed by a participating
public employer, any service performed before the date the member became
an inactive member may not be used toward the period of service required
for vesting in the employer account under ORS 238A.320. [2003 c.733 §40;
2005 c.152 §3](Defined Contribution Benefit) (1) Upon
retirement on or after the earliest retirement date, as described in ORS
238A.165, a member of the individual account program shall receive in a
lump sum the amounts in the member’s employee account, rollover account
and employer account to the extent the member is vested in those accounts
under ORS 238A.320.

(2) In lieu of a lump sum payment under subsection (1) of this
section, a member of the individual account program may elect to receive
the amounts in the member’s employee account and employer account, to the
extent the member is vested in those accounts under ORS 238A.320, in
substantially equal installments paid over a period of 5, 10, 15 or 20
years. Installments may be made on a monthly, quarterly or annual basis.
In no event may the period selected by the member exceed the time allowed
by the minimum distribution requirements described in subsection (4) of
this section. The Public Employees Retirement Board shall by rule
establish the manner in which installments will be adjusted to reflect
investment gains and losses on the unpaid balance during the payout
period elected by the member under this subsection. The board by rule may
establish minimum monthly amounts payable under this subsection. The
board may require that a lump sum payment, or an installment schedule
different than the schedules provided for in this subsection, be used to
pay the vested amounts in the member’s accounts if those amounts are not
adequate to generate the minimum monthly amounts specified by the rule.

(3) A member of the individual account program electing to receive
installments under subsection (2) of this section must designate a
beneficiary or beneficiaries. In the event the member dies before all
amounts in the employee and vested employer accounts are paid, all
remaining installment payments shall be made to the beneficiary or
beneficiaries designated by the member. A beneficiary may elect to
receive a lump sum distribution of the remaining amounts.

(4) A member who is entitled to receive retirement benefits under
ORS chapter 238 may receive vested amounts in the member’s employee
account, rollover account and employer account in the manner provided by
this section when the member retires for service under the provisions of
ORS chapter 238.

(5) Notwithstanding any other provision of ORS 238A.300 to
238A.415, the entire interest of a member of the individual account
program must be distributed over a time period commencing no later than
the latest retirement date set forth in ORS 238A.170, and must be
distributed in a manner that satisfies all other minimum distribution
requirements of 26 U.S.C. 401(a)(9) and regulations implementing that
section, as in effect on August 29, 2003. The board shall adopt rules
implementing those minimum distribution requirements. [2003 c.733 §41;
2005 c.152 §10] (1) If a member of the individual
account program dies before retirement, the amounts in the member’s
employee account, rollover account and employer account, to the extent
the member is vested in those accounts under ORS 238A.320, shall be paid
in a lump sum to the beneficiary or beneficiaries designated by the
member for the purposes of this section.

(2) If a member of the individual account program is married at the
time of death, or there exists at the time of death any other person who
is constitutionally required to be treated in the same manner as a spouse
for the purpose of retirement benefits, the spouse or other person shall
be the beneficiary for purposes of the death benefit payable under this
section unless the spouse or other person consents to the designation of
a different beneficiary or beneficiaries before the designation has been
made and the consent has not been revoked by the spouse or other person
as of the time of the member’s death. Consent and revocation of consent
must be in writing, acknowledged by a notary public, and submitted to the
Public Employees Retirement Board in accordance with rules adopted by the
board. If the member’s spouse is designated as the member’s beneficiary
and the marriage of the member and spouse is subsequently dissolved, the
former spouse shall be treated as predeceasing the member for purposes of
this section, unless the member expressly designates the former spouse as
beneficiary after the effective date of the dissolution or the former
spouse is required to be designated as a beneficiary under the provisions
of ORS 238.465.

(3) For purposes of this section and ORS 238A.400 (3), if a member
fails to designate a beneficiary, or if the person or persons designated
do not survive the member, the death benefit provided for in this section
shall be paid to the following person or persons, in the following order
of priority:

(a) The member’s surviving spouse or other person who is
constitutionally required to be treated in the same manner as a spouse;

(b) The member’s surviving children, in equal shares; or

(c) The member’s estate.

(4) The entire amount of a deceased member’s vested accounts must
be distributed by December 31 of the fifth calendar year after the year
in which the member died. Notwithstanding any other provision of this
chapter, distributions of death benefits under the individual account
program must comply with the minimum distribution requirements of 26
U.S.C. 401(a)(9) and the regulations implementing that section, as in
effect on August 29, 2003. The Public Employees Retirement Board shall
adopt rules implementing those minimum distribution requirements. [2003
c.733 §42] (1)
Notwithstanding any other provision of ORS 238A.300 to 238A.415, an
eligible employee who leaves a qualifying position for the purpose of
performing service in the uniformed services, and who subsequently
returns to employment with a participating public employer with
reemployment rights under federal law, is entitled to credit toward the
probationary period required by ORS 238A.300, credit toward the vesting
requirements of ORS 238A.320 and contributions under rules adopted by the
Public Employees Retirement Board pursuant to subsection (2) of this
section.

(2) The board shall adopt rules establishing contributions and
service credit for any period of service in the uniformed services by an
employee described in subsection (1) of this section. For the purpose of
adopting rules under this subsection, the board shall consider and take
into account all federal law relating to benefits and service credit for
any period of service in the uniformed services, including 26 U.S.C.
414(u), as in effect on August 29, 2003. Contributions and service credit
under rules adopted by the board pursuant to this subsection may not
exceed contributions and service credit required under federal law for
periods of service in the uniformed services. [2003 c.733 §43]DIRECT ROLLOVERS (1) To the extent required by
law, and except as otherwise provided by rules adopted by the Public
Employees Retirement Board under subsection (4) of this section, any
portion of a distribution of benefits described in subsection (2) of this
section shall, at the election of and in lieu of distribution to the
distributee, be paid directly to an eligible retirement plan specified by
the distributee.

(2) The provisions of subsection (1) of this section apply to a
distribution of any benefit under the pension program or the individual
account program except:

(a) A distribution that is one of a series of substantially equal
periodic payments made at least annually for the life or life expectancy
of the distributee, or for the joint lives or life expectancies of the
distributee and a designated beneficiary;

(b) A distribution that is one of a series of substantially equal
periodic payments made at least annually for a specified period of 10
years or more; and

(c) A distribution to the extent that the distribution is required
under 26 U.S.C. 401(a)(9).

(3) The provisions of subsection (1) of this section apply to any
portion of a distribution of benefits under the pension program or the
individual account program even though the portion consists of after-tax
employee contributions that are not includable in gross income. Any
portion of a distribution that consists of after-tax employee
contributions that are not includable in gross income may be transferred
only to an individual retirement account or annuity described in 26
U.S.C. 408(a) or (b), or to a qualified defined contribution plan
described in 26 U.S.C. 401(a) or 403(a) that agrees to account separately
for amounts transferred, including accounting separately for the portion
of the distribution that is includable in gross income and the portion of
the distribution that is not includable in gross income. The amount
transferred shall be treated as consisting first of the portion of the
distribution that is includable in gross income, determined without
regard to 26 U.S.C. 402(c)(1).

(4) The board shall adopt rules implementing the direct rollover
requirements of 26 U.S.C. 401(a)(31) and the regulations implementing
that section, and may adopt administrative exceptions to the direct
rollover requirements to the extent permitted by 26 U.S.C. 401(a)(31) and
the regulations implementing that section.

(5) All references in this section to federal laws and regulations
are to the laws and regulations in effect on August 29, 2003.

(6) For purposes of this section:

(a) “Distributee” means a member, a member’s surviving spouse or a
member’s alternate payee under ORS 238.465.

(b) “Eligible retirement plan” means:

(A) An individual retirement account described in 26 U.S.C. 408(a);

(B) An individual retirement annuity described in 26 U.S.C. 408(b),
other than an endowment contract;

(C) A qualified trust under 26 U.S.C. 401(a), that is a defined
contribution plan and permits the acceptance of rollover contributions;

(D) An annuity plan described in 26 U.S.C. 403(a);

(E) An eligible deferred compensation plan described in 26 U.S.C.
457(b) that is maintained by an eligible governmental employer described
in 26 U.S.C. 457(e)(1)(A) and that agrees to account separately for
amounts transferred into such plan from the distributing plan; or

(F) An annuity contract described in 26 U.S.C. 403(b). [2003 c.733
§44]RULES (1) The
Public Employees Retirement Board shall adopt rules for the
administration of this chapter.

(2) All rules adopted by the board under this section become part
of the written plan document for the Public Employees Retirement System
that is required to maintain the status of the pension program and the
individual account program as parts of a tax-qualified governmental
retirement plan under the Internal Revenue Code and under regulations
adopted pursuant to the Internal Revenue Code. [2003 c.733 §44a; 2005
c.808 §19]CHANGES TO OREGON PUBLIC SERVICE RETIREMENT PLAN (1) The
Public Employees Retirement Board, the director employed by the board and
staff employed by the board may not adopt any rule or take any
administrative action that has the effect of increasing the total
liability for benefits under this chapter that is in excess of one-tenth
of one percent.

(2) Subsection (1) of this section does not apply to any rule or
administrative action necessary to maintain qualification of the Public
Employees Retirement System and the Public Employees Retirement Fund as a
qualified governmental retirement plan and trust under the Internal
Revenue Code and under regulations adopted pursuant to the Internal
Revenue Code. [2003 c.733 §44b] It is
the intent of the Legislative Assembly that any increase in benefits
under the Oregon Public Service Retirement Plan be provided through
changes in the individual account program and not through changes in the
pension program. [2003 c.733 §44d]The Legislative Assembly may change the benefits payable to persons
who become members of the Public Employees Retirement System on or after
August 29, 2003, as described in ORS 238A.025, as long as the change
applies only to benefits attributable to service performed and salary
earned on or after the date the change is made. [2003 c.733 §45] Any law
enacted after January 1, 2004, that has the effect of increasing the
total liability for benefits under this chapter that is in excess of
one-tenth of one percent does not apply to service by members of the
Legislative Assembly that entitles those members to benefits under the
Oregon Public Service Retirement Plan. [2003 c.733 §44c]

_______________

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