Public Employee Unions Sue State Over Pension Revisions

Oregon’s public employee unions filed a lawsuit last week seeking to block the state from changing their retirement contribution rates. If nothing is done, the Public Employees Retirement System, or PERS, may not be able to meet its payout obligations in the future.

At the behest of Gov. Kate Brown, lawmakers passed Senate Bill 1049, along with other legislation, to shore up the system. Under the new law, public employees hired before 2004 – who have the highest pension benefits — would contribute an added 2.5 percent of their salary towards the fund. For newer workers the added contribution would be 0.75 percent.

The union’s lawsuit argues the new rates unconstitutionally reduces the retirement pay of public employees.

OPB reports that lead attorney Aruna Masih, said, “The plaintiffs and all PERS members accepted a job in good faith for a salary and benefits package, did the work they promised to do, and planned their futures based on the package they agreed to accept,”

As lawmakers were deliberating earlier this year, union leaders made clear they would sue if the legislation passed. The measure permits the state to divert a portion of current contributions to individual retirement accounts, which would presumably help keep the system solvent as it pays past and future retirees. In a prior ruling, the Oregon Supremes Court showed some willingness to consider pension reductions for work performed in the future.

– By Andy Thompson