Oregon's Public Employees Retirement System (PERS) is facing a significant challenge as its most generous pension formula, known as the money match formula, is becoming extinct. This formula, which was once a cornerstone of the system, is now being used to calculate benefits for a shrinking number of retirees. The money match formula, which guaranteed earnings and required employer matching contributions, has been replaced by less generous formulas for employees hired after August 28, 2003. As a result, the number of retirees benefiting from this formula has declined dramatically, leaving a funding gap in the system.
The article highlights the stark contrast between the past and present of PERS. In 2000, nearly 95% of retirees were receiving benefits under the money match formula, with an average pension equivalent to their final pay. However, by 2025, only about 11% of retirees were benefiting from this generous formula. The median benefit for retirees in 2025 was $25,112, a significant decrease from the average of $33,890 in 2000. This shift has had a profound impact on the system's finances, with an estimated unfunded liability of $26 billion as of the end of 2025.
One of the most striking examples of the changing landscape of PERS is the case of David Horowitz, a former history professor at Portland State University. Horowitz retired after 57 years of service and started receiving benefits equivalent to $368,250 a year, making him the 12th highest beneficiary in the system. His benefit is driven by his lengthy service, the underlying pension contributions, and the actuarial factors that take life expectancy into account. However, the article also mentions that Horowitz might not have retired if not for the financial difficulties at PSU.
The article also highlights the disparity in benefits among retirees. While some, like Horowitz, receive substantial annual benefits, others, such as a customer service receptionist for the city of Portland, receive much lower amounts. The system's top beneficiary, Johnny Delashaw, a former surgeon at Oregon Health & Science University, receives an astonishing annual benefit of nearly $827,000. This contrast underscores the complex nature of the pension system and the varying circumstances of retirees.
The decline of the money match formula has placed a heavy strain on public employers' budgets, with required contributions averaging 27 cents of every payroll dollar in the current biennium. This financial burden is a significant challenge for cities, counties, schools, and other public entities. The article emphasizes the need for a comprehensive understanding of the pension system's complexities and the implications of its changes on both retirees and public employers.
In conclusion, the extinction of Oregon's most generous PERS formula is a critical issue with far-reaching consequences. It highlights the need for a reevaluation of pension systems and their impact on public finances. The article serves as a reminder that the decisions made today will have a lasting impact on the retirement security of public employees and the financial stability of public institutions.
