Retirement system deserves praise.

Byline: GARY NAUTA and PAT WEST For The Register-Guard

ON DEC. 16, The Register-Guard ran an editorial titled "Tapped by PERS again: System's reserve practices need reform." After reading this editorial, we were left feeling that we, as a firefighters and members of the Public Employees Retirement System, need to defend ourselves and our union to the public which we serve. The editorial, in our opinion, captured only half of the truth.

The editorial suggested that employees' voluntary decision to participate in the more risky variable account has led to higher employer contributions. While this is true, what the editorial failed to mention is that many years ago (before the unprecedented growth of the stock market in the 1990s), the director of PERS and many previous PERS Board members proposed allowing employers to participate in the variable account. Most employers vehemently opposed this proposal, declaring it to be "too risky" - and the proposal was dropped based on this response from employers.

Ironically, all employers have had a change of heart and are now participating in the variable account to match the same percentage an employee voluntarily elects to place in the riskier variable account.

The editorial alluded to the fact that all employees receive the 8 percent guarantee. What the editorial fails to mention is that all employees hired after Jan. 1, 1996, no longer receive the 8 percent guarantee on regular account earnings. This "fix" that the editorial claims is needed has already been in place since 1996.

Further, the editorial portrays and assumes that the 8 percent guarantee is driving employer rates upward. This is simply untrue, and is easily verifiable through PERS. If the time had been taken to review the actual earning of investments since the inception of a 7 percent guarantee in the late 1970s, it would have revealed that there is a staggering 39 percent hold-back between actual earnings and what was credited to employee accounts. This 39 percent has gone into the reserve account, which made up the difference in years when investments earned less than the 8 percent guarantee.

The hold-back has continued since the inception of the 8 percent guarantee, with a 26 percent hold-back between actual earnings and actual crediting of accounts. Most importantly, since the inception of a statutory guarantee, employers have not had to pay one penny toward funding this guarantee. Positive earnings from employee accounts are what funded this guarantee.

The editorial states that "As a matter of fairness, future returns in excess of 8 percent should be returned to public agencies until all of their supplemental contributions are repaid."

What the reader is unaware of is that cities, counties, school districts, the state, and other units of government are not members of PERS, and by law have no legal rights to earnings held in trust for its members. PERS' primary fiduciary responsibility is to the vested member. The notion of returning employee earnings in excess of 8 percent to employers is quite simply illegal. Perpetuating inaccuracies about the legal status of PERS does nothing but cause confusion and resentment.

While it is stated that PERS employees are taking early retirement, the editor failed to mention that age 58 for Tier 1 employees is the legal age at which a general service employee can retire. This is not an "early" retirement. It was also not mentioned that Tier 2 employees must wait until age 60 before retiring.

In reference to firefighters and police officers, the editor implies that the average public safety officer is retiring with 65 percent of their final average salary at age 54. The goal of PERS (as determined by the Board and other groups) is to have retirees receive 75 to 85 percent of their pre-retirement gross income.

While this is intended to consider Social Security, the fact remains that many of today's firefighters and police officers will not be eligible for Social Security benefits until age 62 - if Social Security is available at that time. Studies have proved time and again that firefighters over the age of 50 are at exponentially greater risk for injury and even death due to the physical and stressful demands of the job. An average retirement age of 54 is appropriate given the nature of the job.

In a time where many retirement funds are failing the hard working men and women of America (recent examples include Enron and the building trades trust fund scandal), maybe we should be spending more time on how to emulate the success of PERS instead of how to destroy a well-funded and appropriate pension system.

And, for the record: Firefighters, police officers, teachers and other members of PERS are also taxpayers and members of communities throughout our great state.

Gary Nauta, a Eugene firefighter, is president of the Eugene Firefighters Union. Pat West, a recently retired Salem firefighter, is president of the Oregon State Firefighter Council.