Pension shock

The numbers are staggering to those of more modest means: A retirement income of $41,000 every month, courtesy of the Oregon Public Employees Retirement System. That's what former Oregon Ducks football coach Mike Bellotti makes.

Let's be clear at the outset that we think that's a ridiculous amount for a coach to be paid in retirement. Even more ridiculous was the salary that generated that pension payout. Bellotti made $675,000 in his last position as UO athletic director, but when he was coaching he earned $1.9 million a year.

With that kind of income, Bellotti would have been crazy not to invest a sizable chunk of it for his own retirement. If he needs half a million a year in pension payments, he's a lousy money manager.

Let's also be clear that Bellotti and the other state retirees pulling in more than $100,000 a year are a very small group compared with most retired public employees.

Of the 95,985 retirees now drawing pensions, Bellotti and his well-endowed cohorts make up only one-half of 1 percent. The vast majority of PERS retirees get $72,000 a year or less. And 68 percent receive $36,000 a year or less.

A decade ago, before major PERS reforms, the average retiree was getting 100 percent of his or her final salary. That is now down to 77 percent, and dropping.

That's because of changes in the system implemented by legislators in 2003. The retirees collecting hefty checks are so-called "Tier 1" retirees, hired before 1996.

Public employees hired since then are Tier 2 or Tier 3, and will receive substantially less when they reach retirement age.

Before the 2003 reforms, PERS pension liability — the amount owed to workers — was growing 10 percent to 12 percent annually. Now, PERS says, the annual growth is 3 percent to 4 percent.

As State Rep. Dennis Richardson, R-Central Point, has noted, the Tier 1 retirees now in the system won't be around forever, and workers retiring today are doing so under a far less generous formula. He likens the Tier 1 group to "a pig that the Oregon state snake has swallowed and will have to digest."

Meanwhile, Richardson and others continue to press for more PERS reforms. It's not clear how much more can be done legally, however, because the courts have said current retirees' benefits amount to a contract the state cannot break. Those few retirees pulling in six figures will continue to do so.

As we noted earlier, public employees still working won't get nearly the deal their predecessors did. Most do, however, have 6 percent of their salaries contributed to their retirement accounts by their employers rather than taken out of their own pay. That deal was struck instead of granting pay raises.

Gov. John Kitzhaber tried to get public employees to start paying that 6 percent, but got nowhere with the unions or with Democrats in the Legislature. It's an issue that is bound to come up again, and it should.

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