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Oregon Bulletin

January 1, 2014

Oregon Public Employees Retirement System, Chapter 459

Rule Caption: Clarifies criteria and process for the recovery of overpayments and erroneous payments made by PERS.

Adm. Order No.: PERS 10-2013

Filed with Sec. of State: 11-22-2013

Certified to be Effective: 11-22-13

Notice Publication Date: 9-1-2013

Rules Amended: 459-005-0610

Subject: ORS 238.715 directs PERS to adopt rules establishing the procedures to be followed in recovering overpayments and erroneous payments. OAR 459-005-0610 outlines several options for the recovery of a debt owed to PERS from a benefit recipient.

   Section (6) of the rule currently states: “...PERS shall use one of the following methods to effect a full recovery of any overpayment or erroneous payment....” The proposed rule modifications clarify that PERS is allowed more than one method of recovery.

   Also, section (7) of the rule states that if an overpayment is caused solely by the actions of PERS or the employer, that an actuarial reduction method (ARM) will be the preferred method to recover that overpayment unless otherwise ordered by the Board. The edits to this rule remove the designation of a preferred method of collection.

Rules Coordinator: Daniel Rivas—(503) 603-7713

459-005-0610

Recovery of Overpayments

(1) Authority and Purpose. In accordance with ORS 238.715, this rule sets forth the criteria and process for the recovery of overpayments and erroneous payments made by PERS. It is the policy of the Board to implement wherever possible, and if cost effective, a full recovery of all overpayments and erroneous payments. Staff shall attempt recovery of overpayments and erroneous payments in the most efficient method available and in the least amount of time possible.

(2) For the purposes of this rule:

(a) Erroneous payment” means any payment that has been made from the Public Employees Retirement Fund in error, including a payment to a payee that is not entitled to receive the payment.

(b) “Good cause” means a cause beyond the reasonable control of the person. “Good cause” exists when it is established by satisfactory evidence that factors or circumstances are beyond the reasonable control of a rational and prudent person of normal sensitivity, exercising ordinary common sense.

(c) “Lump-sum payment” means any one-time distribution or payment made under ORS Chapters 238 or 238A, or any other law directing PERS to make a payment, including a retroactive adjustment, that is not scheduled to be paid to or on behalf of a payee on a regular monthly basis.

(d) “Monthly payment” means any gross pension, annuity, service or disability retirement allowance, death benefit, or other benefit under ORS Chapter 238 or 238A that is paid monthly to or on behalf of a payee.

(e) “Overpayment” refers to an amount that is in excess of the amount a payee is entitled to under ORS Chapters 238 and 238A.

(f) “Payee” means:

(A) A member, a trust established by the member, or the member’s estate;

(B) A member’s beneficiary, a trust established by the member’s beneficiary, or the estate of the member’s beneficiary;

(C) An alternate payee, as defined in OAR 459-045-0001(2), a trust established by an alternate payee, or the estate of an alternate payee;

(D) The beneficiary of an alternate payee, a trust established by the beneficiary of an alternate payee, or the estate of the beneficiary of an alternate payee; or

(E) Any other recipient of a benefit payment by PERS.

(3) In addition to the notice of an overpayment or erroneous payment to a payee required by ORS 238.715(4), PERS shall also send an explanation of the overpayment or erroneous payment; whether the Board asserts a right to assess interest, penalties and costs of collection; and a description of the manner in which the payee may appeal the determinations reflected in the explanation, if applicable.

(4) In determining the amounts owed by a payee and setting a repayment schedule under sections (5) or (6) of this rule, PERS shall reduce the amount owed by any lump-sum payment then owed by PERS to that payee. If the payee should subsequently become entitled to any lump sum payment, it shall be applied against the amounts then owed by that payee. PERS, in its discretion, may revise the repayment schedule or continue on the established schedule until the remaining amounts owed are fully repaid.

(5) The following list includes possible methods for PERS to recover an overpayment under an agreement with the payee. These methods are listed in order of preference. Unless otherwise ordered by the Board, PERS Staff is granted the discretion to select the method deemed most likely to effect a full recovery:

(a) A repayment of all amounts owed in a single payment.

(b) A deduction of a percentage or fixed dollar amount, to be agreed upon between the payee and PERS, from future monthly payments for a period not to exceed two years that will fully repay the amounts owed.

(c) A fixed monthly dollar amount to be agreed upon between the payee and PERS that will fully repay the amounts owed.

(d) A deduction of a percentage or fixed dollar amount from future monthly payments, to be agreed upon between the payee and PERS, for a specified period greater than two years that will fully repay the amounts owed if PERS deems that a longer repayment period is warranted by the payee’s personal financial circumstances.

(6) If the payee does not agree to one of the recovery methods under section (5) of this rule, PERS shall use one or more of the following methods to effect a full recovery of any overpayment or erroneous payment:

(a) Deducting not more than 10 percent from current and future monthly payments to a payee until the full amounts owed are recovered.

(b) Making an actuarially determined reduction, not to exceed 10 percent, to current and future payments from PERS calculated to repay the full amount of the overpayment or erroneous payment during the period in which monthly payments will be made to the payee.

(c) Seeking recovery of the overpayment or erroneous payment by using any remedy available to the Board under applicable law.

(d) Engaging the services of outside collection agencies.

(7) If a recovery method has to be selected under section (6) and the overpayment is caused solely by the actions of PERS or a participating public employer, PERS will select a method which imposes the least economic hardship on the member while allowing for a reasonably prudent recovery of the overpayment.

(8) The base or original benefit payment used to calculate cost-of-living adjustments, ad hoc increases, or other benefit increases shall not be altered by an actuarial reduction provided for in subsection (6)(b) of this rule.

(9) In the event that PERS determines that an overpayment or erroneous payment was not caused by PERS or by the actions of a participating public employer, PERS may include within the amounts owed by the payee:

(a) All costs incurred by PERS in recovering the overpayment or erroneous payment, including attorney fees, and fees assessed by an outside collection agency; and

(b) Interest in an amount equal to one percent per month on the balance of the overpayment or erroneous payment until that payment is fully recovered.

(10) The Board authorizes the Director, or the Director’s designee, to waive:

(a) The interest and costs of collection associated with the recovery of an overpayment or erroneous payment for good cause shown; and

(b) The recovery of any overpayment or erroneous payment if the total amount of overpayments or erroneous payments is less than $50.

(11) Recovery of an overpayment or erroneous payment shall not be effected if PERS has not initiated recovery of those payments within six years after the date the overpayment or erroneous payment was made. PERS initiates recovery on the date it mails the notification required by ORS 238.715(4).

(12) The recovery of an overpayment or an erroneous payment shall take precedence over other deductions or reductions as set forth in OAR 459-005-0600.

Stat. Auth.:ORS 238.715(9), 238.630 & 238.650

Stats. Implemented: ORS 238.715

Hist.: PERS 14-1998, f. & cert. ef. 12-17-98; PERS 2-2006, f. & cert. ef. 2-1-06; PERS 10-2013, f. & cert. ef. 11-22-13


Rule Caption: Clarifies the requirements of a court-ordered divorce award.

Adm. Order No.: PERS 11-2013

Filed with Sec. of State: 11-22-2013

Certified to be Effective: 11-22-13

Notice Publication Date: 9-1-2013

Rules Amended: 459-045-0010

Subject: OAR 459-045-0010 was adopted in 1996 to describe how PERS benefits may be divided due to a divorce. The intent of this rule is to further clarify divorce provisions so practitioners can develop court orders that can be administered by PERS and accurately complete related forms that provide PERS with required information.

   This rulemaking will clarify the requirements for the division of lump sum benefits and provide additional design requirements for the PERS divorce forms. Sections (3) and (4) were edited to include lump sums as a benefit that may be divided by a qualified domestic relations order.

Rules Coordinator: Daniel Rivas—(503) 603-7713

459-045-0010

Tier One/Tier Two Division of Benefits

(1) A final court order that provides for a division of benefits must use a method described in this rule.

(a) The method must be identified on PERS divorce forms.

(b) The PERS divorce forms must be attached as exhibits to the court order, and incorporated by reference in the court order.

(2) Award of Alternate Payee Account (Non-Retired Member). If a final court order provides an award of an alternate payee account, the court order must provide:

(a) The date of annulment, separation, divorce, or property settlement. If no date is provided, PERS will use the date the judge signed the court order. The separate account will be established as of December 31 of the calendar year before this date unless:

(A) A prior year is provided in the court order; or

(B) The date is December 31.

(b) That a separate account be established in an alternate payee’s name.

(c) The method by which the award is to be calculated. One of the following methods must be used:

(A) A percentage, expressed with up to two decimal points; or

(B) A dollar amount.

(d) Whether an alternate payee is awarded matching employer dollars.

(e) That an alternate payee may elect to receive the award at any time after the member’s earliest retirement eligibility.

(3) Award of Payment from Member’s Benefit (Non-Retired Member). If a final court order awards an alternate payee a reduction or deduction amount from the service or disability retirement benefit that shall be paid in the future to the member, the court order must provide:

(a) The date of annulment, separation, divorce, or property settlement. If no date is provided, PERS will use the date the judge signed the court order.

(b) Whether the award is a reduction or deduction from the member’s benefit. If the award is a reduction, the court order must provide whether the alternate payee is eligible to elect a separate benefit option at any time after the member reaches earliest retirement eligibility.

(c) The benefit division calculation method that is applied to both the monthly, and if applicable, lump sum award. One of the following calculation methods must be used:

(A) A percentage, expressed with up to two decimal points;

(B) A dollar amount; or

(C) A percentage of the married time ratio. The court order must provide:

(i) The percentage, expressed with up to two decimal points; and

(ii) The years and months of creditable service time accrued by the member during a specified period or while married to the alternate payee.

(d) If there is a specific end date or dollar amount limit to the award, and what that date or limit is.

(e) Whether the award applies to service retirement benefits, disability retirement benefits, or withdrawal benefits.

(f) Whether the member is restricted from withdrawing as a member under ORS 238.265.

(g) Whether the member must select a specific benefit payment option at retirement.

(h) Whether the member is required to designate the alternate payee as a beneficiary:

(A) Before retirement; or

(B) At retirement.

(i) Whether an alternate payee award continues after the death of:

(A) The member; or

(B) The alternate payee.

(4) Award of Benefit (Retired Member). If a final court order awards an alternate payee an amount payable from a retired member’s service or disability retirement benefit, the court order must provide:

(a) The date of annulment, separation, divorce, or property settlement. If no date is provided, PERS will use the date the judge signed the court order.

(b) Whether an alternate payee award is a reduction or deduction from the member’s monthly benefit, and if applicable, lump sum.

(c) The benefit division calculation method that is applied to both the monthly, and if applicable, lump sum award. One of the following calculation methods must be used:

(A) A percentage, expressed with up to two decimal points; or

(B) A dollar amount.

(d) If there is a specific end date or dollar amount limit to the award, and what that date or limit is.

(e) Whether the member may or must change their beneficiary designation. If the member’s beneficiary designation is changed, the member’s monthly benefit must be recalculated.

(f) Whether a member who elected Option 2A or 3A under ORS 238.305(1) is allowed to receive the Option 1 benefit under ORS 238.305(6).

(g) Whether an alternate payee award continues after the death of:

(A) The member; or

(B) The alternate payee.

Stat. Auth.: ORS 238.465 & 238.650

Stats. Implemented: ORS 238.465

Hist.: PERS 5-1996, f. & cert. ef. 6-11-96; PERS 21-2005, f. & cert. ef. 11-1-05; PERS 4-2010, f. & cert. ef. 5-28-10; PERS 11-2013, f. & cert. ef. 11-22-13


Rule Caption: Permits a judge member to elect more than one beneficiary under ORS 238.565.

Adm. Order No.: PERS 12-2013

Filed with Sec. of State: 11-22-2013

Certified to be Effective: 11-22-13

Notice Publication Date: 9-1-2013

Rules Amended: 459-040-0060, 459-040-0070

Subject: Senate Bill 771 (2013) became effective on June 26, 2013. Prior to passage of the bill, a judge member was prohibited from electing more than one beneficiary to receive death benefits. This bill permits a judge member to elect more than one beneficiary. These modifications conform the administrative rules to the statutory amendment.

Rules Coordinator: Daniel Rivas—(503) 603-7713

459-040-0060

Judge Member Death Before Retirement

If a judge member dies before retiring, benefits shall be distributed and calculated as follows:

(1) For a surviving spouse:

(a) If the judge member has six or more years of service as a judge and the judge member is not an inactive judge member performing pro tem service under the provisions of ORS 238.545(4), the surviving spouse shall receive a life pension equal to two-thirds of the retirement allowance the judge member would have received under Plan A, had the judge member retired on the date of death.

(b) If the judge member has six or more years of service as a judge and the judge member is an inactive judge member performing pro tem service under the provisions of ORS 238.545(4) at the time of death, the surviving spouse shall receive a life pension equal to two-thirds of the service retirement allowance the judge member would have received under Plan B, had the judge member retired on the date of death.

(c) If the judge member has less than six years of service as a judge, the surviving spouse shall receive a lump sum payment equal to the amount credited to the judge member account in the Fund on the first of the month following the date of death.

(d) If a surviving spouse receiving a life pension under this section dies and the total amount of pension payments received by the surviving spouse is less than the amount that had been credited to the deceased judge member’s account as of the date of death of the judge member, the designated beneficiary or beneficiaries of the judge member shall receive a lump sum payment equal to the remainder.

(2) For purposes of computing a surviving spouse’s life pension in section (1) of this rule, a judge member who dies before age 60 is deemed to have died at age 60.

(3) If the judge member has six or more years of service as a judge and the judge member has no surviving spouse, the designated beneficiary or beneficiaries shall receive a lump sum payment equal to the amount credited to the judge member account in the Fund on the first of the month following the date of death.

(4) If the judge member has no surviving spouse and designated a beneficiary or beneficiaries at death, a lump sum payment equal to the amount credited to the judge member’s account on the date of death shall be paid to the judge member’s beneficiary or beneficiaries.

(5) If the judge member has no surviving spouse and no designated beneficiary or beneficiaries at death, a lump sum payment equal to the amount credited to the judge member’s account on the date of death shall be paid to the judge member’s estate.

(6) If the judge member, under the provisions of ORS 238.565(8), elects to have a portion of the pension payable to a surviving spouse paid to a former spouse, the designated portion shall be paid to the former spouse as a life pension. The portion of the pension not paid to the former spouse shall be paid to the surviving spouse, if any.

(a) The life of the first former spouse designated to receive a pension under ORS 238.565(8) will be the measuring life of the pensions payable to the surviving spouse and to any other former spouse.

(b) Upon the death of the first designated former spouse, the pensions payable to the surviving spouse and to any other former spouse shall cease.

(c) If, at the death of the first designated former spouse, the total amount of the payments received by the surviving spouse and former spouse(s) is less than the amount that had been credited to the deceased judge member’s account as of the date of the judge member’s death, the judge member’s designated beneficiary or beneficiaries shall receive a lump sum payment equal to the remainder.

Stat. Auth: ORS 238.650

Stats. Implemented: ORS 238.565

Hist.: PERS 11-2007, f. & cert. ef. 7-26-07; PERS 12-2013, f. & cert. ef. 11-22-13

459-040-0070

Judge Member Death After Retirement

If a judge member dies after the effective retirement date, benefits shall be distributed and calculated as follows:

(1) Surviving Spouse Standard Two-thirds Benefit. The surviving spouse of a judge member shall receive a life pension equal to two-thirds of the service retirement allowance the judge member is receiving or is entitled to receive on the date of death.

(2) Additional benefit for surviving spouse. The surviving spouse may be entitled to an addition to the pension described in section (1) of this rule if:

(a) The judge member selected a reduced retirement allowance under ORS 238.565(4); and

(b) The surviving spouse is the spouse of record on the effective date of retirement.

(3) No surviving spouse. If the judge member has no surviving spouse and the total amount of retirement allowance received by the retired judge member is less than the amount credited to the judge member account on the judge member’s effective retirement date, the designated beneficiary or beneficiaries shall receive a lump sum payment equal to the remainder.

(4) Death of surviving spouse. If a surviving spouse receiving a pension under section (1) of this rule dies and the total amount received as retirement allowance by the retired judge member and as pension by the surviving spouse is less than the amount credited to the judge member account on the effective date of retirement of the judge member, the designated beneficiary or beneficiaries of the judge member shall receive a lump sum payment equal to the remainder.

(5) Default beneficiary. If the judge member has no valid written designation of beneficiary form filed with the PERS Board before the judge member’s death, the beneficiary of the judge member shall be the personal representative of the judge member’s estate.

(6) Unpaid accrued retirement allowance. Any accrued retirement allowance due a retired judge member that is unpaid at the time of death of the judge member shall be paid as follows:

(a) To the surviving spouse of the judge member;

(b) If there is no surviving spouse of the judge member, to the beneficiary or beneficiaries of the judge member; or

(c) If there is no surviving spouse or beneficiary of the judge member, in the manner provided for payments under ORS 238.390(2).

(7) If the judge member, under the provisions of ORS 238.565(8), elects to have a portion of the pension payable to a surviving spouse paid to a former spouse, the designated portion shall be paid to the former spouse as a life pension. The portion of the pension not paid to the former spouse shall be paid to the surviving spouse, if any.

(a) The life of the first former spouse designated to receive a pension under ORS 238.565(8) will be the measuring life of the pensions payable to the surviving spouse and to any other former spouse.

(b) Upon the death of the first designated former spouse, the pensions payable to the surviving spouse and to any other former spouse shall cease.

(c) If, at the death of the first designated former spouse, the total amount of the payments received by the retired judge member and the payments received by the surviving spouse and former spouse(s) is less than the amount credited to the deceased judge member’s account on the judge member’s effective retirement date, the judge member’s designated beneficiary or beneficiaries shall receive a lump sum payment equal to the remainder.

Stat. Auth: ORS 238.650

Stats. Implemented: ORS 238.565

Hist.: PERS 11-2007, f. & cert. ef. 7-26-07; PERS 12-2013, f. & cert. ef. 11-22-13

Notes
1.) This online version of the OREGON BULLETIN is provided for convenience of reference and enhanced access. The official, record copy of this publication is contained in the original Administrative Orders and Rulemaking Notices filed with the Secretary of State, Archives Division. Discrepancies, if any, are satisfied in favor of the original versions. Use the OAR Revision Cumulative Index found in the Oregon Bulletin to access a numerical list of rulemaking actions after November 15, 2013.

2.) Copyright Oregon Secretary of State: Terms and Conditions of Use

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