The Oregon state employee., December 01, 1944, Page 34, Image 34

32
League of Oregon Cities Sponsors
Retirement Plan
(Continued from page 31)
for ordinary occupations to be
65; for police and firemen, 60.
Earlier retirement will be per­
mitted with reduced benefits
. at voluntary retirement age of
60 for ordinary occupations
and of 5 5 for police and fire­
men.14
b. On application of the employ­
er, employment of any mem­
ber may be extended by the
Board of Trustees, a year at a
time, to a maximum of five
years past the compulsory re­
tirement age, if that would be
in the interest of the public
service.15
1 It is suggested that an appointed board
without ex-officio members be set up to
administer the retirement system. The
principal elected officers of the state now
serve ex-officio on so many boards and
commissions that they have little time to
spare for additional boards. The adminis­
tration of the retirement system by some
existing department of the state govern­
ment is not recommended because this
arrangement has not been entirely satis­
factory in some of the states and cities
that have tried it.
2 The State Bond Commission, which con­
sists of the Governor, State Treasurer,
and one member of the State Industrial
Accident Commission, is now charged by
law with the duty of investing most of
the funds of the state. It is suggested
that the board of trustees be given the
same right of approval that the World
War Veteran State Aid Commission is
now authorized to exercise.
3 There are three general plans under
which the administrative expenses of re­
tirement systems are financed. In some
cases, as in California, the legislature
makes a special appropriation to meet the
administrative expenses of the system. In
other states, such as Ohio, each employee
pays an annual membership fee of $1.00
which provides the administrative ex­
penses. In Ohio, this fee has not been
sufficient at times and has made the
problem of administration difficult. The
greatest flexibility is attainable where
the administrative expenses are deducted
on a pro rata basis from all contributions
coming into the fund. Since the board of
Trustees would have membership repre­
sentation, there is little likelihood that
this arrangement would be abused, and
the actual requirements of good admin­
istration could better be met because of
the flexibility.
4 Provisions with reference to the coverage
of local units of government vary consid­
erably from state to state. Where teach­
ers are covered in a state-wide pension
system, the school districts are usually
required to participate. The same is true
of counties in some states. In Ohio, every
city and county is automatically covered
by the system, while in New York and
California, cities and counties are covered
only upon application. The provision sug­
gested above is patterned after the Colo­
rado plan which has worked out quite
successfully. It provides home rule while
also indicating a definite state policy.
5lllinois plan includes all employees norm­
ally working 600 hours or more per year.
6 New York requires 60 percent vote; Cali­
fornia, 2/3 vote.
7 The question is sometimes raised as to
whether the higher paid employees should
be covered on the basis of their full sal­
ary. This seems to be desirable from the
standpoint of achieving the personnel ob­
jectives of a retirement system. However,
the Governor's committee recommended
in 1941, that contributions be made only
on a maximum salary of $3,000, and the
Ohio system provides for contributions
on a maximum salary of only $2,000. The
California system provides for contribu­
tions on a maximum salary of $5,000. Most
state and local pension systems provide
for a contribution and for the calculation
of the annunity on the basis of the entire
salary received.
8 In Ohio, the prior service pension consists
of 1% percent of the prior service salary,
multiplied by the number of years of
prior service, and is paid entirely by con­
tribution of the employer. In New York,
full credit is given for prior service, and
prior service pensions are financed by a
“deficiencv contribution” paid by the em­
ploying agency. This deficiency contribu­
tion has amounted to approximately 3
percent of the total salary over a period
of years in New York State, and is in
addition to the current service contribu­
tion of the employing agency.
9The Illinois system provides full credit
for prior service at employer’s expense,
but stipulates that prior service credit
cannot be used to provide an annuity in
excess of 50% of final earnings.
10 In New York, a member of the system
may continue membership in the svstem
while in the armed forces of the United
States by contributing into the fund
monthly, such amount as he would have
paid had he continued in his regular em­
ployment. In California, a member serv­
ing in the armed forces or on ships oper­
ated by or for the government, may con­
tribute while absent or after return to
service, such contributions to be matched
bv the employer.
11 In order to protect the financial sound­
ness of the system, annunities must be
based upon the amount of money that has
been accumulated for each employee by
the time of his retirement. The State of
New York provides that the pension shall
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