18
and at best to a complete readjustment
of living habits.
Effects of Inflation:
It is well known that those who
rely on receiving a fixed number of
dollars for their livelihood are hard
hit by rising living costs. Our $2.50
per month prior service allowance set
in 1945 and our present increased $4.00
allowance starting Ju ly 1, 1951, are
practically the same amount in buying
power; from the receiver’s stand point
.there is no actual gain to him; infla
tion soaked up that extra $1.50 per
month!
The retirement allowance built up
during current service since Ju ly 1,
1946 (maximum of $18.32) has not in
creased and never will, even if the
cost of living should increase another
80% or so. The retired employee has
experienced a steady decrease in the
buying power of his retirement allow
ance, initially pitifully small and in
adequate.
Such conditions explain in part why
many retired employees are working
those 600 hours per year of emergency
employment for the State, why some
are on old age assistance, while others*
are being supported by their families
or friends. Also, these inflationary
trends explain in part the demands to
the legislature by varied interests for
modifications in the Retirement Law
such as: higher retirement age, easing,
up the employment reinstatement con
ditions, increasing the maximum SaM
ary on which contributions and State
matching may be made, permitting in
vestment of the Fund in higher yields,
ing stocks, bonds, et cetera. They are
also responsible in large measure for
employee requests for more liberal
benefits, more State matching funds,
permissible retirement after 30 years
of service regardless of age, larger
death benefits'^ better disability pro
tection, and in one way or another,
simply “more dollars.”
Far Short of the Objective
As stated before, it is intended that
retired employees are to receive, a
half-pay retirement allowance after 30
years of current service at age 65. We
have seen that the maximum allow
ance as of Ju n e 30, 1951 is $98, for 25
or more years of service, and in an
other 5 years could be as much as $119.
It will be December of 1957, at pres
ent rates and limitations, before any
one can draw a retirement allowance
of $125 per month which is the present
maximum allowance payable (exclus
ive of prior service) under the present
system. This is because prior service
credit is limited to a maximum of 20
years, and current H ^ ^ ce retirement
allowance (for 30 years or more of
service?)^ is limited to a maximum of
$125 per month, based on contribu
tions being made on maximumf salary
of $3,000 per year. Thesejftwo limita
tions were placed in th'e^Law to save
the State from putting in the money
originally intended and necessary to
meet the objective of the Act.
Practically every change made in the
.la w S n c e 1945 and practically every
request for change^ lias- I been due to
orie or the other of the twb main de
ficiencies in the Law;' viz: inadequate
provision for those retired during the
early years and the State’s limitation
on the amount it will match.
It might be said, also.; .that the pres
ent A ct-is somewhat dfefici’ent regard
ing death benefits as compared with
msfi^yfother sound- systems.
Some Proposed Remedies:
It is necessary that Oregon’s Retire
ment System remain on ¡ay sound fin
ancial basis. A t present we are .on^an
“ actuarially” ¿ sound financial basis.
There is
difference. The federal
social Security program is financially
sound as the government takes from
'the public what money is necessary to
make promised payments as due. It
can dig up the money at any time and
as needed. In an “ actuarially” -H u n d
prograni|j the probabilities of income
and demand . $re calculated and the
money has to bejgBoliecte'd in advance:
payments are made only to the extent
of the funds so provided. It is said
that social security is a welfare and
insurance program; whereas retire
ment systems such as ours are com
pensation and/j^HHg|s programs. As
nronw ld l remedy
might be
suggested that a- Stale “ welfare.: and
insurance” program could be integrat
ed with our present system to thus
provide a larger measure of'protection
to retired State employees.