PERS reports preliminary 2024 earnings crediting of about $5.2 billion; subcommittee acknowledges receipt

The General Government Subcommittee of the Oregon Legislature acknowledged receipt of the Public Employees Retirement System(PERS) 2024 preliminary earnings crediting report at a work session on Feb. 20.

PERS staff told the committee the PERS Board approved preliminary earnings on Jan. 31, 2025, and the agency presented a net credited amount of approximately $5.2 billion for 2024, net of investment and administrative expenses. Richard Horsford, chief financial officer at Oregon PERS, said Tier 1 accounts are credited at the assumed rate of 6.9%, while most other accounts were credited in a range near the low- to mid-5 percent range and that target-date and variable funds vary more widely because of differing investment mixes and timing.

The report matters because earnings crediting feeds into employer contribution-rate setting. Legislative Fiscal Office (LFO) staff told the committee that 2024 investment returns (about 5.54% overall, per the LFO presentation) were roughly $1.3 billion below the assumed rate, increasing the unfunded actuarial liability (UAL) from about $24 billion to about $25.1 billion and reducing funded status from roughly 77.5% to about 77%. LFO staff also noted that some private-equity returns are reported with a lag and are not fully reflected in the 2024 numbers presented to the committee.

PERS staff described several operational items during the presentation. Horsford said the primary driver of estimated benefit payments is missing payroll information from employers: "the primary driver of having to do estimated payments is that we're missing some type of payroll information." He also said the agency applies administrative costs to earnings; PERS reported administrative operations costs of about $103 million that are allocated across funds in proportion to fund balances.

The agency reported improvement on accounts receivable: beginning the last fiscal year at roughly $16 million and ending the year near $5 million. PERS staff said most collections or issues that produced receivables are now being resolved within a month when estimated payments are initially issued.

Legislators asked several implementation and outreach questions. Senator Manning, Representative Tran and other members pressed PERS on member education and how to improve financial literacy so members understand fund choices and the meaning of earnings crediting; PERS said it is expanding virtual outreach, won awards for a virtual PERS Expo, and is seeking to make two limited-duration communications staff positions permanent to improve member materials.

After testimony from PERS and recommendations from the Department of Administrative Services and the Legislative Fiscal Office that the committee acknowledge receipt, Representative Gomberg moved to acknowledge receipt of the report; the chair called for opposition and, seeing none, the committee approved the motion.

PERS staff said final earnings crediting will be adopted by the PERS Board on March 31, 2025; the final figures will be used in advisory work that helps set employer rates for the 2027-29 biennium.