Oregon Task Force Pension Proposals Could Affect Oregonian Bank Accounts

In order to reduce Oregon PERS’ pension deficit, Governor Kate Brown to look at a series of out-of-the-box options.

Oregon’s Governor Kate Brown’s public employee pension reduction bill may wind up costing Oregonians themselves, according to proposals made by her task force at a Monday meeting held at Portland State University.

The proposals include putting a surcharge of up to 10% on state fees such as hunting licenses and auto registrations, and allowing cities and counties to raise alcohol and tobacco taxes .

Governor Brown seeking to reduce Oregon’s Public Employees Retirement System’s (PERS) unfunded liability by $5 billion. Since she and legislators haven’t been able to agree on any pension reform, Brown and her task force have been encouraged to think outside the box to make the cuts.

Task force chairman and former Nike CFO Don Blair suggested Oregon could find ways to profit from the liquor business by raising beer and wine taxes, which he said haven’t increased in decades, reported Jefferson Public Radio.

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Blair noted state-owned workers compensation insurer Saif could either reduce dividends to policy holders, or be delegated to the private sector.

“There may be some impact to workers comp premiums,” Blair said, adding that Oregon has “among the lowest workers comp premiums in the United States.”

Brown’s task force is also seeking to find alternate ways to raise money without raising taxpayer costs, such as selling surplus property and sending some legal settlements towards the pension deficit.

Task force members added that by lowering the liabilities would help curb the increases to employer pension costs.

The task force is scheduled to deliver its report on the fund to Governor Brown by November 1. Blair said he expects Brown to choose from several options before deciding which proposals to take to legislators.

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Ball Transfers Pension Liabilities to Prudential Annuity

Move will reduce the company’s pension obligation by $220 million.

The Ball Corporation, a packaging and aerospace company, has agreed to purchase a group annuity contract from Prudential that will transfer payment responsibility liabilities for retirement pension benefits owed to approximately 11,000 Ball and Rexam retirees in the U.S.

“With this change, Ball is lowering the cost and effectively managing the risk associated with its U.S. pension plans, as well as streamlining their administration,” said CFO Scott Morrison.

All in-pay participants will continue to receive their benefits from the company’s pension plan until Oct. 31, when Prudential will assume responsibility for payments, as well as administrative and customer service support, and will guarantee the pension benefits. Ball said that by transferring the payment obligations to Prudential, the company will reduce its U.S. qualified pension plan liabilities by approximately $220 million.

Although the payer name will change, the company said its retirees will receive the same monthly benefit they have been receiving from Ball, and will receive more information on the change via mail within the coming weeks.

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Ball said it expects to incur a non-cash, non-comparable settlement charge of approximately $40 million in Q3 related to the annuity transfer. It also said that the move doesn’t change the company’s previously stated pension funding plans, comparable free cash flow, or comparable earnings targets.

“The agreements do not impact any benefits provided to current employees,” said the company.

Willis Towers Watson served as strategic advisor to Ball Corporation in the transaction.

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