Several of you have contacted me recently as a result of member questions regarding the distribution of 2007 income to Tier One participants. Instead of receiving the full amount of the 8% guarantee members received 7.97% for the 2007 income distribution. A number of members have inquired about that difference.

In the Strunk case the court held two of the provisions of the 2003 reform legislation to be unconstitutional. We asked the court for an award of attorney fees under what is referred to as a common fund theory. Under that theory the courts are permitted to require the entire group who benefitted from the litigation to share in the payment of reasonable attorney fees. In Strunk the court held that all Tier One active participants should share in the payment of attorney fees because of the reinstitution of the 8% guarantee. The court also held that all window retirees should share in the payment of attorney fees because of the decision which reinstated their COLA benefits. For active participants the court decided that they would pay those fees by contributing 0.03% of their 2007 earnings allocation into a fund to be used to pay attorney fees. Similarly the court determined that window retirees would be assessed a one-time charge for restoring their COLA benefits. My recollection is that this one-time charge will be on average approximately $25 per retiree. PERS intends to make this one-time charge in August at the same time that all window retirees should be receiving their latest COLA benefit.

All of the funds which were contributed by the active participants as well as the window retirees were paid to the attorneys who represented the plaintiffs in the Strunk litigation. The fees which were paid to our firm were used initially to pay back the Coalition for all of the fees they had paid in the Strunk case, with the remainder retained by our firm.

I am sending this out in the hopes it will provide sufficient information so that you can respond to member inquiries. If you need more information don’t hesitate to contact me.