Some PERS plan 3 members could get the opportunity to opt into PERS plan 2 under a bill scheduled for a hearing this week.

Starting January 1, 2026, HB 1642 would allow new employees to have a period of 90 days after the start of their employment to make an irrevocable choice to become a member of PERS plan 2 or PERS plan 3. After that 90-day period, if a member has not made a choice, they are defaulted to PERS 2, unless they were already a member of either plan from previous employment, in which case they are defaulted to their previously established plan. The bill permits similar plan choice for members of the Teachers’ Retirement System and the School Employees’ Retirement System.

PERS 2 is a defined benefit plan where the benefit is not dependent on stock market performance. Members vest in the plan after 5 years of service. PERS 3 has separate employer-funded pension and member-funded investment accounts. The employer-funded pension benefit vests after 10 years, or after 5 years if part of the employee’s service was after age 44. Since it has an investment aspect, PERS 3 has the potential to grow faster than PERS 2, but is higher risk since it depends on stock performance.

A fiscal note is not yet available, though it is possible the bill could have costs for local governments since it allows employees to switch to the higher cost defined-benefit plan, and defaults new employees to that plan unless they choose otherwise.

Dates to remember

HB 1642 is scheduled for a hearing in the House Appropriations Committee on February 10 at 4 pm.