FINAL BILL REPORT

HB 1649

                                  C 195 L 88

BYRepresentatives Sayan, Patrick, H. Sommers, Holland, Basich and D. Sommers 

Revising pension portability provisions.

House Committe on Ways & Means/Appropriations

Senate Committee on Ways & Means

SYNOPSIS AS ENACTED

BACKGROUND:

In 1987 the Legislature enacted a bill to allow members of the Public Employees' Retirement System (PERS), the Teachers' Retirement System (TRS), the Washington State Patrol Retirement System (WSPRS), and the Statewide Cities Employees Retirement System (SCERS) to move between those four systems without suffering a significant reduction in their retirement benefits, beginning July 1, 1988. The legislation permits persons to combine their service in those four systems for the purpose of determining retirement eligibility. (PERS Plan I and TRS Plan I both allow a member to retire at age 55 with 25 years of service, or at any age with 30 years of service.)  Members may also calculate their retirement allowances using the "base salary" earned in any of the four systems. (Base salary is defined as the salaries or wages earned by a member, excluding any overtime and lump sum payments.)

The SCERS was abolished in 1971; all active members of SCERS became members of PERS at that time and later were allowed to receive credit in PERS for their prior service in SCERS.

The 1987 portability legislation prohibits use of the portability benefit ("dual membership") if the member is receiving a disability benefit from PERS, TRS, WSPRS, SCERS or from one of the city employee retirement systems for Seattle, Tacoma or Spokane.

Under the 1987 act the surviving spouse of a dual member may receive a survivor benefit from each of the dual member's systems, as if the dual member were active in each of the systems at the time of death.  PERS and TRS provide the surviving spouse of a member who has at least 10 years of service with a survivor allowance, which is based on the member's length of service. The WSPRS provides the surviving spouse of a member who has any length of service with an allowance equal to 50 percent of the member's salary.

The 1987 bill includes a "maximum benefit limitation." The sum of the retirement allowances received under the bill may not exceed the smallest amount the member would have received if all of his or her service had been rendered in any one of the member's systems. The bill does not, however, provide guidelines for enforcing this limitation.

During the fall of 1987 the Joint Committee on Pension Policy reviewed the 1987 portability act and recommended several clarifying amendments.

SUMMARY:

The following changes are made to the statute on portability of public retirement benefits:

1.  Definitions that are no longer used are deleted and the definitions of "base salary" and "director" are clarified.  The definition of "dual member" is clarified to exclude any person who is receiving disability benefits from any retirement system administered by the Department of Retirement Systems.

2. References to the city employee retirement systems of Seattle, Tacoma and Spokane are clarified. The Statewide City Employees Retirement System is removed from the coverage of the act.

3.  The section creating the basic portability benefit is rewritten to more clearly define the benefit. The benefit is not modified.

4.  The portability survivor benefit is not made available to former members of the Washington State Patrol Retirement System.

5. Guidelines are provided for administering the maximum benefit limitation.

6. Each participating retirement system may pay a dual member a lump sum payment in lieu of a monthly benefit if the initial monthly benefit would be less than $50.

VOTES ON FINAL PASSAGE:

      House 94   0

      Senate    49     0

EFFECTIVE:July 1, 1988