SENATE BILL REPORT

2SHB 2154

BYHouse Committee on Judiciary (originally sponsored by Representatives Belcher, Dellwo, Hargrove, Locke and H. Myers) 

Regarding retirement benefits.

House Committe on Judiciary

Senate Committee on Ways & Means

Senate Hearing Date(s):February 26, 1990

Majority Report:  Do pass as amended.

      Signed by Senators McDonald, Chairman; Craswell, Vice Chairman; Amondson, Bailey, Bauer, Bluechel, Cantu, Gaspard, Hayner, Johnson, Lee, Moore, Newhouse, Niemi, Saling, Smith, Warnke, Wojahn.

Senate Staff:Michael Groesch (786-7715)

                  February 27, 1990

AS REPORTED BY COMMITTEE ON WAYS & MEANS, FEBRUARY 26, 1990

BACKGROUND:

When a married couple gets divorced, vested retirement benefits are divided according to community property rules.  Until 1987, the Department of Retirement Systems (DRS) was responsible for dividing the retirement benefits according to dissolution decrees or other court orders.  DRS was required under various retirement acts to make direct payments to the nonmember spouse (obligee) according to the property division in the divorce decree.

In addition to community property divisions, the court may order spousal maintenance based upon equitable principles.

In 1987, the Legislature enacted a bill that was intended to clarify the department's responsibilities when dividing payments.  The bill was also enacted to create a collection mechanism for obligees whose spouses were not paying court-ordered spousal maintenance.  However, when the collection mechanism was created for spousal maintenance, the law eliminated direct payment of community property interests.  As a result, obligees no longer automatically receive the benefits they had received automatically under the prior direct benefit scheme.  The mechanism created is termed the "mandatory benefits assignment order."  That mechanism places responsibility upon the obligee to obtain a court order requiring the department to make specified payments to the obligee.  The obligee may not obtain an order until the member spouse (obligor) is 15 days delinquent in an amount of $100 or more.  DRS may not withhold more than 50 percent of the obligor's disposable benefits.  The federal and state garnishment statutes also impose limits upon attaching an obligor's wages and pensions.  DRS must notify an obligee if an obligor requests a lump sum withdrawal of accumulated contributions but no statutory mechanism exists to legally prevent DRS from disbursing those sums to the obligor.

SUMMARY:

Direct payments for community property division payments are restored.  The spouse may still obtain a mandatory assignment benefits order enforcing spousal maintenance awards. The provisions governing each mechanism are separated to reduce confusion.  The term disposable benefits is clarified to read that elective deductions by a member must be deducted after compliance with the court order.  The 50 percent cap on withdrawing funds to satisfy the obligation is removed for community property divisions.  The cap on spousal maintenance obligations still exists and is clarified to distinguish it from garnishments. The garnishment statute is amended to reflect that garnishments for spousal maintenance have a 50 percent cap.  An obligee may obtain a restraining order pending resolution of the dissolution restraining the department from disbursing funds to the obligor until a court rules on the appropriate distribution between the parties.  The department may collect a $75 fee for initially setting up the direct payment scheme and may charge $6 for subsequent disbursements.  All benefits cease upon death of the nonmember spouse.  The department must provide the obligee with information about the account so that the obligee can comply with federal tax requirements.

Appropriation:    none

Revenue:    none

Fiscal Note:      available

SUMMARY OF PROPOSED SENATE AMENDMENTS:

Enactment of the bill is contingent on reference and funding in the budget.

Under the Law Enforcement Officers and Fire Fighters (LEOFF) retirement system the definition of surviving spouse is retroactively changed to include an ex-spouse who has been provided benefits under a court decree.  Restrictive stipulations apply for a person to qualify for benefits under the new definition.

Senate Committee - Testified: Geoff Gibbs, British Petroleum (pro)