WSR 01-10-082

PROPOSED RULES

DEPARTMENT OF

RETIREMENT SYSTEMS

[ Filed May 1, 2001, 9:50 a.m. ]

Original Notice.

Preproposal statement of inquiry was filed as WSR 00-08-093 and 01-06-048.

Title of Rule: WAC 415-103-010 WSPRS definitions and 415-103-215 WSPRS retirement benefit options.

Purpose: The department proposes adding a new section to chapter 415-103 WAC, Washington State Patrol retirement system benefit options, defining salary. It also proposes amending WAC 415-103-215 to give WSPRS members benefits that are actuarially equivalent. The member's estate, rather than the retirement fund, will receive any remaining accumulated contributions. Changes will also be made to make this WAC easier to understand.

Statutory Authority for Adoption: RCW 41.50.050(5), 43.43.142.

Statute Being Implemented: RCW 43.43.278, 43.43.280.

Summary: See Purpose above.

Reasons Supporting Proposal: There is no definition of salary, earnable compensation, or anything similar in chapter 415-103 WAC. Adding a definition will assist in determining retirement benefits. Currently, remaining accumulated contributions stay in the retirement fund, rather than being given to a member's estate. The amended WAC will provide retirement funds to the member's estate.

Name of Agency Personnel Responsible for Drafting: Merry A. Kogut, P.O. Box 48380, Olympia, WA 98504-8380, (360) 664-7291; Implementation and Enforcement: Zan Johnston, P.O. Box 48380, Olympia, WA 98504-8380, (360) 664-7049.

Name of Proponent: Department of Retirement Systems, governmental.

Rule is not necessitated by federal law, federal or state court decision.

Explanation of Rule, its Purpose, and Anticipated Effects: The department proposes adding a new section to chapter 415-103 WAC, Washington State Patrol retirement system benefit options, defining salary. It also proposes amending WAC 415-103-215 to give WSPRS members benefits that are actuarially equivalent. The member's estate, rather than the retirement fund, will receive any remaining accumulated contributions. Changes will also be made to make this WAC easier to understand.

Proposal Changes the Following Existing Rules: Currently, remaining accumulated contributions stay in the retirement fund, rather than being given to a member's estate. The amended WAC will provide retirement funds to the member's estate. Changes are also being made to make the WAC easier to understand.

No small business economic impact statement has been prepared under chapter 19.85 RCW. These amendments have no effect on businesses.

RCW 34.05.328 does not apply to this rule adoption. The Department of Retirement Systems is not one of the named departments in RCW 34.05.328.

Hearing Location: Department of Retirement Systems, 6835 Capitol Boulevard, Boardroom 3rd Floor, Tumwater, WA, on June 5, 2001, at 10:00 a.m.

Assistance for Persons with Disabilities: Contact the rules coordinator seven days before the hearing, if possible, phone (360) 664-7291, TTY (360) 586-5450, e-mail merryk@drs.wa.gov.

Submit Written Comments to: Identify WAC Numbers, Merry A. Kogut, Rules Coordinator, Department of Retirement Systems, P.O. Box 48380, Olympia, WA 98504-8380, e-mail Merryk@drs.wa.gov, fax (360) 753-3166, by 5:00 p.m. on June 5, 2001.

Date of Intended Adoption: No sooner than June 6, 2001.

April 30, 2001

Merry A. Kogut

Rules Coordinator

OTS-4722.3

Chapter 415-103 WAC

WASHINGTON STATE PATROL RETIREMENT SYSTEM (WSPRS) ((BENEFIT OPTIONS))


NEW SECTION
WAC 415-103-010   WSPRS definitions.   (1) General. The definitions in RCW 43.43.120 and 41.50.010 apply to this chapter. In case of conflict between definitions, RCW 43.43.120 will prevail.

(2) "Salary," for members commissioned:

(a) Prior to July 1, 2001, shall exclude any overtime earnings related to RCW 47.46.040 or voluntary overtime earned on or after July 1, 2001.

(b) On or after July 1, 2001, shall exclude any overtime earnings related to RCW 47.46.040, voluntary overtime, lump sum payments for deferred annual sick leave, unused accumulated vacation, unused accumulated annual leave, holiday pay, or any form of severance pay.

[]


AMENDATORY SECTION(Amending WSR 00-11-103, filed 5/18/00, effective 6/18/00)

WAC 415-103-215   WSPRS retirement benefit options.   ((RCW 43.43.278 requires the department to provide retiring members with an actuarially equivalent retirement option by July 1, 2000. The option pays the retiree a reduced retirement allowance which, upon the retiree's death, continues throughout the life of the lawful surviving spouse.)) (1) When retiring for service, ((the)) a married member can select either ((the historic retirement option)) Option A (historic retirement option) under RCW 43.43.270 (((Option A) or the actuarially equivalent retirement option (Option B))) or Option B under RCW 43.43.278. Both options include a survivor feature that entitles the eligible surviving spouse to receive a monthly allowance after the retiree dies.

(((1))) (2) As used in this section, the terms "spouse," "surviving spouse" and "eligible spouse" mean "lawful surviving spouse."

(3) Option A (historic retirement option and survivor benefit). The department pays the retiree a monthly retirement allowance in accordance with RCW 43.43.260 (Benefits). The department pays survivor benefits in accordance with RCW 43.43.270 (Retirement allowances).

(a) When the retiree dies, the department pays the retiree's lawful spouse a monthly retirement allowance equal to the gross monthly allowance received by the retiree, or an allowance equal to fifty percent of the average final salary (AFS) used to determine the retiree's benefit, whichever is less. This allowance is paid for the duration of the spouse's lifetime. The surviving spouse allowance will be adjusted by the annual increase amount as provided by RCW 43.43.272 (Surviving spouse allowance -- Annual adjustment).

(b) If a surviving spouse who is receiving benefits under this subsection marries another member of this retirement system and the retiree predeceases the spouse, the spouse can receive only the higher of the two survivor's allowances for which he or she qualifies. The surviving spouse cannot receive more than one survivor allowance at a time under this subsection.

(c) To be eligible for an allowance, the lawful surviving spouse of a retired member must have been married to the member prior to the member's retirement and continuously thereafter until the date of the member's death, or must have been married to the retired member at least two years prior to the member's death. ((As used in this section, the terms "spouse," "surviving spouse" and "eligible spouse" mean "lawful surviving spouse."))

(d) If the retiree has surviving unmarried children under the age of eighteen years, each child shall be entitled to a benefit equal to five percent of the retiree's AFS at retirement. The combined benefits to the surviving spouse and all children cannot exceed sixty percent of the retiree's AFS.

(e) If there is no surviving spouse or the spouse dies, the child or children will receive a benefit equal to thirty percent of the retiree's AFS for one child and an additional ten percent of AFS for each additional child.

(f) All ((payments)) benefits cease upon the death of the surviving spouse or the youngest unmarried child's attainment of age eighteen, whichever occurs last. (((2))) Any remaining balance of the member's accumulated contributions will be paid to:

(i) Such person or persons, trust, or organization as the member has nominated by written designation duly executed and filed with the department of retirement systems; or

(ii) The member's estate; or

(iii) If there is neither such designated person or persons still living at the time of death, then to the member's legal representative.

(4) Option B (actuarially equivalent retirement option and survivor benefit). The department pays the retiree a monthly benefit that is actuarially reduced by three percent to offset the cost of the survivor feature. The retiree's annual post-retirement increase (PRI) is based upon the amount of the retiree's reduced benefit.

(a) When the retiree dies, the department pays the retiree's eligible spouse a monthly retirement allowance equal to the gross monthly allowance received by the retiree. This allowance is paid for the duration of the spouse's lifetime. The surviving spouse allowance will be increased every July 1 by the amount of the PRI that had been paid to the retiree under the provisions of RCW 43.43.260(5).

(b) Benefits to the surviving spouse cease upon the spouse's death. Any remaining balance of the member's accumulated contributions will be paid to:

(i) Such person or persons, trust, or organization as the member has nominated by written designation duly executed and filed with the department of retirement systems; or

(ii) The member's estate; or

(iii) If there is neither such designated person or persons still living at the time of death, then to the member's legal representative.

(((3))) (5) Retiree's benefit increases if spouse ceases to be married to retiree or predeceases retiree (pop-up provision).

(a) This ((section)) subsection applies to members retiring on or after July 1, 2000, who select Option B.

(b) If the retiree's spouse ceases to be married to the retiree or dies before the retiree, the retiree's monthly retirement allowance increases, effective the first day of the following month, to:

(i) The amount that would have been received had the retiree chosen Option A; plus

(ii) Any post-retirement increases the retiree received prior to the survivor's death or the termination of marriage.

(c) Pop-up recalculation example:

Option B:

Bob retires on August 1, 2000. He selects Option B so that his spouse Linda, to whom he has been married for 30 years, will receive his monthly allowance and post-retirement increases after he dies. As a result, his monthly allowance is reduced by three percent from $3,000, the Option A, historic retirement and survivor benefit, to $2,910. Bob's PRI is $58.20, two percent of his reduced retirement allowance.

Unfortunately, Linda dies in September 2002. Under the "pop-up" provision, Bob's monthly benefit will increase in October 2002 to a total of $3,116.40. His new benefit amount is composed of the $3,000 he would have received had he originally chosen Option A, plus the total of the PRIs he received in 2001 and 2002.


Year Option A (Historic Survivor Benefit) Annual PRI Based on Option A Benefit Option B (Full Survivor Benefit) Annual PRI Based on Optional B Benefit Total Benefit
08/01/2000 2,910.00 (not eligible.) 2,910.00
07/01/2001 2,910.00 58.20 2,968.20
07/01/2002 2,968.20 58.20 3.026.40
10/01/2002 3,000.00 3,116.40
07/01/2003 3,000.00 60.00 3,176.40

On July 1, 2003, Bob's PRI will be two percent of the Option A amount ($60.00) and his benefit will increase to $3,176.40.

(d) If the retiree whose benefit increases under this section thereafter dies before all contributions are exhausted and there is no surviving spouse or eligible child, ((the)) all benefits cease. Any remaining balance is ((retained by the retirement fund)) paid to:

(i) Such person or persons, trust, or organization as the member has nominated by written designation duly executed and filed with the department of retirement systems; or

(ii) The member's estate; or

(iii) If there is neither such designated person or persons still living at the time of death, then to the member's legal representative.

[Statutory Authority: RCW 43.43.278 and 41.50.050. 00-11-103, 415-103-215, filed 5/18/00, effective 6/18/00.]

Washington State Code Reviser's Office