PROPOSED RULES
RETIREMENT SYSTEMS
Original Notice.
Preproposal statement of inquiry was filed as WSR 07-11-106.
Title of Rule and Other Identifying Information: WAC 415-02-350 What are cost of living adjustments (COLA) and how are they calculated?
Hearing Location(s): Department of Retirement Systems, 6835 Capitol Boulevard, Conference Room 115, Tumwater, WA 98501, on December 11, 2007, at 10:00 a.m.
Date of Intended Adoption: December 13, 2007.
Submit Written Comments to: Sarah Monaly, Rules Coordinator, Department of Retirement Systems, P.O. Box 48380, Olympia, WA 98504-8380, e-mail sarahm@drs.wa.gov, fax (360) 753-3166, by 5:00 p.m. on December 11, 2007.
Assistance for Persons with Disabilities: Contact Sarah Monaly by December 4, 2007, phone (360) 664-7291, e-mail sarahm@drs.wa.gov, TDD (360) 586-5450 or (866) 377-8895.
Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The purpose of this proposal is to amend rules to implement SB 5175 (2007), which modifies the eligibility requirements for retirees, beneficiaries, or eligible ex-spouses of either the public employees' retirement system (PERS) Plan 1 or Teachers' retirement system (TRS) Plan 1 who receive a cost of living adjustment (COLA). Prior to SB 5175, PERS Plan 1 and TRS Plan 1 retirees, beneficiaries, and eligible ex-spouses were eligible for a COLA if they were retired for one year and reached age 66 by July 1 of the year in which the COLA was given. Now, PERS Plan 1 and TRS Plan 1 retirees, beneficiaries, and eligible ex-spouses are eligible for a COLA if they are retired for one year by July 1 of the year in which they reach age 66. WAC 415-02-350 needs amending to reflect this change.
Reasons Supporting Proposal: SB 5175 took effect on July 1, 2007. The department needs to update its rules to assist plan members, retirees, employers and department staff.
Statutory Authority for Adoption: RCW 41.50.050(5).
Statute Being Implemented: RCW 41.40.197 and 41.32.489.
Rule is not necessitated by federal law, federal or state court decision.
Name of Proponent: Department of retirement systems, governmental.
Name of Agency Personnel Responsible for Drafting: Sarah Monaly, P.O. Box 48380, Olympia, WA 98504-8380, (360) 664-7291; Implementation and Enforcement: Cathy Cale, P.O. Box 48380, Olympia, WA 98504-8380, (360) 664-7305.
No small business economic impact statement has been prepared under chapter 19.85 RCW. These rules have no effect on businesses.
A cost-benefit analysis is not required under RCW 34.05.328. The department of retirement systems is not one of the named departments in RCW 34.05.328.
November 6, 2007
Sarah Monaly
Rules Coordinator
OTS-1185.1
AMENDATORY SECTION(Amending WSR 06-18-009, filed 8/24/06,
effective 9/24/06)
WAC 415-02-350
What are cost-of-living adjustments
(COLA) and how are they calculated?
(1) What is a
cost-of-living adjustment (COLA)? The value of a retiree's,
beneficiary's, or ex-spouse's monthly allowance may change in
the years after retirement because of inflation or other
factors. A COLA automatically adjusts benefits based on the
cost of living changes.
(2) What retirement plans include COLAs? With one exception, all retirement plans administered by the department provide one or more of the types of COLAs listed in subsection (3) of this section. The judges retirement fund (chapter 2.12 RCW) does not provide a COLA.
| RETIREMENT SYSTEM | PLAN | COLA TYPE | STATUTE |
| JUDICIAL | Base | RCW 2.10.170 | |
| LEOFF | Plan 1 | Base | RCW 41.26.240 |
| LEOFF | Plan 2 | Base | RCW 41.26.440 |
| PSERS | Base | RCW 41.37.160 | |
| PERS | Plan 1 |
Uniform | RCW 41.40.197 |
| PERS | Plan 1 | Optional Auto | RCW 41.40.188 (1)(c) |
| PERS | Plan 2 | Base | RCW 41.40.640 |
| PERS | Plan 3 | Base | RCW 41.40.840 |
| SERS | Plans 2 and 3 | Base | RCW 41.35.210 |
| TRS | Plan 1 | Uniform | RCW 41.32.489 |
| TRS | Plan 1 | Optional Auto | RCW 41.32.530 (1)(d) |
| TRS | Plan 2 | Base | RCW 41.32.770 |
| TRS | Plan 3 | Base | RCW 41.32.845 |
| WSPRS | Plans 1 and 2 |
Base | RCW 43.43.260 |
(a) Auto COLA
The auto COLA, if offered under your plan, is an option
you may select at retirement. If you choose this option, your
monthly retirement allowance will be actuarially reduced at
retirement, and you will receive an automatic adjustment in
your monthly retirement allowance each year for the rest of
your life. The auto COLA has no age requirement and is
limited to a maximum of ((3% times)) three percent of your
monthly allowance.
(b) Base COLA
The base COLA is applied in July (April for LEOFF Plan 1)
of each year and adjusts the benefit based on the change in
the ((CPI)) Consumer Price Index for the Seattle area. Base
COLAs are limited to a maximum of ((3% times)) three percent
of the monthly allowance for all affected plans except LEOFF
Plan 1. ((They are)) During a calendar year, the base COLA is
payable to:
(i) Retirees((, beneficiaries, and ex-spouses)) who have
been retired for at least one year ((before)) by July 1st of
each year (April 1st for LEOFF Plan 1); and
(ii) Beneficiaries or eligible ex-spouses who receive benefit payments from an account that, by July 1st, has paid a monthly benefit for at least one year (April 1st for LEOFF Plan 1).
(c) Uniform COLA
The uniform COLA is an annual adjustment to the benefit, based on years of service. The annual adjustment for the uniform COLA is independent from any other COLA. During a calendar year, it is payable to:
(i) ((Retirees, beneficiaries, or ex-
spouses age 66 or older who have been retired for at least one year by July 1st of each year; and
(ii))) Retirees who, by July 1st, have received a retirement benefit for at least one year and who, by December 31st, will have reached age sixty-six or older;
(ii) Beneficiaries and eligible ex-spouses who receive benefit payments from an account that, by July 1st, has paid a monthly benefit for at least one year and who, by December 31st, will have reached age sixty-six or older; and
(iii) Retirees, beneficiaries, or eligible ex-spouses of any age whose retirement benefit is calculated under the minimum formula.
(4) Who is responsible for determining the amount of the COLA? The office of the state actuary (OSA) bases the percentages of the COLAs on the Consumer Price Index. The Index is based on wages earned by urban wage earners and clerical workers in the Seattle-Tacoma-Bremerton, Washington area. OSA provides this information to the department annually.
[Statutory Authority: RCW 41.50.050(5), 2.10.170, 41.26.240, 41.26.440, 41.37.160, 41.40.197, 41.40.188 (1)(c), 41.40.640, 41.40.840, 41.35.210, 41.32.489, 41.32.530 (1)(d), 41.32.770, 41.32.845, 43.43.260. 06-18-009, § 415-02-350, filed 8/24/06, effective 9/24/06. Statutory Authority: RCW 41.50.050(5) and chapter 41.45 RCW. 03-06-044, § 415-02-350, filed 2/27/03, effective 4/1/03.]