WSR 08-20-068

PERMANENT RULES

DEPARTMENT OF

RETIREMENT SYSTEMS

[ Filed September 25, 2008, 8:51 a.m. , effective October 26, 2008 ]


Effective Date of Rule: Thirty-one days after filing.

Purpose: The purpose of this rule-making order is to adopt changes to TITLE 415 WAC that contain typographical errors and incorrect references to repealed statutes and rules. The substance and meaning of these rules are not changing.

Citation of Existing Rules Affected by this Order: Amending WAC 415-02-010, 415-02-310, 415-02-350, 415-02-360, 415-112-544, 415-113-055, and 415-113-057.

Statutory Authority for Adoption: RCW 41.50.050(5).

Other Authority: For WAC 415-02-310 and 415-02-360 is chapter 41.45 RCW; for WAC 415-112-544 is RCW 41.32.800, 41.32.860, 41.32.802, 41.32.862; and for WAC 415-113-055 and 415-113-057 is chapter 41.54 RCW.

Adopted under notice filed as WSR 08-15-093 on July 17, 2008.

Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.

Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

Number of Sections Adopted on the Agency's Own Initiative: New 0, Amended 7, Repealed 0.

Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 7, Repealed 0.

Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 7, Repealed 0.

Date Adopted: September 25, 2008.

Sandra J. Matheson

Director

OTS-1773.1


AMENDATORY SECTION(Amending WSR 00-10-016, filed 4/21/00, effective 5/22/00)

WAC 415-02-010   Identification.   The department of retirement systems is a department of state government created by chapter 105, Laws of 1975-'76 2nd ex. sess.

(1) The chief executive officer of the department of retirement systems is the director of retirement systems.

(2) Members of the public may obtain information, make submittals or requests, or obtain copies of agency decisions by addressing their requests or submittals to the director of the Department of Retirement Systems at P.O. Box 48380, Olympia, Washington, 98504. Upon receipt of such a request or submittal, the director shall forward the same to the proper officer or employee of the department of retirement systems for an appropriate response.

(3) Members of the public who wish to inspect and/or copy public records maintained by the agency pursuant to chapter ((42.17)) 42.56 RCW shall do so in accordance with the methods and procedures established in chapter 415-06 WAC.

[Statutory Authority: RCW 41.50.050. 00-10-016, 415-02-010, filed 4/21/00, effective 5/22/00; Order 4, 415-02-010, filed 7/27/77.]


AMENDATORY SECTION(Amending WSR 03-06-044, filed 2/27/03, effective 4/1/03)

WAC 415-02-310   How does the department use my age in calculating benefits?   This section provides an overview of the several different ways in which the department uses age in calculating benefits. The department may use your age to determine your retirement date, early retirement factors to apply, survivor factors, or cost of living adjustment factors.

(1) Present value: The department uses a rounding method to determine your age when calculating what your future lifetime monthly benefit is worth in present-day dollars. If the number of months in your age is under six months, the department will round down. If the number is six months or more, the department will round up. See WAC 415-02-340 for more information about the present value calculations.


Example 1:


At the time that the department is calculating Sharon's age in making a present value calculation, Sharon is 55 years, 5 months and 26 days old. The department will round down and use 55 as Sharon's age.


Example 2:


At the time that the department is calculating Donna's age in making a present value calculation, Donna is 54 years and 7 months old. The department will round up and use 55 as Donna's age.


(2) Early retirement: The department uses the difference between your "fully eligible retirement date" and your actual retirement date in calculating any actuarial reductions to your benefits. See WAC 415-02-320 for more information about early retirement.

(a) Step 1: Determine the fully eligible retirement date.

(i) The department first calculates the date on which you would have been fully eligible to retire.

(ii) All plans (except for LEOFF Plan 1, TRS Plan 1, WSPRS Plans 1 and 2, JRF and JRS): You can retire the first day of the month following your meeting the age requirement for retirement if you are otherwise eligible.


Example: Jake was born on May 12, 1934. On May 12, 1999, Jake reaches age 65 and has met the age requirement for retirement. Provided that he is otherwise eligible, Jake's retirement date is June 1, 1999.

(iii) LEOFF Plan 1, TRS Plan 1, WSPRS Plans 1 and 2, JRF, and JRS: If a retirement date other than the first of the month is allowed, you can retire on the day you meet the age requirement, or the following day (depending on the plan).


Example: If Jake is a member of this type of plan, he could retire May 12th or 13th, 1999 (his birthday or the day after his birthday).

(b) Step 2: Determine the difference. The department next calculates the difference between your fully eligible retirement date and your actual retirement date by subtracting the actual retirement year and month from the fully eligible retirement year and month. (Days are not used in the calculation.)

(i) Example:

Fully eligible date: 06/01/99
Minus actual retirement date: 08/01/95
Difference: 3 years, 10 months
(ii) Example:

Fully eligible date: 05/25/99
Minus actual retirement date: 08/01/95
Difference: 3 years, 9 months
(c) Step 3: Determine the early retirement factor. The department uses the difference calculated in step 2 to determine the early retirement factor (ERF) used to calculate your benefit as described in WAC 415-02-320.

(3) Optional COLA Factor for PERS Plan 1 and TRS Plan 1. The department uses the rounding method described in the "present value" subsection in this section to calculate your age when determining the optional COLA factor. See WAC 415-02-360 for a description of the optional COLA factor calculation.

(4) Calculating age to use in determining the survivor option factor. At retirement, if you select a survivor option, the department must calculate the difference between your age and your beneficiary's age. See WAC 415-02-380 for more information about survivor options.

(a) Step 1: The department calculates your age and your beneficiary's age at the time of your retirement.

(b) Step 2: The department rounds the ages, using the same method described in the "present value" subsection in this section.

(c) Step 3: The department subtracts your beneficiary's age from your age.

Example:

Member's age: 60
Minus beneficiary's age: 49
11
Result: The department will use the survivor option factor for a beneficiary who is 11 years younger than the member.

Example:

Member's age: 65
Minus beneficiary's age: 67
-2
Result: The department will use the survivor option factor for a beneficiary who is two years older than the member.

(5) Terms used

(a) JRF - Judicial retirement fund.

(b) JRS - Judicial retirement system.

(c) LEOFF - Law enforcement officers' and fire fighters' retirement system.

(d) PERS - Public employees' retirement system.

(e) SERS - School employees' retirement system.

(f) TRS - Teachers' retirement system.

(g) WSPRS - Washington state patrol retirement system.

[Statutory Authority: RCW 41.50.050(5) and chapter 41.45 RCW. 03-06-044, 415-02-310, filed 2/27/03, effective 4/1/03.]

OTS-1774.1


AMENDATORY SECTION(Amending WSR 08-01-079, filed 12/17/07, effective 1/17/08)

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

(3) What are the types of COLAs?

(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 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 Consumer Price Index for the Seattle-Tacoma-Bremerton, Washington area. Base COLAs are limited to a maximum of three percent of the monthly allowance for all affected plans except LEOFF Plan 1. During a calendar year, the base COLA is payable to:

(i) Retirees who have been retired for at least one year 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 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). 08-01-079, 415-02-350, filed 12/17/07, effective 1/17/08. 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.]


AMENDATORY SECTION(Amending WSR 02-18-048, filed 8/28/02, effective 9/1/02)

WAC 415-02-360   What is the optional cost-of-living adjustment (COLA) for PERS Plan 1 and TRS Plan 1?   (1) At the time of retirement, if you are a PERS Plan 1 or TRS Plan 1 member, you can choose initially reduced retirement payment benefits that will provide you with annual cost of living adjustments in the future.

For more information, see:

PERS Plan 1: RCW 41.40.188 (1)(e); WAC 415-108-326(((4)))

TRS Plan 1: RCW 41.32.530 (1)(d); WAC ((415-112-727(4))) 415-112-504

(2) By opting to receive a lower dollar amount at the beginning of your retirement, you will receive a progressively higher amount as the payments continue.

(3) Examples

(a) Example (a):

Ernie, a TRS Plan 1 member, retires at age 55 with 30 years of service and chooses the COLA option. TRS Plan 1 provides two percent (.02) of average final compensation (AFC) per year of service. At the time he retires, Ernie's AFC is $4,295.33. As shown in the "Plan 1 Optional COLA" table below, Ernie would receive 0.7408 of his normal retirement benefit as the starting amount of the COLA-protected benefit. TRS would calculate the benefit as follows: 30.00 (years of service credit) x .02 x $4,295.33 (AFC) = $2,577.20 (monthly benefit without the COLA option). TRS would then multiply $2,577.20 x .7408 = $1,909.19 (the COLA-protected starting benefit Ernie would receive).

(b) Example (b):

Tina is a PERS Plan 1 member with 30 years of service credit at age 52 and eight months. Because she has reached 30 years of service, there is no reduction for an early retirement. However, Tina chooses the optional COLA. Tina would receive .7388 of her normal retirement benefit as the starting amount of the COLA-protected benefit. Her normal retirement benefit is $2,295.00; her COLA-reduced benefit will be $1,695.55.

(4) Table - The optional cost-of-living adjustment (COLA) table is based on the 1995-2000 actuarial experience study.

Use these factors to convert from standard option monthly benefit payments without a COLA to the same option with a COLA.

Plan 1 Optional COLA

Age PERS 1 Factor TRS 1 Factor Age PERS 1 Factor TRS 1 Factor
20 0.6586 0.6554 61 0.7778 0.7662
21 0.6600 0.6566 62 0.7825 0.7708
22 0.6615 0.6580 63 0.7873 0.7754
23 0.6630 0.6593 64 0.7922 0.7801
24 0.6645 0.6607 65 0.7972 0.7849
25 0.6661 0.6622 66 0.8022 0.7897
26 0.6678 0.6638 67 0.8073 0.7946
27 0.6696 0.6654 68 0.8124 0.7996
28 0.6714 0.6670 69 0.8176 0.8046
29 0.6732 0.6687 70 0.8229 0.8097
30 0.6752 0.6705 71 0.8282 0.8149
31 0.6772 0.6723 72 0.8335 0.8201
32 0.6793 0.6742 73 0.8389 0.8253
33 0.6814 0.6762 74 0.8443 0.8306
34 0.6836 0.6783 75 0.8497 0.8359
35 0.6859 0.6804 76 0.8551 0.8413
36 0.6883 0.6826 77 0.8605 0.8467
37 0.6908 0.6849 78 0.8659 0.8521
38 0.6933 0.6872 79 0.8713 0.8575
39 0.6960 0.6896 80 0.8766 0.8628
40 0.6987 0.6921 81 0.8819 0.8682
41 0.7015 0.6947 82 0.8871 0.8735
42 0.7044 0.6974 83 0.8922 0.8788
43 0.7074 0.7002 84 0.8971 0.8840
44 0.7105 0.7031 85 0.9020 0.8891
45 0.7137 0.7060 86 0.9066 0.8941
46 0.7170 0.7091 87 0.9111 0.8989
47 0.7204 0.7122 88 0.9153 0.9036
48 0.7238 0.7154 89 0.9192 0.9080
49 0.7274 0.7188 90 0.9230 0.9123
50 0.7311 0.7222 91 0.9264 0.9162
51 0.7349 0.7256 92 0.9296 0.9200
52 0.7388 0.7293 93 0.9326 0.9234
53 0.7427 0.7331 94 0.9353 0.9266
54 0.7468 0.7369 95 0.9378 0.9296
55 0.7510 0.7408 96 0.9401 0.9323
56 0.7552 0.7448 97 0.9423 0.9348
57 0.7595 0.7489 98 0.9444 0.9372
58 0.7640 0.7531 99 0.9464 0.9394
59 0.7685 0.7574
60 0.7731 0.7618

[Statutory Authority: RCW 41.50.050(5) and chapter 41.45 RCW. 02-18-048, 415-02-360, filed 8/28/02, effective 9/1/02.]

OTS-1775.1


AMENDATORY SECTION(Amending WSR 05-12-043, filed 5/25/05, effective 6/25/05)

WAC 415-112-544   How does the department calculate the retirement allowance of a TRS Plan 2 or Plan 3 member who retires, reenters TRS membership, and then retires again?   This rule establishes a method to actuarially recompute your defined benefit retirement allowance if you are a Plan 2 or Plan 3 member who retires, reenters TRS membership causing your retirement allowance to stop, and then retires again.

(1) If you previously retired before age sixty-five, the department will:

(a) Recompute your retirement allowance pursuant to RCW 41.32.760 (Plan 2) or 41.32.840 (Plan 3) using:

(i) Your total years of career service, including service earned prior to your initial retirement and service earned after reentering membership; and

(ii) Any increase in your average final compensation resulting from your reentry into membership; and

(b) Actuarially reduce your retirement allowance:

(i) Based on the present value of the retirement allowance payments you received during your initial retirement;

(ii) To reflect the difference in the number of years between your current age and the attainment of age sixty-five, if applicable; and

(iii) To offset the cost of your benefit option if it includes a survivor feature. See WAC ((415-112-493)) 415-112-505.

(2) If you previously retired at or after age sixty-five, the department will recompute your retirement allowance pursuant to RCW 41.32.760 (Plan 2) or 41.32.840 (Plan 3) and include any additional service credit you earned and any increase in your average final compensation resulting from your reentry into membership. The department will actuarially reduce your retirement allowance to offset the cost of your benefit option if it includes a survivor feature. See WAC ((415-112-493)) 415-112-505.

(3) Under no circumstances will you receive a retirement allowance creditable to a month during which you earned service credit.

[Statutory Authority: RCW 41.50.050(5), 41.32.800, 41.32.860, 41.32.802, 41.32.862. 05-12-043, 415-112-544, filed 5/25/05, effective 6/25/05.]

OTS-1776.1


AMENDATORY SECTION(Amending WSR 02-18-046, filed 8/28/02, effective 9/30/02)

WAC 415-113-055   Am I eligible for a multiple system benefit?   To be eligible for a multiple system benefit, you must meet the criteria listed in this section.

(1) You may retire for service or disability. You may retire with a multiple system benefit if you retire from all systems for service. You may also retire with a disability retirement from your current system, other than a benefit provided by RCW 41.40.220 or WSPRS, and a service retirement from your prior system.

(2) You must retire from all systems. You may only retire with a multiple system benefit if you retire from all dual member systems that you participate in.

(3) Defined terms used. Definitions for the following terms used in this section may be found in the sections listed.

(a) "Accumulated contributions" - WAC ((415-113-030)) 415-02-030.

(b) "Dual member system" - WAC 415-113-030.

(c) "Multiple system benefit" - WAC 415-113-030.

[Statutory Authority: RCW 41.50.050(5) and chapter 41.54 RCW. 02-18-046, 415-113-055, filed 8/28/02, effective 9/30/02. Statutory Authority: RCW 41.50.050. 96-20-004, 415-113-055, filed 9/19/96, effective 10/20/96; 95-03-001, 415-113-055, filed 1/4/95, effective 2/4/95.]


AMENDATORY SECTION(Amending WSR 02-18-046, filed 8/28/02, effective 9/30/02)

WAC 415-113-057   Am I required to retire with a multiple system benefit?   You are not required to retire with a multiple system benefit. You may elect to retire from a system or systems without the benefits or restrictions of chapter 41.54 RCW. If you choose to retire from more than one system without receiving a multiple system benefit, you are not subject to the maximum benefit limitation of RCW 41.54.070 and WAC 415-113-090(1).

(1) Waiver of benefits. If you decide not to receive a multiple system benefit, you waive the right to:

(a) Substitute your base salary between retirement systems for purposes of calculating a retirement allowance; or

(b) Combining your service from each system for purposes of determining retirement eligibility.

(2) You are not required to retire with a multiple system benefit even if you repaid contributions as a dual member. If you repaid previously withdrawn contributions from a prior dual member system under RCW 41.54.020, you may still elect to retire from one or more systems without receiving a multiple system benefit.

(3) If you decline a multiple system benefit, you may withdraw your contributions. If you elect to retire without receiving a multiple system benefit, you may withdraw your accumulated contributions from a system in lieu of receiving a retirement allowance, provided that withdrawal is otherwise permissible under the systems' provisions.

(4) Defined terms used. Definitions for the following terms used in this section may be found in the sections listed.

(a) "Accumulated contributions" - WAC ((415-113-030)) 415-02-030.

(b) "Base salary" - RCW 41.54.010(1).

(c) "Dual member" - RCW 41.54.010(4), WAC 415-113-030.

(d) "Dual member system" - WAC 415-113-030.

(e) "Multiple system benefit" - WAC 415-113-030.

[Statutory Authority: RCW 41.50.050(5) and chapter 41.54 RCW. 02-18-046, 415-113-057, filed 8/28/02, effective 9/30/02. Statutory Authority: RCW 41.50.050. 95-03-001, 415-113-057, filed 1/4/95, effective 2/4/95.]

Washington State Code Reviser's Office