WSR 10-13-152

PROPOSED RULES

DEPARTMENT OF

RETIREMENT SYSTEMS

[ Filed June 23, 2010, 8:31 a.m. ]

Original Notice.

Preproposal statement of inquiry was filed as WSR 10-07-152.

Title of Rule and Other Identifying Information: WAC 415-02-310 How does the department use my age in calculating benefits? and 415-02-345 TRS Plan 1 Option benefit factors.

Hearing Location(s): Department of Retirement Systems, 6835 Capitol Boulevard, Conference Room 115, Tumwater, WA, on July 29, 2010, at 1:30 p.m.

Date of Intended Adoption: July 29, 2010.

Submit Written Comments to: Ken Goolsby, Rules Coordinator, Department of Retirement Systems, P.O. Box 48380, Olympia, WA 98504-8380, e-mail rules@drs.wa.gov, fax (360) 753-5397, by 5:00 p.m. on July 29, 2010.

Assistance for Persons with Disabilities: Contact Ken Goolsby, rules coordinator, by May 20, 2010, TDD (360) 664-7291, TTY (360) 586-5450, phone (360) 664-7291.

Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The purpose of this proposal is to update the department's administrative rules with new administrative factors provided by the state actuary.

Reasons Supporting Proposal: The office of the state actuary (OSA) has provided the department with new actuarial projections. The department must amend its rules to update administrative factors for the law enforcement officers' and firefighters' retirement system (LEOFF), public employees' retirement system (PERS), public safety employees' retirement system (PSERS), school employees' retirement system (SERS), teachers' retirement system (TRS), Washington state patrol retirement system (WSPRS), and judicial retirement system (JRS).

Statutory Authority for Adoption: RCW 41.50.050(5).

Statute Being Implemented: Chapter 41.45 RCW.

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: Ken Goolsby, 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 affect 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.

June 23, 2010

Ken Goolsby

Rules Coordinator


AMENDATORY SECTION(Amending WSR 08-20-068, filed 9/25/08, effective 10/26/08)

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)) the date you are eligible for normal retirement and your date of actual retirement to calculate any actuarial reduction to your benefit. See WAC 415-02-320 for more information about early retirement.

(a) Step 1: ((Determine the fully eligible retirement date)) The department determines the date you are eligible for normal retirement.

(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.)) 1941. On May 12, ((1999)) 2006, Jake ((reaches)) reached age 65 and ((has)) met the age requirement for retirement. Provided that he is otherwise eligible, Jake's retirement date is June 1, ((1999)) 2006.

(((iii))) (ii) 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)) 2006 (his birthday or the day after his birthday).

(b) Step 2: ((Determine the difference.)) The department determines the difference between the date you are eligible for normal retirement and your date of actual retirement as follows: ((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))
(i) Example 1:

Date of eligibility for normal retirement 06/01/06
Date of actual retirement 08/01/02
Determination of full years: 08/01/02 to 07/31/05 is 3 years
Determination of full months: 08/01/05 to 05/31/06 is 10 months
Difference is: 3 years, 10 months
(ii) Example 2:

Date of eligibility for normal retirement 05/13/06
Date of actual retirement 08/01/02
Determination of full years: 08/01/02 to 07/31/05 is 3 years
Determination of full months: 08/01/05 to 04/30/06 is 9 months
Additional days are not considered: 05/01/06 to 05/13/06 are not considered
Difference is: 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 Auto 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 auto COLA factor. See WAC 415-02-360 for a description of the optional auto 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 survivor beneficiary's age. See WAC 415-02-380 for more information about survivor options.

(a) Step 1: The department calculates your age and your survivor 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 survivor beneficiary's age from your age.

Example:

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

Example:

Member's age: 65
Minus survivor beneficiary's age: 67
-2
Result: The department will use the survivor option factor for a survivor 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 firefighters' 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. 08-20-068, 415-02-310, filed 9/25/08, effective 10/26/08; 03-06-044, 415-02-310, filed 2/27/03, effective 4/1/03.]


AMENDATORY SECTION(Amending WSR 03-24-051, filed 11/26/03, effective 1/1/04)

WAC 415-02-345   TRS Plan 1 Option 1 benefit factors.   (1) What is a TRS Plan 1 Option 1 benefit factor? At the time of retirement, a TRS Plan 1 member may choose to receive an Option 1, standard ((allowance)) benefit, which is a slightly reduced lifetime monthly benefit. This option allows the final unpaid monthly benefit and any remaining balance of contributions to be paid in a lump sum to the retiree's estate or named beneficiary at the time of the retiree's death. The reduction to the monthly benefit is based on an Option 1 factor and is applied against the annuity portion of the monthly benefit. The factor that is used is determined by the age of the member at the time of retirement. For more information about the Option 1, standard ((allowance)) benefit, see RCW 41.32.530 (1)(a).

(2) ((Option 1 benefit factor table.)) Table - The following option 1 benefit factors are effective September 1, 2010.


((Age Factor Reduction Age Factor Reduction
20 99.8876% 0.1% 50 99.1060% 0.9%
21 99.8851% 0.1% 51 99.0237% 1.0%
22 99.8825% 0.1% 52 98.9288% 1.1%
23 99.8794% 0.1% 53 98.8184% 1.2%
24 99.8757% 0.1% 54 98.6970% 1.3%
25 99.8710% 0.1% 55 98.5566% 1.4%
26 99.8650% 0.1% 56 98.3876% 1.6%
27 99.8575% 0.1% 57 98.1977% 1.8%
28 99.8480% 0.2% 58 97.9853% 2.0%
29 99.8362% 0.2% 59 97.7388% 2.3%
30 99.8220% 0.2% 60 97.4759% 2.5%
31 99.8053% 0.2% 61 97.1849% 2.8%
32 99.7858% 0.2% 62 96.8657% 3.1%
33 99.7638% 0.2% 63 96.5199% 3.5%
34 99.7413% 0.3% 64 96.1340% 3.9%
35 99.7184% 0.3% 65 95.7405% 4.3%
36 99.6951% 0.3% 66 95.3342% 4.7%
37 99.6712% 0.3% 67 94.8664% 5.1%
38 99.6461% 0.4% 68 94.4041% 5.6%
39 99.6195% 0.4% 69 93.9285% 6.1%
40 99.5908% 0.4% 70 93.3893% 6.6%
41 99.5597% 0.4% 71 92.8393% 7.2%
42 99.5255% 0.5% 72 92.2534% 7.7%
43 99.4881% 0.5% 73 91.5922% 8.4%
44 99.4474% 0.6% 74 90.9422% 9.1%
45 99.4018% 0.6% 75 90.2102% 9.8%
46 99.3542% 0.6% 76 89.4917% 10.5%
47 99.2994% 0.7% 77 88.7582% 11.2%
48 99.2421% 0.8% 78 85.9377% 14.1%
49 99.1781% 0.8% 79 85.8097% 14.2%
80 86.1255% 13.9%))

Age Factor Reduction Age Factor Reduction
20 99.3233% 0.7% 50 98.5277% 1.5%
21 99.1906% 0.8% 51 98.8267% 1.2%
22 99.0506% 0.9% 52 99.2279% 0.8%
23 98.9113% 1.1% 53 99.1329% 0.9%
24 98.7803% 1.2% 54 99.0247% 1.0%
25 98.6679% 1.3% 55 98.9011% 1.1%
26 98.5907% 1.4% 56 98.7584% 1.2%
27 98.5248% 1.5% 57 98.5936% 1.4%
28 98.4698% 1.5% 58 98.4070% 1.6%
29 98.4281% 1.6% 59 98.1990% 1.8%
30 98.4011% 1.6% 60 97.9599% 2.0%
31 98.3898% 1.6% 61 98.0472% 2.0%
32 98.3880% 1.6% 62 97.7597% 2.2%
33 98.3919% 1.6% 63 97.4355% 2.6%
34 98.3889% 1.6% 64 97.0756% 2.9%
35 98.3802% 1.6% 65 96.6774% 3.3%
36 98.3656% 1.6% 66 96.2422% 3.8%
37 98.3360% 1.7% 67 96.1337% 3.9%
38 98.2896% 1.7% 68 96.0251% 4.0%
39 98.2246% 1.8% 69 95.5281% 4.5%
40 98.1380% 1.9% 70 94.9709% 5.0%
41 98.0401% 2.0% 71 94.3415% 5.7%
42 97.9596% 2.0% 72 94.2358% 5.8%
43 97.8978% 2.1% 73 94.1300% 5.9%
44 97.8557% 2.1% 74 93.3902% 6.6%
45 97.8346% 2.2% 75 92.5634% 7.4%
46 97.8359% 2.2% 76 92.5038% 7.5%
47 97.8815% 2.1% 77 92.4441% 7.6%
48 97.9786% 2.0% 78 91.4887% 8.5%
49 98.3106% 1.7% 79 90.4121% 9.6%
80 90.4374% 9.6%

[Statutory Authority: RCW 41.50.050(5). 03-24-051, 415-02-345, filed 11/26/03, effective 1/1/04.]

Reviser's note: RCW 34.05.395 requires the use of underlining and deletion marks to indicate amendments to existing rules. The rule published above varies from its predecessor in certain respects not indicated by the use of these markings.

Washington State Code Reviser's Office