WSR 10-13-155

PROPOSED RULES

DEPARTMENT OF

RETIREMENT SYSTEMS

[ Filed June 23, 2010, 8:33 a.m. ]

Original Notice.

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

Title of Rule and Other Identifying Information: WAC 415-02-360 What is the optional cost-of-living adjustment (COLA) for PERS Plan 1 and TRS Plan 1? and new section WAC 415-02-390 Total allocation portfolio (TAP) annuity 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 for WAC 415-02-360.

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 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.

June 23, 2010

Ken Goolsby

Rules Coordinator


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

WAC 415-02-360   What is the optional auto 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.)) PERS plan 1 and TRS plan 1 members can choose to receive an initially reduced retirement benefit in order to receive an annual cost of living adjustment in the future. With this optional auto COLA, the member's monthly retirement benefit is actuarially reduced at the time of retirement. Thereafter, the monthly benefit of the member (and subsequently their beneficiary) is adjusted annually, based on changes in the consumer price index (CPI) for the Seattle-Tacoma-Bremerton, Washington area, up to the statutory maximum. For more information, see:

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

TRS Plan 1: RCW 41.32.530 (1)(d); WAC 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))) (2) 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.)) Ernie is a member of TRS plan 1. He retires at age 55 with 30 years of service and chooses the Single Life Option (no survivor beneficiary). His average final compensation (AFC) is $4,295.33 per month.

(i) If he does not choose the optional auto COLA, his monthly benefit will be $2,577.20 (2% x 30 x $4,295.33).

(ii) If he does choose the optional auto COLA, his intial monthly benefit will be reduced to $1,909.19, based on the factor in the table in subsection (3) (0.7396 x $2,577.20). This monthly amount may increase each year with changes in the CPI.

Regardless whether or not Ernie chooses the optional auto COLA, he will begin to receive the uniform COLA at age 66, consistent with all statutory requirements.

(b) Tina is a member of PERS plan 1. She retires with 30 years of service credit at age 52 and 8 months. Because she has 30 years of service, there is no reduction for an early retirement. Tina chooses the Single Life Option (no survivor beneficiary). Her average final compensation (AFC) is $3,825.00 per month.

(i) If she does not choose the optional auto COLA, her monthly benefit will be $2,295.00 (2% x 30 x $3,825.00).

(ii) If she does choose the optional auto COLA, her initial monthly benefit will be reduced to $1,692.56, based on the factor in the table in subsection (3) (0.7375 x $2,295.00). This monthly amount may increase each year with changes in the CPI.

Regardless whether or not Tina chooses the optional auto COLA, she will begin to receive the uniform COLA at age 66, consistent with all statutory requirements.

(((4))) (3) 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 (any retirement option) without ((a)) the optional auto COLA to the same retirement option with ((a)) the optional auto COLA. The following factors are effective September 1, 2010.

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))

Plan 1 Optional Auto COLA Factors

Age PERS 1 TRS 1 Age PERS 1 TRS 1
20 0.6636 0.6664 61 0.7713 0.7648
21 0.6650 0.6675 62 0.7760 0.7693
22 0.6665 0.6687 63 0.7807 0.7739
23 0.6680 0.6698 64 0.7855 0.7786
24 0.6695 0.6710 65 0.7904 0.7833
25 0.6711 0.6722 66 0.7953 0.7881
26 0.6727 0.6734 67 0.8003 0.7930
27 0.6743 0.6746 68 0.8054 0.7980
28 0.6760 0.6759 69 0.8105 0.8030
29 0.6777 0.6772 70 0.8157 0.8081
30 0.6794 0.6786 71 0.8210 0.8133
31 0.6811 0.6800 72 0.8263 0.8185
32 0.6828 0.6815 73 0.8317 0.8238
33 0.6845 0.6831 74 0.8370 0.8291
34 0.6862 0.6847 75 0.8425 0.8344
35 0.6879 0.6864 76 0.8479 0.8398
36 0.6897 0.6881 77 0.8533 0.8452
37 0.6915 0.6900 78 0.8588 0.8506
38 0.6934 0.6918 79 0.8642 0.8560
39 0.6954 0.6938 80 0.8696 0.8614
40 0.6975 0.6959 81 0.8750 0.8668
41 0.6997 0.6980 82 0.8803 0.8722
42 0.7020 0.7002 83 0.8856 0.8775
43 0.7045 0.7024 84 0.8907 0.8828
44 0.7071 0.7048 85 0.8957 0.8879
45 0.7099 0.7073 86 0.9006 0.8929
46 0.7129 0.7098 87 0.9053 0.8978
47 0.7161 0.7125 88 0.9098 0.9025
48 0.7194 0.7153 89 0.9141 0.9070
49 0.7229 0.7183 90 0.9181 0.9113
50 0.7264 0.7214 91 0.9218 0.9153
51 0.7300 0.7247 92 0.9253 0.9191
52 0.7337 0.7282 93 0.9286 0.9226
53 0.7375 0.7319 94 0.9316 0.9258
54 0.7414 0.7357 95 0.9343 0.9288
55 0.7454 0.7396 96 0.9369 0.9316
56 0.7494 0.7435 97 0.9392 0.9342
57 0.7536 0.7476 98 0.9415 0.9365
58 0.7579 0.7518 99 0.9436 0.9388
59 0.7623 0.7560
60 0.7668 0.7604

[Statutory Authority: RCW 41.50.050(5) and chapter 41.45 RCW. 08-20-068, 415-02-360, filed 9/25/08, effective 10/26/08; 02-18-048, 415-02-360, filed 8/28/02, effective 9/1/02.]

Reviser's note: The spelling error in the above section occurred in the copy filed by the agency and appears in the Register pursuant to the requirements of RCW 34.08.040.

Reviser's note: The typographical error in the above section occurred in the copy filed by the agency and appears in the Register pursuant to the requirements of RCW 34.08.040.

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.
NEW SECTION
WAC 415-02-390   Total allocation portfolio (TAP) annuity factors.   If you are a Plan 3 member of the Public Employees' Retirement System (PERS), School Employees' Retirement System (SERS) or Teachers' Retirement System (TRS) and you have funds in the Washington State Investment Board (WSIB) Investment Program, you may use those funds to purchase a life annuity that is administered by the state of Washington when you become eligible to withdraw funds from your Plan 3 account. See WAC 415-111-320 for more information about purchasing a TAP annuity.

(1) How is the monthly TAP Annuity payment determined? Your single life annuity payment amount is based on the original purchase price and the annuity factor for your age at the time of purchase.

Original Purchase Price X Factor = Single Life Annuity Payment Amount

Factors - The following factors are effective September 1, 2010.



Age PERS Plan 3 SERS Plan 3 TRS Plan 3
20 .0042981 .0042752 .0042735
21 .0043115 .0042875 .0042857
22 .0043255 .0043004 .0042985
23 .0043403 .0043140 .0043119
24 .0043559 .0043283 .0043260
25 .0043722 .0043433 .0043409
26 .0043894 .0043591 .0043565
27 .0044074 .0043758 .0043729
28 .0044264 .0043932 .0043901
29 .0044464 .0044116 .0044083
30 .0044674 .0044309 .0044273
31 .0044894 .0044512 .0044473
32 .0045144 .0044726 .0044683
33 .0045389 .0044966 .0044921
34 .0045646 .0045203 .0045154
35 .0045915 .0045451 .0045398
36 .0046197 .0045712 .0045655
37 .0046492 .0045986 .0045923
38 .0046800 .0046274 .0046205
39 .0047124 .0046576 .0046501
40 .0047507 .0046893 .0046812
41 .0047868 .0047226 .0047139
42 .0048246 .0047618 .0047524
43 .0048641 .0047989 .0047890
44 .0049054 .0048379 .0048274
45 .0049486 .0048787 .0048677
46 .0050025 .0049215 .0049101
47 .0050508 .0049664 .0049545
48 .0051015 .0050216 .0050086
49 .0051544 .0050719 .0050584
50 .0052099 .0051246 .0051107
51 .0052819 .0051798 .0051654
52 .0053441 .0052375 .0052227
53 .0054090 .0053119 .0052956
54 .0054761 .0053765 .0053597
55 .0055453 .0054440 .0054263
56 .0056425 .0055148 .0054972
57 .0057222 .0056100 .0055713
58 .0058050 .0056893 .0056717
59 .0058914 .0057719 .0057554
60 .0060024 .0058574 .0058425
61 .0061134 .0059677 .0059332
62 .0062157 .0060779 .0060501
63 .0063231 .0061801 .0061669
64 .0064666 .0062857 .0062734
65 .0066102 .0064271 .0064146
66 .0067381 .0065685 .0065558
67 .0069142 .0066932 .0066812
68 .0070904 .0068650 .0068527
69 .0072409 .0070367 .0070243
70 .0074580 .0071836 .0071720
71 .0076750 .0073948 .0073831
72 .0078537 .0076060 .0075943
73 .0081241 .0077801 .0077698
74 .0083945 .0080424 .0080323
75 .0086079 .0083046 .0082949
76 .0089494 .0085123 .0085049
77 .0092910 .0088426 .0088361
78 .0095472 .0091729 .0091674
79 .0099864 .0094231 .0094204
80 .0104255 .0098473 .0098460
81 .0107358 .0102714 .0102716
82 .0113112 .0105753 .0105794
83 .0118866 .0111296 .0111364
84 .0122633 .0116840 .0116935
85 .0130303 .0120540 .0120687
86 .0137973 .0124197 .0124401
87 .0142547 .0131966 .0132228
88 .0146958 .0139735 .0140056
89 .0157858 .0144064 .0144471
90 .0168759 .0154392 .0154931
91 .0173946 .0164719 .0165391
92 .0178765 .0169752 .0170558
93 .0194101 .0174443 .0175370
94 .0209437 .0178745 .0179796
95 .0215135 .0193483 .0194888
96 .0220376 .0208221 .0209980
97 .0225187 .0213149 .0215118
98 .0229620 .0217660 .0219824
99 .0233764 .0221845 .0224187

(2) Can I choose a Joint Life Annuity option? When you purchase your annuity, you can choose a joint life annuity option that will provide a lifetime monthly payment to another person upon your death. Your joint life annuity payment amount is a reduction from the single life annuity payment amount and will depend on the survivorship percentage you choose and the age of you and your joint annuitant at the time of the annuity purchase.

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Washington State Code Reviser's Office