H-0221

AN ACT Relating to private retirement accounts for certain teachers and public employees; amending RCW 43.84.090, 41.32.350, and 41.40.330; and adding new chapters to Title 41 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. (1) The purpose of this chapter is to provide a supplemental retirement benefit opportunity for teachers who are members of the teachers' retirement system plan I and have at least thirty years of service credit.

(2) This chapter may be known and cited as the teachers' retirement account act.

NEW SECTION. Sec. 2. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Plan" means the teacher retirement account plan.

(2) "Principal account" means the teacher retirement principal account.

(3) "Member" means a teacher, who is a member of the teachers' retirement system plan I, participating in the teacher retirement account plan.

(4) "Administrative account" means the teacher retirement administrative account.

(5) "Accumulated contributions" means the total amount contributed to a member's account under section 9 of this act, together with any interest and earnings that have been credited to the member's account.

NEW SECTION. Sec. 3. The teacher retirement account plan is established for teachers who are members of the teachers' retirement system plan I and have at least thirty years of service credit.

NEW SECTION. Sec. 4. The superintendent of public instruction shall administer the plan. The superintendent shall:

(1) Deposit or invest contributions to the plan consistent with section 8 of this act;

(2) Credit investment earnings or interest to individual teacher retirement accounts consistent with section 7 of this act;

(3) Keep or cause to be kept full and adequate accounts and records of the assets, obligations, transactions, and affairs of any teacher retirement accounts created under this chapter;

(4) File an annual report of the financial condition, transactions, and affairs of the teacher retirement accounts. A copy of the annual report shall be filed with the speaker of the house of representatives, the president of the senate, the governor, and the state auditor; and

(5) Adopt rules necessary to carry out this chapter.

NEW SECTION. Sec. 5. The superintendent of public instruction shall be deemed to stand in a fiduciary relationship to the members participating in the plan and shall discharge his or her duties in good faith and with that diligence, care, and skill which ordinary prudent persons would exercise under similar circumstances in like positions.

NEW SECTION. Sec. 6. The teachers' retirement principal account is created in the state treasury. Any deficiency in the teacher retirement administrative account caused by an excess of administrative expenses disbursed from that account over earnings of investments of balances credited to that account shall be transferred to that account from the principal account.

The contributions under section 9 of this act shall be paid into the principal account and shall be sufficient to cover costs of administration and staffing in addition to such other amounts as determined by the superintendent of public instruction. The principal account shall be used to carry out the purposes of this chapter.

NEW SECTION. Sec. 7. The teacher retirement administrative account is created in the state treasury. All expenses of the superintendent of public instruction under this chapter, including staffing and administrative expenses, shall be paid out of the administrative account. All earnings of investments of balances in the administrative account shall be credited to this account. Any excess of earnings of investments of balances credited to this account over administrative expenses disbursed from this account shall be expended to the principal account. Any deficiency in the administrative account caused by an excess of administrative expenses disbursed from this account over earnings of investments of balances credited to this account shall be transferred to this account from the principal account.

NEW SECTION. Sec. 8. (1) The superintendent of public instruction shall:

(a) Deposit or invest the contributions under section 9 of this act in a credit union, savings and loan association, bank, or mutual savings bank;

(b) Purchase life insurance, shares of an investment company, or fixed and/or variable annuity contracts from any insurance company or investment company licensed to contract business in this state; or

(2) The state investment board or the committee for deferred compensation, at the request of the superintendent of public instruction may invest moneys in the principal account. Moneys invested by the investment board shall be invested in accordance with RCW 43.84.150. Moneys invested by the committee for deferred compensation shall be invested in accordance with RCW 41.04.250. Except as provided in RCW 43.33A.160 or as necessary to pay a pro rata share of expenses incurred by the committee for deferred compensation, one hundred percent of all earnings from these investments shall accrue directly to the principal account. The earnings on any surplus balances in the principal account shall be credited to the principal account.

NEW SECTION. Sec. 9. (1) The plan shall be funded on a voluntary basis at the rate of six percent which will be deducted from each member's salary.

(2) The contributions shall be collected by the superintendent of public instruction and deposited in the member's account within the principal account.

NEW SECTION. Sec. 10. (1) A member who separates from service for any reason is entitled to receive a lump sum distribution of the member's accumulated contributions. The superintendent of public instruction may adopt rules establishing other payment options, in addition to lump sum distributions, if the other payment options conform to the requirements of the federal internal revenue code.

(2) The right of a person to receive a payment under this chapter and the moneys in the accounts created under this chapter are exempt from any state, county, municipal, or other local tax and are not subject to execution, garnishment, or any other process of law whatsoever.

NEW SECTION. Sec. 11. If a member dies, the amount of the accumulated contributions standing to the member's credit at the time of the member's death shall be paid to such person or persons having an insurable interest in the member's life as the member has nominated by written designation duly executed and filed with the superintendent of public instruction. If there is no such designated person or persons still living at the time of the member's death, the member's accumulated contributions shall be paid to the member's surviving spouse as if in fact the spouse had been nominated by written designation or, if there is no such surviving spouse, then to the member's legal representatives.

Sec. 12. RCW 43.84.090 and 1990 2nd ex.s. c 1 s 203 are each amended to read as follows:

Except as otherwise provided by RCW 43.250.030, 67.40.025, sections 7, 8, 21, and 22 of this act, and 82.14.050, twenty percent of all income received from such investments shall be deposited in the state general fund.

Sec. 13. RCW 41.32.350 and 1990 c 274 s 7 are each amended to read as follows:

Member contributions shall be placed in the annuity fund, the disability reserve fund and the death benefit fund. A member may make an additional lump sum payment at date of retirement, not to exceed his or her accumulated contributions, to purchase additional annuity. A contribution of six percent of earnable compensation is required from each member, except as provided under RCW 41.32.013 and except members who have at least thirty years of service credit and who participate in the teacher retirement account plan under section 3 of this act.

NEW SECTION. Sec. 14. Sections 1 through 11 of this act shall constitute a new chapter in Title 41 RCW.

NEW SECTION. Sec. 15. (1) The purpose of this chapter is to provide a supplemental retirement benefit opportunity for public employees who are members of the public employees' retirement system plan I and have at least thirty years of service credit.

(2) This chapter may be known and cited as the public employees' retirement account act.

NEW SECTION. Sec. 16. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Plan" means the public employee retirement account plan.

(2) "Principal account" means the public employee retirement principal account.

(3) "Member" means a public employee, who is a member of the public employees' retirement system plan I, participating in the public employee retirement account plan.

(4) "Administrative account" means the public employee retirement administrative account.

(5) "Accumulated contributions" means the total amount contributed to a member's account under section 23 of this act, together with any interest and earnings that have been credited to the member's account.

NEW SECTION. Sec. 17. The public employee retirement account plan is established for public employees who are members of the public employees' retirement system plan I and have at least thirty years of service credit.

NEW SECTION. Sec. 18. The director of personnel shall administer the plan. The director shall:

(1) Deposit or invest contributions to the plan consistent with section 22 of this act;

(2) Credit investment earnings or interest to individual public employee retirement accounts consistent with section 21 of this act;

(3) Keep or cause to be kept full and adequate accounts and records of the assets, obligations, transactions, and affairs of any public employee retirement accounts created under this chapter;

(4) File an annual report of the financial condition, transactions, and affairs of the public employee retirement accounts. A copy of the annual report shall be filed with the speaker of the house of representatives, the president of the senate, the governor, and the state auditor; and

(5) Adopt rules necessary to carry out this chapter.

NEW SECTION. Sec. 19. The director of personnel shall be deemed to stand in a fiduciary relationship to the members participating in the plan and shall discharge his or her duties in good faith and with that diligence, care, and skill which ordinary prudent persons would exercise under similar circumstances in like positions.

NEW SECTION. Sec. 20. The public employee retirement principal account is created in the state treasury. Any deficiency in the public employee retirement administrative account caused by an excess of administrative expenses disbursed from that account over earnings of investments of balances credited to that account shall be transferred to that account from the principal account.

The contributions under section 23 of this act shall be paid into the principal account and shall be sufficient to cover costs of administration and staffing in addition to such other amounts as determined by the administrator for the courts. The principal account shall be used to carry out the purposes of this chapter.

NEW SECTION. Sec. 21. The public employee retirement administrative account is created in the state treasury. All expenses of the director of personnel under this chapter, including staffing and administrative expenses, shall be paid out of the administrative account. All earnings of investments of balances in the administrative account shall be credited to this account. Any excess of earnings of investments of balances credited to this account over administrative expenses disbursed from this account shall be expended to the principal account. Any deficiency in the administrative account caused by an excess of administrative expenses disbursed from this account over earnings of investments of balances credited to this account shall be transferred to this account from the principal account.

NEW SECTION. Sec. 22. (1) The director of personnel shall:

(a) Deposit or invest the contributions under section 23 of this act in a credit union, savings and loan association, bank, or mutual savings bank;

(2) The state investment board or the committee for deferred compensation, at the request of the director of personnel may invest moneys in the principal account. Moneys invested by the investment board shall be invested in accordance with RCW 43.84.150. Moneys invested by the committee for deferred compensation shall be invested in accordance with RCW 41.04.250. Except as provided in RCW 43.33A.160 or as necessary to pay a pro rata share of expenses incurred by the committee for deferred compensation, one hundred percent of all earnings from these investments shall accrue directly to the principal account. The earnings on any surplus balances in the principal account shall be credited to the principal account.

NEW SECTION. Sec. 23. (1) The plan shall be funded on a voluntary basis at the rate of six percent which will be deducted from each member's salary.

(2) The contributions shall be collected by the director of personnel and deposited in the member's account within the principal account.

NEW SECTION. Sec. 24. (1) A member who separates from service for any reason is entitled to receive a lump sum distribution of the member's accumulated contributions. The director of personnel may adopt rules establishing other payment options, in addition to lump sum distributions, if the other payment options conform to the requirements of the federal internal revenue code.

NEW SECTION. Sec. 25. If a member dies, the amount of the accumulated contributions standing to the member's credit at the time of the member's death shall be paid to such person or persons having an insurable interest in the member's life as the member has nominated by written designation duly executed and filed with the director of personnel. If there is no such designated person or persons still living at the time of the member's death, the member's accumulated contributions shall be paid to the member's surviving spouse as if in fact the spouse had been nominated by written designation or, if there is no such surviving spouse, then to the member's legal representatives.

Sec. 26. RCW 41.40.330 and 1990 c 8 s 4 are each amended to read as follows:

(1) Each employee who is a member of the retirement system, except members who have at least thirty years of service credit and participate in the public employee retirement account plan under section 17 of this act, shall contribute six percent of his or her total compensation earnable. Effective January 1, 1987, however, no contributions are required for any calendar month in which the member is not granted service credit. The officer responsible for making up the payroll shall deduct from the compensation of each member, on each and every payroll of such member for each and every payroll period subsequent to the date on which he or she became a member of the retirement system the contribution as provided by this section.

(2) Any member may, pursuant to regulations formulated from time to time by the department, provide for himself or herself, by means of an increased rate of contribution to his or her account in the employees' savings fund, an increased prospective retirement allowance pursuant to RCW 41.40.190 and 41.40.185.

(3) The officer responsible for making up the payroll shall deduct from the compensation of each member covered by the provisions of RCW 41.40.190(5) and 41.40.185(4) on each and every payroll of such member for each and every payroll period subsequent to the date on which he or she thereafter becomes a member of the retirement system, an amount equal to seven and one-half percent of such member's compensation earnable.

NEW SECTION. Sec. 27. Sections 15 through 25 of this act shall constitute a new chapter in Title 41 RCW.