Z-1334.2          _______________________________________________

                                 SENATE BILL 6312

                  _______________________________________________

State of Washington              52nd Legislature             1992 Regular Session

By Senators Saling, Bauer, Skratek, Rinehart, Gaspard, Jesernig, Murray, M. Kreidler, Sutherland, A. Smith, Pelz and Wojahn

Read first time 01/24/92.  Referred to Committee on Ways & Means.Adjusting cost of living increases for public employees' retirement system and teachers' retirement system retirees.

     AN ACT Relating to providing cost-of-living increases to retirees of the public employees' retirement system and the teachers' retirement system; and amending RCW 41.32.575 and 41.40.325.

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

     Sec. 1.  RCW 41.32.575 and 1989 c 272 s 3 are each amended to read as follows:

     (1) Beginning July 1, 1989, and every year thereafter, the department shall determine the following information for each retired member or beneficiary who is over the age of sixty-five:

     (a) The dollar amount of the retirement allowance received by the retiree at the benefit age ((sixty-five)), to be known for the purposes of this section as the "benefit age ((sixty-five)) retirement allowance";

     (b) The index for the calendar year prior to the year that the retiree reached the benefit age ((sixty-five)), to be known for purposes of this section as "index A";

     (c) The index for the calendar year prior to the date of determination, to be known for purposes of this section as "index B";

     (d) The ratio obtained when index B is divided by index A, to be known for the purposes of this section as the "full purchasing power ratio"; and

     (e) The value obtained when the retiree's benefit age ((sixty-five)) retirement allowance is multiplied by ((sixty percent)) the target percentage of the retiree's full purchasing power ratio, to be known for the purposes of this section as the "target benefit."

     (2) Beginning with the July payment, the ((retiree's)) benefit age ((sixty-five)) retirement allowance for each retiree who is age sixty-six or over shall be adjusted to be equal to the retiree's target benefit.  In no event, however, shall the adjusted allowance:

     (a) Be smaller than the retirement allowance received without the adjustment; nor

     (b) Differ from the previous year's allowance by more than three percent.

     (3) For members who retire after the benefit age ((sixty-five)), the benefit age ((sixty-five)) retirement allowance shall be the initial retirement allowance received by the member.

     (4) For beneficiaries of members who die prior to the benefit age ((sixty-five)):  (a) The benefit age ((sixty-five)) retirement allowance shall be the allowance received by the beneficiary on the date the member would have turned the benefit age ((sixty-five)); and (b) index A shall be the index for the calendar year prior to the year the member would have turned the benefit age ((sixty-five)).

     (5) Where the pension payable to a beneficiary was adjusted at the time the benefit commenced, the benefit provided by this section shall be adjusted in a manner consistent with the adjustment made to the beneficiary's pension.

     (6) For the purposes of this section:

     (a) "Benefit age" means the member's age at retirement, except that for members who retire prior to the minimum age set by the legislature under subsection (7) of this section, the benefit age shall be the minimum age set by the legislature;

(b) "Index" means, for any calendar year, that year's average consumer price index‑-Seattle, Washington area for urban wage earners and clerical workers, all items, compiled by the bureau of labor statistics, United States department of labor;

     (((b))) (c) "Retired member" or "retiree" means any member who has retired for service or because of duty or nonduty disability, or the surviving beneficiary of such a member;

(d) "Target percentage" is the percentage of the full purchasing power ratio that the legislature sets as a target for qualifying for cost-of-living adjustments funded under subsection (7) of this section.

(7) The legislature shall establish the minimum "benefit age" and the "target percentage" in each biennial omnibus appropriations act until the target levels established in this subsection are achieved.  The minimum benefit age shall be initially set at sixty-five, and the target percentage shall be initially set at sixty percent.  Each year, the benefit age may be reduced from age sixty-five to such age as may be established in the appropriations act.  After the benefit age has been lowered to the age at retirement, the target percentage shall be increased on an incremental basis to such level as may be established in the appropriations act, up to seventy percent.

(8) Changes to the minimum benefit age or target percentage shall be effective only if the cost of the change, as determined pursuant to chapter 41.45 RCW, is fully funded in the appropriations act.

     Sec. 2.  RCW 41.40.325 and 1989 c 272 s 2 are each amended to read as follows:

     (1) Beginning July 1, 1989, and every year thereafter, the department shall determine the following information for each retired member or beneficiary who is over the age of sixty-five:

     (a) The dollar amount of the retirement allowance received by the retiree at the benefit age ((sixty-five)), to be known for the purposes of this section as the "benefit age ((sixty-five)) retirement allowance";

     (b) The index for the calendar year prior to the year that the retiree reached the benefit age ((sixty-five)), to be known for purposes of this section as "index A";

     (c) The index for the calendar year prior to the date of determination, to be known for purposes of this section as "index B";

     (d) The ratio obtained when index B is divided by index A, to be known for the purposes of this section as the "full purchasing power ratio"; and

     (e) The value obtained when the retiree's benefit age ((sixty-five)) retirement allowance is multiplied by ((sixty percent)) the target percentage of the retiree's full purchasing power ratio, to be known for the purposes of this section as the "target benefit."

     (2) Beginning with the July payment, the ((retiree's)) benefit age ((sixty-five)) retirement allowance for each retiree who is age sixty-six or over shall be adjusted to be equal to the retiree's target benefit.  In no event, however, shall the adjusted allowance:

     (a) Be smaller than the retirement allowance received without the adjustment; nor

     (b) Differ from the previous year's allowance by more than three percent.

     (3) For members who retire after the benefit age ((sixty-five)), the benefit age ((sixty-five)) retirement allowance shall be the initial retirement allowance received by the member.

     (4) For beneficiaries of members who die prior to the benefit age ((sixty-five)):  (a) The benefit age ((sixty-five)) retirement allowance shall be the allowance received by the beneficiary on the date the member would have turned the benefit age ((sixty-five)); and (b) index A shall be the index for the calendar year prior to the year the member would have turned the benefit age ((sixty-five)).

     (5) Where the pension payable to a beneficiary was adjusted at the time the benefit commenced, the benefit provided by this section shall be adjusted in a manner consistent with the adjustment made to the beneficiary's pension.

     (6) For the purposes of this section:

     (a) "Benefit age" means the member's age at retirement, except that for members who retire prior to the minimum age set by the legislature under subsection (7) of this section, the benefit age shall be the minimum age set by the legislature;

(b) "Index" means, for any calendar year, that year's average consumer price index‑-Seattle, Washington area for urban wage earners and clerical workers, all items, compiled by the bureau of labor statistics, United States department of labor;

     (((b))) (c) "Retired member" or "retiree" means any member who has retired for service or because of duty or nonduty disability, or the surviving beneficiary of such a member;

(d) "Target percentage" is the percentage of the full purchasing power ratio that the legislature sets as a target for qualifying for cost-of-living adjustments funded under subsection (7) of this section.

(7) The legislature shall establish the minimum "benefit age" and the "target percentage" in each biennial omnibus appropriations act until the target levels established in this subsection are achieved.  The minimum benefit age shall be initially set at sixty-five, and the target percentage shall be initially set at sixty percent.  Each year, the benefit age may be reduced from age sixty-five to such age as may be established in the appropriations act.  After the benefit age has been lowered to the age at retirement, the target percentage shall be increased on an incremental basis to such level as may be established in the appropriations act, up to seventy percent.

(8) Changes to the minimum benefit age or target percentage shall be effective only if the cost of the change, as determined pursuant to chapter 41.45 RCW, is fully funded in the appropriations act.