BILL REQ. #: Z-0482.1
| State of Washington | 59th Legislature | 2005 Regular Session |
Read first time 01/18/2005. Referred to Committee on Ways & Means.
AN ACT Relating to public pensions that replaces gain-sharing provisions with certain changes in benefits and sets contribution rates for the public employees' retirement system, the teachers' retirement system, the school employees' retirement system, and the public safety employees' retirement system; amending RCW 41.40.630, 41.40.820, 41.32.765, 41.32.875, 41.35.420, 41.35.680, 41.32.835, 41.35.610, 41.31A.010, 41.31A.020, 41.45.061, 41.34.040, 41.32.010, 41.32.4851, 41.32.489, 41.40.010, 41.40.010, 41.40.197, and 41.40.1984; adding new sections to chapter 41.45 RCW; creating a new section; decodifying RCW 41.31A.030, 41.31A.040, and 41.45.054; repealing RCW 41.31.010, 41.31.020, and 41.31.030; providing effective dates; providing an expiration date; and declaring an emergency.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
Sec. 1 RCW 41.40.630 and 2000 c 247 s 901 are each amended to
read as follows:
(1) NORMAL RETIREMENT. Any member with at least five service
credit years who has attained at least age sixty-five shall be eligible
to retire and to receive a retirement allowance computed according to
the provisions of RCW 41.40.620.
(2) UNREDUCED RETIREMENT. Any member who has completed at least
five service credit years and has attained age sixty, and for whom the
sum of the number of years of the member's age and the number of years
of the member's service credit equals ninety or more, shall be eligible
to retire. For the portion of the member's benefit that is based on
service credit earned after July 1, 2007, the member shall receive an
unreduced retirement allowance computed according to the provisions of
RCW 41.40.620. For the portion of the member's benefit that is based
on service credit earned prior to July 1, 2007, the retirement
allowance shall be reduced under subsection (3) or (4) of this section
as applicable.
(3) EARLY RETIREMENT. Any member who has completed at least twenty
service credit years and has attained age fifty-five shall be eligible
to retire and to receive a retirement allowance computed according to
the provisions of RCW 41.40.620, except that a member retiring pursuant
to this subsection shall have the retirement allowance actuarially
reduced to reflect the difference in the number of years between age at
retirement and the attainment of age sixty-five.
(((3))) (4) ALTERNATE EARLY RETIREMENT. Any member who has
completed at least thirty service credit years and has attained age
fifty-five shall be eligible to retire and to receive a retirement
allowance computed according to the provisions of RCW 41.40.620, except
that a member retiring pursuant to this subsection shall have the
retirement allowance reduced by three percent per year to reflect the
difference in the number of years between age at retirement and the
attainment of age sixty-five.
Sec. 2 RCW 41.40.820 and 2000 c 247 s 309 are each amended to
read as follows:
(1) NORMAL RETIREMENT. Any member who is at least age sixty-five
and who has:
(a) Completed ten service credit years; or
(b) Completed five service credit years, including twelve service
credit months after attaining age fifty-four; or
(c) Completed five service credit years by the transfer payment
date specified in RCW 41.40.795, under the public employees' retirement
system plan 2 and who transferred to plan 3 under RCW 41.40.795;
shall be eligible to retire and to receive a retirement allowance
computed according to the provisions of RCW 41.40.790.
(2) UNREDUCED RETIREMENT. Any member who has completed the number
of service credit years required in subsection (1) of this section and
has attained age sixty, and for whom the sum of the number of years of
the member's age and the number of years of the member's service credit
equals ninety or more, shall be eligible to retire. For the portion of
the member's benefit that is based on service credit earned after July
1, 2007, the member shall receive an unreduced retirement allowance
computed according to the provisions of RCW 41.40.790. For the portion
of the member's benefit that is based on service credit earned prior to
July 1, 2007, the retirement allowance shall be reduced under
subsection (3) or (4) of this section as applicable.
(3) EARLY RETIREMENT. Any member who has attained at least age
fifty-five and has completed at least ten years of service shall be
eligible to retire and to receive a retirement allowance computed
according to the provisions of RCW 41.40.790, except that a member
retiring pursuant to this subsection shall have the retirement
allowance actuarially reduced to reflect the difference in the number
of years between age at retirement and the attainment of age sixty-five.
(((3))) (4) ALTERNATE EARLY RETIREMENT. Any member who has
completed at least thirty service credit years and has attained age
fifty-five shall be eligible to retire and to receive a retirement
allowance computed according to the provisions of RCW 41.40.790, except
that a member retiring pursuant to this subsection shall have the
retirement allowance reduced by three percent per year to reflect the
difference in the number of years between age at retirement and the
attainment of age sixty-five.
Sec. 3 RCW 41.32.765 and 2000 c 247 s 902 are each amended to
read as follows:
(1) NORMAL RETIREMENT. Any member with at least five service
credit years of service who has attained at least age sixty-five shall
be eligible to retire and to receive a retirement allowance computed
according to the provisions of RCW 41.32.760.
(2) UNREDUCED RETIREMENT. Any member who has completed at least
five service credit years and has attained age sixty, and for whom the
sum of the number of years of the member's age and the number of years
of the member's service credit equals ninety or more, shall be eligible
to retire. For the portion of the member's benefit that is based on
service credit earned after July 1, 2007, the member shall receive an
unreduced retirement allowance computed according to the provisions of
RCW 41.32.760. For the portion of the member's benefit that is based
on service credit earned prior to July 1, 2007, the retirement
allowance shall be reduced under subsection (3) or (4) of this section
as applicable.
(3) EARLY RETIREMENT. Any member who has completed at least twenty
service credit years of service who has attained at least age fifty-five shall be eligible to retire and to receive a retirement allowance
computed according to the provisions of RCW 41.32.760, except that a
member retiring pursuant to this subsection shall have the retirement
allowance actuarially reduced to reflect the difference in the number
of years between age at retirement and the attainment of age sixty-five.
(((3))) (4) ALTERNATE EARLY RETIREMENT. Any member who has
completed at least thirty service credit years and has attained age
fifty-five shall be eligible to retire and to receive a retirement
allowance computed according to the provisions of RCW 41.32.760, except
that a member retiring pursuant to this subsection shall have the
retirement allowance reduced by three percent per year to reflect the
difference in the number of years between age at retirement and the
attainment of age sixty-five.
Sec. 4 RCW 41.32.875 and 2000 c 247 s 903 are each amended to
read as follows:
(1) NORMAL RETIREMENT. Any member who is at least age sixty-five
and who has:
(a) Completed ten service credit years; or
(b) Completed five service credit years, including twelve service
credit months after attaining age fifty-four; or
(c) Completed five service credit years by July 1, 1996, under plan
2 and who transferred to plan 3 under RCW 41.32.817;
shall be eligible to retire and to receive a retirement allowance
computed according to the provisions of RCW 41.32.840.
(2) UNREDUCED RETIREMENT. Any member who has completed the number
of service credit years required in subsection (1) of this section and
has attained age sixty, and for whom the sum of the number of years of
the member's age and the number of years of the member's service credit
equals ninety or more, shall be eligible to retire. For the portion of
the member's benefit that is based on service credit earned after July
1, 2007, the member shall receive an unreduced retirement allowance
computed according to the provisions of RCW 41.32.840. For the portion
of the member's benefit that is based on service credit earned prior to
July 1, 2007, the retirement allowance shall be reduced under
subsection (3) or (4) of this section as applicable.
(3) EARLY RETIREMENT. Any member who has attained at least age
fifty-five and has completed at least ten years of service shall be
eligible to retire and to receive a retirement allowance computed
according to the provisions of RCW 41.32.840, except that a member
retiring pursuant to this subsection shall have the retirement
allowance actuarially reduced to reflect the difference in the number
of years between age at retirement and the attainment of age sixty-five.
(((3))) (4) ALTERNATE EARLY RETIREMENT. Any member who has
completed at least thirty service credit years and has attained age
fifty-five shall be eligible to retire and to receive a retirement
allowance computed according to the provisions of RCW 41.32.840, except
that a member retiring pursuant to this subsection shall have the
retirement allowance reduced by three percent per year to reflect the
difference in the number of years between age at retirement and the
attainment of age sixty-five.
Sec. 5 RCW 41.35.420 and 2000 c 247 s 905 are each amended to
read as follows:
(1) NORMAL RETIREMENT. Any member with at least five service
credit years who has attained at least age sixty-five shall be eligible
to retire and to receive a retirement allowance computed according to
the provisions of RCW 41.35.400.
(2) UNREDUCED RETIREMENT. Any member who has completed at least
five service credit years and has attained age sixty, and for whom the
sum of the number of years of the member's age and the number of years
of the member's service credit equals ninety or more, shall be eligible
to retire. For the portion of the member's benefit that is based on
service credit earned after July 1, 2007, the member shall receive an
unreduced retirement allowance computed according to the provisions of
RCW 41.35.400. For the portion of the member's benefit that is based
on service credit earned prior to July 1, 2007, the retirement
allowance shall be reduced under subsection (3) or (4) of this section
as applicable.
(3) EARLY RETIREMENT. Any member who has completed at least twenty
service credit years and has attained age fifty-five shall be eligible
to retire and to receive a retirement allowance computed according to
the provisions of RCW 41.35.400, except that a member retiring pursuant
to this subsection shall have the retirement allowance actuarially
reduced to reflect the difference in the number of years between age at
retirement and the attainment of age sixty-five.
(((3))) (4) ALTERNATE EARLY RETIREMENT. Any member who has
completed at least thirty service credit years and has attained age
fifty-five shall be eligible to retire and to receive a retirement
allowance computed according to the provisions of RCW 41.35.400, except
that a member retiring pursuant to this subsection shall have the
retirement allowance reduced by three percent per year to reflect the
difference in the number of years between age at retirement and the
attainment of age sixty-five.
Sec. 6 RCW 41.35.680 and 2000 c 247 s 906 are each amended to
read as follows:
(1) NORMAL RETIREMENT. Any member who is at least age sixty-five
and who has:
(a) Completed ten service credit years; or
(b) Completed five service credit years, including twelve service
credit months after attaining age fifty-four; or
(c) Completed five service credit years by September 1, 2000, under
the public employees' retirement system plan 2 and who transferred to
plan 3 under RCW 41.35.510;
shall be eligible to retire and to receive a retirement allowance
computed according to the provisions of RCW 41.35.620.
(2) UNREDUCED RETIREMENT. Any member who has completed the number
of service credit years required in subsection (1) of this section and
has attained age sixty, and for whom the sum of the number of years of
the member's age and the number of years of the member's service credit
equals ninety or more, shall be eligible to retire. For the portion of
the member's benefit that is based on service credit earned after July
1, 2007, the member shall receive an unreduced retirement allowance
computed according to the provisions of RCW 41.35.620. For the portion
of the member's benefit that is based on service credit earned prior to
July 1, 2007, the retirement allowance shall be reduced under
subsection (3) or (4) of this section as applicable.
(3) EARLY RETIREMENT. Any member who has attained at least age
fifty-five and has completed at least ten years of service shall be
eligible to retire and to receive a retirement allowance computed
according to the provisions of RCW 41.35.620, except that a member
retiring pursuant to this subsection shall have the retirement
allowance actuarially reduced to reflect the difference in the number
of years between age at retirement and the attainment of age sixty-five.
(((3))) (4) ALTERNATE EARLY RETIREMENT. Any member who has
completed at least thirty service credit years and has attained age
fifty-five shall be eligible to retire and to receive a retirement
allowance computed according to the provisions of RCW 41.35.620, except
that a member retiring pursuant to this subsection shall have the
retirement allowance reduced by three percent per year to reflect the
difference in the number of years between age at retirement and the
attainment of age sixty-five.
Sec. 7 RCW 41.32.835 and 1995 c 239 s 105 are each amended to
read as follows:
(1) All teachers who first become employed by an employer in an
eligible position on or after ((July 1, 1996, shall be members of plan
3)) July 1, 2007, shall have a period of ninety days to make an
irrevocable choice to become a member of plan 2 or plan 3. At the end
of ninety days, if the member has not made a choice to become a member
of plan 2, he or she becomes a member of plan 3.
(2) For administrative efficiency, until a member elects to become
a member of plan 3, or becomes a member of plan 3 by default under
subsection (1) of this section, the member shall be reported to the
department in plan 2, with member and employer contributions. Upon
becoming a member of plan 3 by election or by default, all service
credit shall be transferred to the member's plan 3 defined benefit, and
all employee accumulated contributions shall be transferred to the
member's plan 3 defined contribution account.
Sec. 8 RCW 41.35.610 and 1998 c 341 s 202 are each amended to
read as follows:
(1) All classified employees who first become employed by an
employer in an eligible position on or after ((September 1, 2000, shall
be members of plan 3)) July 1, 2007, shall have a period of ninety days
to make an irrevocable choice to become a member of plan 2 or plan 3.
At the end of ninety days, if the member has not made a choice to
become a member of plan 2, he or she becomes a member of plan 3.
(2) For administrative efficiency, until a member elects to become
a member of plan 3, or becomes a member of plan 3 by default under
subsection (1) of this section, the member shall be reported to the
department in plan 2, with member and employer contributions. Upon
becoming a member of plan 3 by election or by default, all service
credit shall be transferred to the member's plan 3 defined benefit, and
all employee accumulated contributions shall be transferred to the
member's plan 3 defined contribution account.
Sec. 9 RCW 41.31A.010 and 2000 c 247 s 407 are each amended to
read as follows:
The definitions in this section apply throughout this chapter
unless the context requires otherwise.
(1) "Actuary" means the state actuary or the office of the state
actuary.
(2) "Department" means the department of retirement systems.
(3) (("Teacher" means any employee included in the membership of
the teachers' retirement system as provided for in chapter 41.32 RCW.)) "Member account" or "member's account" means the sum of any
contributions as provided for in chapter 41.34 RCW and the earnings on
behalf of the member.
(4)
(((5))) (4) "Classified employee" means the same as in RCW
41.35.010.
(((6) "Public employee" means the same as "member" as defined in
RCW 41.40.010(5).))
(5) "Terminated vested member" means a member who separates or has
separated from service after having completed enough service credit
years to be vested in the defined benefit portion of the members' plan
and who remains a member during the period of absence from service for
the exclusive purpose of receiving a future retirement allowance.
Sec. 10 RCW 41.31A.020 and 2003 c 294 s 4 are each amended to
read as follows:
(1) On January 1, ((2004)) 2008, and on January 1st of ((even-numbered years)) each year thereafter, the member account of a person
meeting the requirements of this section shall be credited by the
extraordinary investment gain amount.
(2) ((The following persons)) Members, retirees, and terminated
vested members of the school employees' retirement system plan 3 as of
June 30, 2007, who also meet the criteria in any of (a) through (f) of
this subsection shall be eligible for the benefit provided in
subsection (1) of this section:
(a) Any member of the ((teachers' retirement system plan 3, the))
Washington school employees' retirement system plan 3((, or the public
employees' retirement system plan 3)) who earned service credit during
the twelve-month period from September 1st to August 31st immediately
preceding the distribution and had a balance of at least one thousand
dollars in their member account on August 31st of the year immediately
preceding the distribution; or
(b) Any person in receipt of a benefit pursuant to RCW
((41.32.875,)) 41.35.680((, or 41.40.820)); or
(c) Any person who is a retiree pursuant to RCW 41.34.020(8) and
who:
(i) Completed ten service credit years; or
(ii) Completed five service credit years, including twelve service
months after attaining age fifty-four; or
(d) ((Any teacher who is a retiree pursuant to RCW 41.34.020(8) and
who has completed five service credit years by July 1, 1996, under plan
2 and who transferred to plan 3 under RCW 41.32.817; or)) Any classified employee who is a retiree pursuant to RCW
41.34.020(8) and who has completed five service credit years by
September 1, 2000, and who transferred to plan 3 under RCW 41.35.510;
or
(e)
(((f) Any public employee who is a retiree pursuant to RCW
41.34.020(8) and who has completed five service credit years by March
1, 2002, and who transferred to plan 3 under RCW 41.40.795; or)) (e) Any person who had a balance of at least one thousand
dollars in their member account on August 31st of the year immediately
preceding the distribution and who:
(g)
(i) Completed ten service credit years; or
(ii) Completed five service credit years, including twelve service
months after attaining age fifty-four; or
(((h) Any teacher who had a balance of at least one thousand
dollars in their member account on August 31st of the year immediately
preceding the distribution and who has completed five service credit
years by July 1, 1996, under plan 2 and who transferred to plan 3 under
RCW 41.32.817; or)) (f) Any classified employee who had a balance of at least one
thousand dollars in their member account on August 31st of the year
immediately preceding the distribution and who has completed five
service credit years by September 1, 2000, and who transferred to plan
3 under RCW 41.35.510((
(i); or)).
(j) Any public employee who had a balance of at least one thousand
dollars in their member account on August 31st of the year immediately
preceding the distribution and who has completed five service credit
years by March 1, 2002, and who transferred to plan 3 under RCW
41.40.795
(3) The extraordinary investment gain amount shall be calculated as
follows:
(((a) One-half of the sum of the value of the net assets held in
trust for pension benefits in the teachers' retirement system combined
plan 2 and 3 fund, the Washington school employees' retirement system
combined plan 2 and 3 fund, and the public employees' retirement system
combined plan 2 and 3 fund at the close of the previous state fiscal
year not including the amount attributable to member accounts;)) Ten
dollars, which shall be increased by three percent per year rounded to
the nearest cent, multiplied by the member's service credit total on
August 31st of the previous year.
(b) Multiplied by the amount which the compound average of
investment returns on those assets over the previous four state fiscal
years exceeds ten percent;
(c) Multiplied by the proportion of:
(i) The sum of the service credit on August 31st of the previous
year of all persons eligible for the benefit provided in subsection (1)
of this section; to
(ii) The sum of the service credit on August 31st of the previous
year of:
(A) All persons eligible for the benefit provided in subsection (1)
of this section;
(B) Any person who earned service credit in the teachers'
retirement system plan 2, the Washington school employees' retirement
system plan 2, or the public employees' retirement system plan 2 during
the twelve-month period from September 1st to August 31st immediately
preceding the distribution;
(C) Any person in receipt of a benefit pursuant to RCW 41.32.765,
41.35.420, or 41.40.630; and
(D) Any person with five or more years of service in the teachers'
retirement system plan 2, the Washington school employees' retirement
system plan 2, or the public employees' retirement system plan 2;
(d) Divided proportionally among persons eligible for the benefit
provided in subsection (1) of this section on the basis of their
(((4) The legislature reserves the right to amend or repeal this
section in the future and no member or beneficiary has a contractual
right to receive this distribution not granted prior to that time.))
NEW SECTION. Sec. 11 RCW 41.31A.030 is decodified.
NEW SECTION. Sec. 12 RCW 41.31A.040 is decodified.
Sec. 13 RCW 41.45.061 and 2004 c 242 s 40 are each amended to
read as follows:
(1) The required contribution rate for members of the ((plan 2))
teachers' retirement system plan 2 shall be ((fixed at the rates in
effect on July 1, 1996, subject to the following:)) set at the same
rate as the employer combined plan 2 and plan 3 rate.
(a) Beginning September 1, 1997, except as provided in (b) of this
subsection, the employee contribution rate shall not exceed the
employer plan 2 and 3 rates adopted under RCW 41.45.060, 41.45.054, and
41.45.070 for the teachers' retirement system;
(b) In addition, the employee contribution rate for plan 2 shall be
increased by fifty percent of the contribution rate increase caused by
any plan 2 benefit increase passed after July 1, 1996;
(c) In addition, the employee contribution rate for plan 2 shall
not be increased as a result of any distributions pursuant to section
309, chapter 341, Laws of 1998 and RCW 41.31A.020
(2) The required contribution rate for members of the school
employees' retirement system plan 2 shall ((equal the school employees'
retirement system employer plan 2 and 3 contribution rate adopted under
RCW 41.45.060, 41.45.054, and 41.45.070, except as provided in
subsection (3) of this section.)) be set at the same rate as the employer
combined plan 2 and plan 3 rate.
(3) The member contribution rate for the school employees'
retirement system plan 2 shall be increased by fifty percent of the
contribution rate increase caused by any plan 2 benefit increase passed
after September 1, 2000
(((4))) (3) The required contribution rate for members of the
public employees' retirement system plan 2 shall be set at the same
rate as the employer combined plan 2 and plan 3 rate.
(((5))) (4) The required contribution rate for members of the law
enforcement officers' and fire fighters' retirement system plan 2 shall
be set at fifty percent of the cost of the retirement system.
(((6))) (5) The ((employee)) required contribution rates for
members of the school employees' retirement system plan 2 ((under
subsections (3) and (4) of this section)) shall not include any
increase as a result of any distributions pursuant to RCW 41.31A.020
((and 41.31A.030)).
(((7))) (6) The required plan 2 and 3 contribution rates for
employers shall be adopted in the manner described in RCW 41.45.060((,
41.45.054,)) and 41.45.070.
(((8))) (7) The required contribution rate for members of the
public safety employees' retirement system plan 2 shall be set at fifty
percent of the cost of the retirement system.
Sec. 14 RCW 41.34.040 and 2003 c 156 s 1 are each amended to read
as follows:
(1) A member shall contribute from his or her compensation
according to one of the following rate structures in addition to the
mandatory minimum five percent:
| Option A | Contribution Rate |
| All Ages | 0.0% fixed |
| Option B | |
| Up to Age 35 | 0.0% |
| Age 35 to 44 | 1.0% |
| Age 45 and above | 2.5% |
| Option C | |
| Up to Age 35 | 1.0% |
| Age 35 to 44 | 2.5% |
| Age 45 and above | 3.5% |
| Option D | |
| All Ages | 2.0% |
| Option E | |
| All Ages | 5.0% |
| Option F | |
| All Ages | 10.0% |
NEW SECTION. Sec. 15 The benefits provided pursuant to sections
1 through 16 of this act are not provided to employees as a matter of
contractual right prior to July 1, 2007. The legislature retains the
right to alter or abolish these benefits at any time prior to July 1,
2007.
NEW SECTION. Sec. 16 Sections 1 through 14 of this act take
effect July 1, 2007.
NEW SECTION. Sec. 17 A new section is added to chapter 41.45 RCW
to read as follows:
The basic employer and state contribution rates and required plan
2 member contribution rates are changed to reflect the 2003 actuarial
valuation and actuarial projections of the 2005 actuarial valuation,
both of which incorporate the 2002 actuarial experience study conducted
by the office of the state actuary for 1995-2000. This contribution
rate schedule departs from the normal biennial process for setting
contribution rates by requiring four annual increases in rates. The
rates are lower in the first two years than required by the 2003
actuarial valuation and higher in the second two years than required by
the projected 2005 actuarial valuation. Upon completion of the 2005
actuarial valuation, the pension funding council and the state actuary
shall review the appropriateness of the contribution rates for 2007-2008 and 2008-2009 and by September 30, 2006, the pension funding
council shall recommend to the legislature any adjustments as may be
needed due to material changes in benefits or actuarial assumptions,
methods, or experience. This contribution rate schedule also requires
a departure from the allocation formula for contributions in RCW
41.45.050.
(1) Beginning July 1, 2005, the following employer contribution
rate shall be charged: 2.50 percent for the public employees'
retirement system, of which .75 percent shall be allocated to the
unfunded actuarial accrued liability for the public employees'
retirement system plan 1.
(2) Beginning September 1, 2005, the following employer
contribution rates shall be charged:
(a) 3.00 percent for the school employees' retirement system, of
which .75 percent shall be allocated to the unfunded actuarial accrued
liability for the public employees' retirement system plan 1; and
(b) 3.50 percent for the teachers' retirement system, of which 1.50
percent shall be allocated to the unfunded actuarial accrued liability
for the teachers' retirement system plan 1.
(3) Beginning July 1, 2005, the following member contribution rate
shall be charged: 1.75 percent for the public employees' retirement
system plan 2.
(4) Beginning September 1, 2005, the following member contribution
rates shall be charged:
(a) 2.25 percent for the school employees' retirement system plan
2; and
(b) 1.75 percent for the teachers' retirement system plan 2.
(5) The contribution rates in subsections (1) through (4) of this
section shall be collected through June 30, 2006, for the public
employees' retirement system, and August 31, 2006, for the school
employees' retirement system and the teachers' retirement system.
(6) Beginning July 1, 2006, the following employer contribution
rate shall be charged: 5.00 percent for the public employees'
retirement system, of which 1.75 percent shall be allocated to the
unfunded actuarial accrued liability for the public employees'
retirement system plan 1.
(7) Beginning September 1, 2006, the following employer
contribution rates shall be charged:
(a) 5.25 percent for the school employees' retirement system, of
which 1.75 percent shall be allocated to the unfunded actuarial accrued
liability for the public employees' retirement system plan 1; and
(b) 5.25 percent for the teachers' retirement system, of which 2.25
percent shall be allocated to the unfunded actuarial accrued liability
for the teachers' retirement system plan 1.
(8) Beginning July 1, 2006, the following member contribution rate
shall be charged: 3.25 percent for the public employees' retirement
system plan 2.
(9) Beginning September 1, 2006, the following member contribution
rates shall be charged:
(a) 3.50 percent for the school employees' retirement system plan
2; and
(b) 2.75 percent for the teachers' retirement system plan 2.
(10) The contribution rates in subsections (6) through (9) of this
section shall be collected through June 30, 2007, for the public
employees' retirement system, and August 31, 2007, for the school
employees' retirement system and the teachers' retirement system.
(11) Beginning July 1, 2007, the following employer contribution
rate shall be charged: 7.25 percent for the public employees'
retirement system, of which 2.50 percent shall be allocated to the
unfunded actuarial accrued liability of the public employees'
retirement system plan 1.
(12) Beginning September 1, 2007, the following employer
contribution rates shall be charged:
(a) 7.25 percent for the school employees' retirement system, of
which 2.50 percent shall be allocated to the unfunded actuarial accrued
liability of the public employees' retirement system plan 1; and
(b) 7.37 percent for the teachers' retirement system, of which 3.50
percent shall be allocated to the unfunded actuarial accrued liability
of the teachers' retirement system plan 1.
(13) Beginning July 1, 2007, the following member contribution rate
shall be charged: 4.75 percent for the public employees' retirement
system plan 2.
(14) Beginning September 1, 2007, the following member contribution
rates shall be charged:
(a) 4.75 percent for the school employees' retirement system plan
2; and
(b) 3.75 percent for the teachers' retirement system plan 2.
(15) The contribution rates in subsections (11) through (14) of
this section shall be collected through June 30, 2008, for the public
employees' retirement system, and August 31, 2008, for the school
employees' retirement system and the teachers' retirement system.
(16) Beginning July 1, 2008, the following employer contribution
rate shall be charged: 8.62 percent for the public employees'
retirement system, of which 2.82 percent shall be allocated to the
unfunded actuarial accrued liability of the public employees'
retirement system plan 1.
(17) Beginning September 1, 2008, the following employer
contribution rates shall be charged:
(a) 8.94 percent for the school employees' retirement system, of
which 2.82 percent shall be allocated to the unfunded actuarial accrued
liability of the public employees' retirement system plan 1; and
(b) 9.21 percent for the teachers' retirement system, of which 4.18
percent shall be allocated to the unfunded actuarial accrued liability
of the teachers' retirement system plan 1.
(18) Beginning July 1, 2008, the following member contribution rate
shall be charged: 5.80 percent for the public employees' retirement
system plan 2.
(19) Beginning September 1, 2008, the following member contribution
rates shall be charged:
(a) 6.12 percent for the school employees' retirement system plan
2; and
(b) 4.91 percent for the teachers' retirement system plan 2.
(20) The contribution rates in subsections (16) through (19) of
this section shall be collected through June 30, 2009, for the public
employees' retirement system, and August 31, 2009, for the school
employees' retirement system and the teachers' retirement system.
NEW SECTION. Sec. 18 A new section is added to chapter 41.45 RCW
to read as follows:
Beginning July 1, 2009, for the public employees' retirement system
and the public safety employees' retirement system, and September 1,
2009, for the school employees' retirement system and the teachers'
retirement system, minimum basic employer and state contribution rates
and minimum required plan 2 member contribution rates are established.
In establishing these minimum rates, it is the intent of the
legislature to promote contribution rate stability over time. The
basic employer and state contribution rates and required plan 2 member
contribution rates as recommended by the pension funding council and
adopted by the legislature may exceed, but shall not drop below, these
minimum rates. Upon completion of each biennial actuarial valuation,
the pension funding council and the state actuary shall review the
appropriateness of the minimum contribution rates and the pension
funding council shall recommend to the legislature any adjustments as
may be needed due to material changes in benefits or actuarial
assumptions, methods, or experience.
(1) Beginning July 1, 2009, the following minimum employer
contribution rate shall be charged: 4.00 percent for the public
employees' retirement system.
(2) Beginning September 1, 2009, the following minimum employer
contribution rates shall be charged:
(a) 4.25 percent for the school employees' retirement system; and
(b) 5.00 percent for the teachers' retirement system.
(3) Beginning July 1, 2009, the following minimum member
contribution rate shall be charged: 4.00 percent for the public
employees' retirement system plan 2.
(4) Beginning September 1, 2009, the following minimum member
contribution rates shall be charged:
(a) 4.25 percent for the school employees' retirement system plan
2; and
(b) 5.00 percent for the teachers' retirement system plan 2.
(5) Beginning July 1, 2009, an additional minimum 2.75 percent is
added to the minimum employer contribution rate of 4.00 percent for the
public employees' retirement system until the actuarial value of assets
equals one hundred twenty-five percent of the actuarial accrued
liability for the public employees' retirement system plan 1 or June
30, 2024, whichever comes first.
(6) Beginning July 1, 2009, an additional minimum 2.75 percent is
added to the basic employer contribution rate for the public safety
employees' retirement system until the actuarial value of public
employees' retirement system plan 1 assets equals one hundred
twenty-five percent of the actuarial accrued liability for the public
employees' retirement system plan 1 or June 30, 2024, whichever comes
first.
(7) Beginning September 1, 2009, an additional minimum 2.75 percent
is added to the minimum employer contribution rate of 4.25 percent for
the school employees' retirement system until the actuarial value of
public employees' retirement system plan 1 assets equals one hundred
twenty-five percent of the actuarial accrued liability for the public
employees' retirement system plan 1 or June 30, 2024, whichever comes
first.
(8) Beginning September 1, 2009, an additional 5.75 percent is
added to the minimum employer contribution rate of 5.00 percent for the
teachers' retirement system until the actuarial value of assets equals
one hundred twenty-five percent of the actuarial accrued liability for
the teachers' retirement system plan 1 or June 30, 2024, whichever
comes first.
NEW SECTION. Sec. 19 RCW 41.45.054 is decodified, effective
September 1, 2005.
NEW SECTION. Sec. 20 Section 17 of this act is necessary for the
immediate preservation of the public peace, health, or safety, or
support of the state government and its existing public institutions,
and takes effect July 1, 2005.
NEW SECTION. Sec. 21 Section 18 of this act takes effect July 1,
2009.
Sec. 22 RCW 41.32.010 and 2003 c 31 s 1 are each amended to read
as follows:
As used in this chapter, unless a different meaning is plainly
required by the context:
(1)(a) "Accumulated contributions" for plan 1 members, means the
sum of all regular annuity contributions and, except for the purpose of
withdrawal at the time of retirement, any amount paid under RCW
41.50.165(2) with regular interest thereon.
(b) "Accumulated contributions" for plan 2 members, means the sum
of all contributions standing to the credit of a member in the member's
individual account, including any amount paid under RCW 41.50.165(2),
together with the regular interest thereon.
(2) "Actuarial equivalent" means a benefit of equal value when
computed upon the basis of such mortality tables and regulations as
shall be adopted by the director and regular interest.
(3) "Annuity" means the moneys payable per year during life by
reason of accumulated contributions of a member.
(4) "Member reserve" means the fund in which all of the accumulated
contributions of members are held.
(5)(a) "Beneficiary" for plan 1 members, means any person in
receipt of a retirement allowance or other benefit provided by this
chapter.
(b) "Beneficiary" for plan 2 and plan 3 members, means any person
in receipt of a retirement allowance or other benefit provided by this
chapter resulting from service rendered to an employer by another
person.
(6) "Contract" means any agreement for service and compensation
between a member and an employer.
(7) "Creditable service" means membership service plus prior
service for which credit is allowable. This subsection shall apply
only to plan 1 members.
(8) "Dependent" means receiving one-half or more of support from a
member.
(9) "Disability allowance" means monthly payments during
disability. This subsection shall apply only to plan 1 members.
(10)(a) "Earnable compensation" for plan 1 members, means:
(i) All salaries and wages paid by an employer to an employee
member of the retirement system for personal services rendered during
a fiscal year. In all cases where compensation includes maintenance
the employer shall fix the value of that part of the compensation not
paid in money.
(ii) For an employee member of the retirement system teaching in an
extended school year program, two consecutive extended school years, as
defined by the employer school district, may be used as the annual
period for determining earnable compensation in lieu of the two fiscal
years.
(iii) "Earnable compensation" for plan 1 members also includes the
following actual or imputed payments, which are not paid for personal
services:
(A) Retroactive payments to an individual by an employer on
reinstatement of the employee in a position, or payments by an employer
to an individual in lieu of reinstatement in a position which are
awarded or granted as the equivalent of the salary or wages which the
individual would have earned during a payroll period shall be
considered earnable compensation and the individual shall receive the
equivalent service credit.
(B) If a leave of absence, without pay, is taken by a member for
the purpose of serving as a member of the state legislature, and such
member has served in the legislature five or more years, the salary
which would have been received for the position from which the leave of
absence was taken shall be considered as compensation earnable if the
employee's contribution thereon is paid by the employee. In addition,
where a member has been a member of the state legislature for five or
more years, earnable compensation for the member's two highest
compensated consecutive years of service shall include a sum not to
exceed thirty-six hundred dollars for each of such two consecutive
years, regardless of whether or not legislative service was rendered
during those two years.
(iv) For members employed less than full time under written
contract with a school district, or community college district, in an
instructional position, for which the member receives service credit of
less than one year in all of the years used to determine the earnable
compensation used for computing benefits due under RCW 41.32.497,
41.32.498, and 41.32.520, the member may elect to have earnable
compensation defined as provided in RCW 41.32.345. For the purposes of
this subsection, the term "instructional position" means a position in
which more than seventy-five percent of the member's time is spent as
a classroom instructor (including office hours), a librarian, or a
counselor. Earnable compensation shall be so defined only for the
purpose of the calculation of retirement benefits and only as necessary
to insure that members who receive fractional service credit under RCW
41.32.270 receive benefits proportional to those received by members
who have received full-time service credit.
(v) "Earnable compensation" does not include:
(A) Remuneration for unused sick leave authorized under RCW
41.04.340, 28A.400.210, or 28A.310.490;
(B) Remuneration for unused annual leave in excess of thirty days
as authorized by RCW 43.01.044 and 43.01.041.
(b) "Earnable compensation" for plan 2 and plan 3 members, means
salaries or wages earned by a member during a payroll period for
personal services, including overtime payments, and shall include wages
and salaries deferred under provisions established pursuant to sections
403(b), 414(h), and 457 of the United States Internal Revenue Code, but
shall exclude lump sum payments for deferred annual sick leave, unused
accumulated vacation, unused accumulated annual leave, or any form of
severance pay.
"Earnable compensation" for plan 2 and plan 3 members also includes
the following actual or imputed payments which, except in the case of
(b)(ii)(B) of this subsection, are not paid for personal services:
(i) Retroactive payments to an individual by an employer on
reinstatement of the employee in a position or payments by an employer
to an individual in lieu of reinstatement in a position which are
awarded or granted as the equivalent of the salary or wages which the
individual would have earned during a payroll period shall be
considered earnable compensation, to the extent provided above, and the
individual shall receive the equivalent service credit.
(ii) In any year in which a member serves in the legislature the
member shall have the option of having such member's earnable
compensation be the greater of:
(A) The earnable compensation the member would have received had
such member not served in the legislature; or
(B) Such member's actual earnable compensation received for
teaching and legislative service combined. Any additional
contributions to the retirement system required because compensation
earnable under (b)(ii)(A) of this subsection is greater than
compensation earnable under (b)(ii)(B) of this subsection shall be paid
by the member for both member and employer contributions.
(11) "Employer" means the state of Washington, the school district,
or any agency of the state of Washington by which the member is paid.
(12) "Fiscal year" means a year which begins July 1st and ends June
30th of the following year.
(13) "Former state fund" means the state retirement fund in
operation for teachers under chapter 187, Laws of 1923, as amended.
(14) "Local fund" means any of the local retirement funds for
teachers operated in any school district in accordance with the
provisions of chapter 163, Laws of 1917 as amended.
(15) "Member" means any teacher included in the membership of the
retirement system. Also, any other employee of the public schools who,
on July 1, 1947, had not elected to be exempt from membership and who,
prior to that date, had by an authorized payroll deduction, contributed
to the member reserve.
(16) "Membership service" means service rendered subsequent to the
first day of eligibility of a person to membership in the retirement
system: PROVIDED, That where a member is employed by two or more
employers the individual shall receive no more than one service credit
month during any calendar month in which multiple service is rendered.
The provisions of this subsection shall apply only to plan 1 members.
(17) "Pension" means the moneys payable per year during life from
the pension reserve.
(18) "Pension reserve" is a fund in which shall be accumulated an
actuarial reserve adequate to meet present and future pension
liabilities of the system and from which all pension obligations are to
be paid.
(19) "Prior service" means service rendered prior to the first date
of eligibility to membership in the retirement system for which credit
is allowable. The provisions of this subsection shall apply only to
plan 1 members.
(20) "Prior service contributions" means contributions made by a
member to secure credit for prior service. The provisions of this
subsection shall apply only to plan 1 members.
(21) "Public school" means any institution or activity operated by
the state of Washington or any instrumentality or political subdivision
thereof employing teachers, except the University of Washington and
Washington State University.
(22) "Regular contributions" means the amounts required to be
deducted from the compensation of a member and credited to the member's
individual account in the member reserve. This subsection shall apply
only to plan 1 members.
(23) "Regular interest" means such rate as the director may
determine.
(24)(a) "Retirement allowance" for plan 1 members, means monthly
payments based on the sum of annuity and pension, or any optional
benefits payable in lieu thereof.
(b) "Retirement allowance" for plan 2 and plan 3 members, means
monthly payments to a retiree or beneficiary as provided in this
chapter.
(25) "Retirement system" means the Washington state teachers'
retirement system.
(26)(a) "Service" for plan 1 members means the time during which a
member has been employed by an employer for compensation.
(i) If a member is employed by two or more employers the individual
shall receive no more than one service credit month during any calendar
month in which multiple service is rendered.
(ii) As authorized by RCW 28A.400.300, up to forty-five days of
sick leave may be creditable as service solely for the purpose of
determining eligibility to retire under RCW 41.32.470.
(iii) As authorized in RCW 41.32.065, service earned in an out-of-state retirement system that covers teachers in public schools may be
applied solely for the purpose of determining eligibility to retire
under RCW 41.32.470.
(b) "Service" for plan 2 and plan 3 members, means periods of
employment by a member for one or more employers for which earnable
compensation is earned subject to the following conditions:
(i) A member employed in an eligible position or as a substitute
shall receive one service credit month for each month of September
through August of the following year if he or she earns earnable
compensation for eight hundred ten or more hours during that period and
is employed during nine of those months, except that a member may not
receive credit for any period prior to the member's employment in an
eligible position except as provided in RCW 41.32.812 and 41.50.132;
(ii) If a member is employed either in an eligible position or as
a substitute teacher for nine months of the twelve month period between
September through August of the following year but earns earnable
compensation for less than eight hundred ten hours but for at least six
hundred thirty hours, he or she will receive one-half of a service
credit month for each month of the twelve month period;
(iii) All other members in an eligible position or as a substitute
teacher shall receive service credit as follows:
(A) A service credit month is earned in those calendar months where
earnable compensation is earned for ninety or more hours;
(B) A half-service credit month is earned in those calendar months
where earnable compensation is earned for at least seventy hours but
less than ninety hours; and
(C) A quarter-service credit month is earned in those calendar
months where earnable compensation is earned for less than seventy
hours.
(iv) Any person who is a member of the teachers' retirement system
and who is elected or appointed to a state elective position may
continue to be a member of the retirement system and continue to
receive a service credit month for each of the months in a state
elective position by making the required member contributions.
(v) When an individual is employed by two or more employers the
individual shall only receive one month's service credit during any
calendar month in which multiple service for ninety or more hours is
rendered.
(vi) As authorized by RCW 28A.400.300, up to forty-five days of
sick leave may be creditable as service solely for the purpose of
determining eligibility to retire under RCW 41.32.470. For purposes of
plan 2 and plan 3 "forty-five days" as used in RCW 28A.400.300 is equal
to two service credit months. Use of less than forty-five days of sick
leave is creditable as allowed under this subsection as follows:
(A) Less than eleven days equals one-quarter service credit month;
(B) Eleven or more days but less than twenty-two days equals one-half service credit month;
(C) Twenty-two days equals one service credit month;
(D) More than twenty-two days but less than thirty-three days
equals one and one-quarter service credit month;
(E) Thirty-three or more days but less than forty-five days equals
one and one-half service credit month.
(vii) As authorized in RCW 41.32.065, service earned in an out-of-state retirement system that covers teachers in public schools may be
applied solely for the purpose of determining eligibility to retire
under RCW 41.32.470.
(viii) The department shall adopt rules implementing this
subsection.
(27) "Service credit year" means an accumulation of months of
service credit which is equal to one when divided by twelve.
(28) "Service credit month" means a full service credit month or an
accumulation of partial service credit months that are equal to one.
(29) "Teacher" means any person qualified to teach who is engaged
by a public school in an instructional, administrative, or supervisory
capacity. The term includes state, educational service district, and
school district superintendents and their assistants and all employees
certificated by the superintendent of public instruction; and in
addition thereto any full time school doctor who is employed by a
public school and renders service of an instructional or educational
nature.
(30) "Average final compensation" for plan 2 and plan 3 members,
means the member's average earnable compensation of the highest
consecutive sixty service credit months prior to such member's
retirement, termination, or death. Periods constituting authorized
leaves of absence may not be used in the calculation of average final
compensation except under RCW 41.32.810(2).
(31) "Retiree" means any person who has begun accruing a retirement
allowance or other benefit provided by this chapter resulting from
service rendered to an employer while a member.
(32) "Department" means the department of retirement systems
created in chapter 41.50 RCW.
(33) "Director" means the director of the department.
(34) "State elective position" means any position held by any
person elected or appointed to statewide office or elected or appointed
as a member of the legislature.
(35) "State actuary" or "actuary" means the person appointed
pursuant to RCW 44.44.010(2).
(36) "Substitute teacher" means:
(a) A teacher who is hired by an employer to work as a temporary
teacher, except for teachers who are annual contract employees of an
employer and are guaranteed a minimum number of hours; or
(b) Teachers who either (i) work in ineligible positions for more
than one employer or (ii) work in an ineligible position or positions
together with an eligible position.
(37)(a) "Eligible position" for plan 2 members from June 7, 1990,
through September 1, 1991, means a position which normally requires two
or more uninterrupted months of creditable service during September
through August of the following year.
(b) "Eligible position" for plan 2 and plan 3 on and after
September 1, 1991, means a position that, as defined by the employer,
normally requires five or more months of at least seventy hours of
earnable compensation during September through August of the following
year.
(c) For purposes of this chapter an employer shall not define
"position" in such a manner that an employee's monthly work for that
employer is divided into more than one position.
(d) The elected position of the superintendent of public
instruction is an eligible position.
(38) "Plan 1" means the teachers' retirement system, plan 1
providing the benefits and funding provisions covering persons who
first became members of the system prior to October 1, 1977.
(39) "Plan 2" means the teachers' retirement system, plan 2
providing the benefits and funding provisions covering persons who
first became members of the system on and after October 1, 1977, and
prior to July 1, 1996.
(40) "Plan 3" means the teachers' retirement system, plan 3
providing the benefits and funding provisions covering persons who
first become members of the system on and after July 1, 1996, or who
transfer under RCW 41.32.817.
(41) "Index" means, for any calendar year, that year's annual
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.
(42) "Index A" means the index for the year prior to the
determination of a postretirement adjustment.
(43) "Index B" means the index for the year prior to index A.
(44) "Index year" means the earliest calendar year in which the
index is more than sixty percent of index A.
(45) "Adjustment ratio" means the value of index A divided by index
B.
(46) "Annual increase" means((, initially, fifty-nine)) one dollar
and forty-five cents per month per year of service which amount shall
be increased each July 1st by three percent, rounded to the nearest
cent.
(47) "Member account" or "member's account" for purposes of plan 3
means the sum of the contributions and earnings on behalf of the member
in the defined contribution portion of plan 3.
(48) "Separation from service or employment" occurs when a person
has terminated all employment with an employer.
(49) "Employed" or "employee" means a person who is providing
services for compensation to an employer, unless the person is free
from the employer's direction and control over the performance of work.
The department shall adopt rules and interpret this subsection
consistent with common law.
Sec. 23 RCW 41.32.4851 and 2004 c 85 s 1 are each amended to read
as follows:
(1) No one who becomes a beneficiary after June 30, 1995, shall
receive a monthly retirement allowance of less than twenty-four dollars
and twenty-two cents times the number of years of service creditable to
the person whose service is the basis of such retirement allowance.
(2) If the retirement allowance payable was adjusted at the time
benefit payments to the beneficiary commenced, the minimum allowance
provided in this section shall be adjusted in a manner consistent with
that adjustment.
(3) Beginning July 1, 1996, the minimum benefit set forth in
subsection (1) of this section shall be adjusted annually by the annual
increase.
(4) Those receiving a temporary disability benefit under RCW
41.32.540 shall not be eligible for the benefit provided by this
section.
(5) Beginning July 1, 2004, the minimum benefit set forth in
subsection (1) of this section, prior to adjustments set forth in
subsection (2) of this section, for a beneficiary with at least twenty-five years of service and who has been retired at least twenty years
shall be one thousand dollars per month((. The minimum benefit in this
subsection shall not be adjusted by the annual increase provided in
subsection (3) of this section)) which shall be increased each July 1st
by three percent, rounded to the nearest cent.
(6) Beginning July 1, 2005, the minimum benefit set forth in
subsection (1) of this section, prior to adjustments set forth in
subsection (2) of this section, for a beneficiary with at least twenty
years of service and who has been retired at least twenty-five years
shall be one thousand dollars per month which shall be increased each
July 1st by three percent, rounded to the nearest cent.
Sec. 24 RCW 41.32.489 and 1995 c 345 s 2 are each amended to read
as follows:
(1) Beginning July 1, 1995, and annually thereafter, the retirement
allowance of a person meeting the requirements of this section shall be
increased by the annual increase amount.
(2) The following persons shall be eligible for the benefit
provided in subsection (1) of this section:
(a) A beneficiary who has received a retirement allowance for at
least one year by July 1st in the calendar year in which the annual
increase is given and has attained at least age sixty-six by ((July
1st)) December 31st in the calendar year in which the annual increase
is given; or
(b) A beneficiary whose retirement allowance is lower than the
minimum benefit provided under RCW 41.32.4851.
(3) The following persons shall also be eligible for the benefit
provided in subsection (1) of this section:
(a) A beneficiary receiving the minimum benefit on June 30, 1995,
under RCW 41.32.485; or
(b) A recipient of a survivor benefit on June 30, 1995, which has
been increased by RCW 41.32.575.
(4) If otherwise eligible, those receiving an annual adjustment
under RCW 41.32.530(1)(d) shall be eligible for the annual increase
adjustment in addition to the benefit that would have been received
absent this section.
(5) Those receiving a temporary disability benefit under RCW
41.32.540 shall not be eligible for the benefit provided by this
section.
(6) The legislature reserves the right to amend or repeal this
section in the future and no member or beneficiary has a contractual
right to receive this postretirement adjustment not granted prior to
that time.
Sec. 25 RCW 41.40.010 and 2003 c 412 s 4 are each amended to read
as follows:
As used in this chapter, unless a different meaning is plainly
required by the context:
(1) "Retirement system" means the public employees' retirement
system provided for in this chapter.
(2) "Department" means the department of retirement systems created
in chapter 41.50 RCW.
(3) "State treasurer" means the treasurer of the state of
Washington.
(4)(a) "Employer" for plan 1 members, means every branch,
department, agency, commission, board, and office of the state, any
political subdivision or association of political subdivisions of the
state admitted into the retirement system, and legal entities
authorized by RCW 35.63.070 and 36.70.060 or chapter 39.34 RCW; and the
term shall also include any labor guild, association, or organization
the membership of a local lodge or division of which is comprised of at
least forty percent employees of an employer (other than such labor
guild, association, or organization) within this chapter. The term may
also include any city of the first class that has its own retirement
system.
(b) "Employer" for plan 2 and plan 3 members, means every branch,
department, agency, commission, board, and office of the state, and any
political subdivision and municipal corporation of the state admitted
into the retirement system, including public agencies created pursuant
to RCW 35.63.070, 36.70.060, and 39.34.030; except that after August
31, 2000, school districts and educational service districts will no
longer be employers for the public employees' retirement system plan 2.
(5) "Member" means any employee included in the membership of the
retirement system, as provided for in RCW 41.40.023. RCW 41.26.045
does not prohibit a person otherwise eligible for membership in the
retirement system from establishing such membership effective when he
or she first entered an eligible position.
(6) "Original member" of this retirement system means:
(a) Any person who became a member of the system prior to April 1,
1949;
(b) Any person who becomes a member through the admission of an
employer into the retirement system on and after April 1, 1949, and
prior to April 1, 1951;
(c) Any person who first becomes a member by securing employment
with an employer prior to April 1, 1951, provided the member has
rendered at least one or more years of service to any employer prior to
October 1, 1947;
(d) Any person who first becomes a member through the admission of
an employer into the retirement system on or after April 1, 1951,
provided, such person has been in the regular employ of the employer
for at least six months of the twelve-month period preceding the said
admission date;
(e) Any member who has restored all contributions that may have
been withdrawn as provided by RCW 41.40.150 and who on the effective
date of the individual's retirement becomes entitled to be credited
with ten years or more of membership service except that the provisions
relating to the minimum amount of retirement allowance for the member
upon retirement at age seventy as found in RCW 41.40.190(4) shall not
apply to the member;
(f) Any member who has been a contributor under the system for two
or more years and who has restored all contributions that may have been
withdrawn as provided by RCW 41.40.150 and who on the effective date of
the individual's retirement has rendered five or more years of service
for the state or any political subdivision prior to the time of the
admission of the employer into the system; except that the provisions
relating to the minimum amount of retirement allowance for the member
upon retirement at age seventy as found in RCW 41.40.190(4) shall not
apply to the member.
(7) "New member" means a person who becomes a member on or after
April 1, 1949, except as otherwise provided in this section.
(8)(a) "Compensation earnable" for plan 1 members, means salaries
or wages earned during a payroll period for personal services and where
the compensation is not all paid in money, maintenance compensation
shall be included upon the basis of the schedules established by the
member's employer.
(i) "Compensation earnable" for plan 1 members also includes the
following actual or imputed payments, which are not paid for personal
services:
(A) Retroactive payments to an individual by an employer on
reinstatement of the employee in a position, or payments by an employer
to an individual in lieu of reinstatement in a position which are
awarded or granted as the equivalent of the salary or wage which the
individual would have earned during a payroll period shall be
considered compensation earnable and the individual shall receive the
equivalent service credit;
(B) If a leave of absence is taken by an individual for the purpose
of serving in the state legislature, the salary which would have been
received for the position from which the leave of absence was taken,
shall be considered as compensation earnable if the employee's
contribution is paid by the employee and the employer's contribution is
paid by the employer or employee;
(C) Assault pay only as authorized by RCW 27.04.100, 72.01.045, and
72.09.240;
(D) Compensation that a member would have received but for a
disability occurring in the line of duty only as authorized by RCW
41.40.038;
(E) Compensation that a member receives due to participation in the
leave sharing program only as authorized by RCW 41.04.650 through
41.04.670; and
(F) Compensation that a member receives for being in standby
status. For the purposes of this section, a member is in standby
status when not being paid for time actually worked and the employer
requires the member to be prepared to report immediately for work, if
the need arises, although the need may not arise.
(ii) "Compensation earnable" does not include:
(A) Remuneration for unused sick leave authorized under RCW
41.04.340, 28A.400.210, or 28A.310.490;
(B) Remuneration for unused annual leave in excess of thirty days
as authorized by RCW 43.01.044 and 43.01.041.
(b) "Compensation earnable" for plan 2 and plan 3 members, means
salaries or wages earned by a member during a payroll period for
personal services, including overtime payments, and shall include wages
and salaries deferred under provisions established pursuant to sections
403(b), 414(h), and 457 of the United States Internal Revenue Code, but
shall exclude nonmoney maintenance compensation and lump sum or other
payments for deferred annual sick leave, unused accumulated vacation,
unused accumulated annual leave, or any form of severance pay.
"Compensation earnable" for plan 2 and plan 3 members also includes
the following actual or imputed payments, which are not paid for
personal services:
(i) Retroactive payments to an individual by an employer on
reinstatement of the employee in a position, or payments by an employer
to an individual in lieu of reinstatement in a position which are
awarded or granted as the equivalent of the salary or wage which the
individual would have earned during a payroll period shall be
considered compensation earnable to the extent provided above, and the
individual shall receive the equivalent service credit;
(ii) In any year in which a member serves in the legislature, the
member shall have the option of having such member's compensation
earnable be the greater of:
(A) The compensation earnable the member would have received had
such member not served in the legislature; or
(B) Such member's actual compensation earnable received for
nonlegislative public employment and legislative service combined. Any
additional contributions to the retirement system required because
compensation earnable under (b)(ii)(A) of this subsection is greater
than compensation earnable under (b)(ii)(B) of this subsection shall be
paid by the member for both member and employer contributions;
(iii) Assault pay only as authorized by RCW 27.04.100, 72.01.045,
and 72.09.240;
(iv) Compensation that a member would have received but for a
disability occurring in the line of duty only as authorized by RCW
41.40.038;
(v) Compensation that a member receives due to participation in the
leave sharing program only as authorized by RCW 41.04.650 through
41.04.670; and
(vi) Compensation that a member receives for being in standby
status. For the purposes of this section, a member is in standby
status when not being paid for time actually worked and the employer
requires the member to be prepared to report immediately for work, if
the need arises, although the need may not arise.
(9)(a) "Service" for plan 1 members, except as provided in RCW
41.40.088, means periods of employment in an eligible position or
positions for one or more employers rendered to any employer for which
compensation is paid, and includes time spent in office as an elected
or appointed official of an employer. Compensation earnable earned in
full time work for seventy hours or more in any given calendar month
shall constitute one service credit month except as provided in RCW
41.40.088. Compensation earnable earned for less than seventy hours in
any calendar month shall constitute one-quarter service credit month of
service except as provided in RCW 41.40.088. Only service credit
months and one-quarter service credit months shall be counted in the
computation of any retirement allowance or other benefit provided for
in this chapter. Any fraction of a year of service shall be taken into
account in the computation of such retirement allowance or benefits.
Time spent in standby status, whether compensated or not, is not
service.
(i) Service by a state employee officially assigned by the state on
a temporary basis to assist another public agency, shall be considered
as service as a state employee: PROVIDED, That service to any other
public agency shall not be considered service as a state employee if
such service has been used to establish benefits in any other public
retirement system.
(ii) An individual shall receive no more than a total of twelve
service credit months of service during any calendar year. If an
individual is employed in an eligible position by one or more employers
the individual shall receive no more than one service credit month
during any calendar month in which multiple service for seventy or more
hours is rendered.
(iii) A school district employee may count up to forty-five days of
sick leave as creditable service solely for the purpose of determining
eligibility to retire under RCW 41.40.180 as authorized by RCW
28A.400.300. For purposes of plan 1 "forty-five days" as used in RCW
28A.400.300 is equal to two service credit months. Use of less than
forty-five days of sick leave is creditable as allowed under this
subsection as follows:
(A) Less than twenty-two days equals one-quarter service credit
month;
(B) Twenty-two days equals one service credit month;
(C) More than twenty-two days but less than forty-five days equals
one and one-quarter service credit month.
(b) "Service" for plan 2 and plan 3 members, means periods of
employment by a member in an eligible position or positions for one or
more employers for which compensation earnable is paid. Compensation
earnable earned for ninety or more hours in any calendar month shall
constitute one service credit month except as provided in RCW
41.40.088. Compensation earnable earned for at least seventy hours but
less than ninety hours in any calendar month shall constitute one-half
service credit month of service. Compensation earnable earned for less
than seventy hours in any calendar month shall constitute one-quarter
service credit month of service. Time spent in standby status, whether
compensated or not, is not service.
Any fraction of a year of service shall be taken into account in
the computation of such retirement allowance or benefits.
(i) Service in any state elective position shall be deemed to be
full time service, except that persons serving in state elective
positions who are members of the Washington school employees'
retirement system, teachers' retirement system, or law enforcement
officers' and fire fighters' retirement system at the time of election
or appointment to such position may elect to continue membership in the
Washington school employees' retirement system, teachers' retirement
system, or law enforcement officers' and fire fighters' retirement
system.
(ii) A member shall receive a total of not more than twelve service
credit months of service for such calendar year. If an individual is
employed in an eligible position by one or more employers the
individual shall receive no more than one service credit month during
any calendar month in which multiple service for ninety or more hours
is rendered.
(iii) Up to forty-five days of sick leave may be creditable as
service solely for the purpose of determining eligibility to retire
under RCW 41.40.180 as authorized by RCW 28A.400.300. For purposes of
plan 2 and plan 3 "forty-five days" as used in RCW 28A.400.300 is equal
to two service credit months. Use of less than forty-five days of sick
leave is creditable as allowed under this subsection as follows:
(A) Less than eleven days equals one-quarter service credit month;
(B) Eleven or more days but less than twenty-two days equals one-half service credit month;
(C) Twenty-two days equals one service credit month;
(D) More than twenty-two days but less than thirty-three days
equals one and one-quarter service credit month;
(E) Thirty-three or more days but less than forty-five days equals
one and one-half service credit month.
(10) "Service credit year" means an accumulation of months of
service credit which is equal to one when divided by twelve.
(11) "Service credit month" means a month or an accumulation of
months of service credit which is equal to one.
(12) "Prior service" means all service of an original member
rendered to any employer prior to October 1, 1947.
(13) "Membership service" means:
(a) All service rendered, as a member, after October 1, 1947;
(b) All service after October 1, 1947, to any employer prior to the
time of its admission into the retirement system for which member and
employer contributions, plus interest as required by RCW 41.50.125,
have been paid under RCW 41.40.056 or 41.40.057;
(c) Service not to exceed six consecutive months of probationary
service rendered after April 1, 1949, and prior to becoming a member,
in the case of any member, upon payment in full by such member of the
total amount of the employer's contribution to the retirement fund
which would have been required under the law in effect when such
probationary service was rendered if the member had been a member
during such period, except that the amount of the employer's
contribution shall be calculated by the director based on the first
month's compensation earnable as a member;
(d) Service not to exceed six consecutive months of probationary
service, rendered after October 1, 1947, and before April 1, 1949, and
prior to becoming a member, in the case of any member, upon payment in
full by such member of five percent of such member's salary during said
period of probationary service, except that the amount of the
employer's contribution shall be calculated by the director based on
the first month's compensation earnable as a member.
(14)(a) "Beneficiary" for plan 1 members, means any person in
receipt of a retirement allowance, pension or other benefit provided by
this chapter.
(b) "Beneficiary" for plan 2 and plan 3 members, means any person
in receipt of a retirement allowance or other benefit provided by this
chapter resulting from service rendered to an employer by another
person.
(15) "Regular interest" means such rate as the director may
determine.
(16) "Accumulated contributions" means the sum of all contributions
standing to the credit of a member in the member's individual account,
including any amount paid under RCW 41.50.165(2), together with the
regular interest thereon.
(17)(a) "Average final compensation" for plan 1 members, means the
annual average of the greatest compensation earnable by a member during
any consecutive two year period of service credit months for which
service credit is allowed; or if the member has less than two years of
service credit months then the annual average compensation earnable
during the total years of service for which service credit is allowed.
(b) "Average final compensation" for plan 2 and plan 3 members,
means the member's average compensation earnable of the highest
consecutive sixty months of service credit months prior to such
member's retirement, termination, or death. Periods constituting
authorized leaves of absence may not be used in the calculation of
average final compensation except under RCW 41.40.710(2).
(18) "Final compensation" means the annual rate of compensation
earnable by a member at the time of termination of employment.
(19) "Annuity" means payments for life derived from accumulated
contributions of a member. All annuities shall be paid in monthly
installments.
(20) "Pension" means payments for life derived from contributions
made by the employer. All pensions shall be paid in monthly
installments.
(21) "Retirement allowance" means the sum of the annuity and the
pension.
(22) "Employee" or "employed" means a person who is providing
services for compensation to an employer, unless the person is free
from the employer's direction and control over the performance of work.
The department shall adopt rules and interpret this subsection
consistent with common law.
(23) "Actuarial equivalent" means a benefit of equal value when
computed upon the basis of such mortality and other tables as may be
adopted by the director.
(24) "Retirement" means withdrawal from active service with a
retirement allowance as provided by this chapter.
(25) "Eligible position" means:
(a) Any position that, as defined by the employer, normally
requires five or more months of service a year for which regular
compensation for at least seventy hours is earned by the occupant
thereof. For purposes of this chapter an employer shall not define
"position" in such a manner that an employee's monthly work for that
employer is divided into more than one position;
(b) Any position occupied by an elected official or person
appointed directly by the governor, or appointed by the chief justice
of the supreme court under RCW 2.04.240(2) or 2.06.150(2), for which
compensation is paid.
(26) "Ineligible position" means any position which does not
conform with the requirements set forth in subsection (25) of this
section.
(27) "Leave of absence" means the period of time a member is
authorized by the employer to be absent from service without being
separated from membership.
(28) "Totally incapacitated for duty" means total inability to
perform the duties of a member's employment or office or any other work
for which the member is qualified by training or experience.
(29) "Retiree" means any person who has begun accruing a retirement
allowance or other benefit provided by this chapter resulting from
service rendered to an employer while a member.
(30) "Director" means the director of the department.
(31) "State elective position" means any position held by any
person elected or appointed to statewide office or elected or appointed
as a member of the legislature.
(32) "State actuary" or "actuary" means the person appointed
pursuant to RCW 44.44.010(2).
(33) "Plan 1" means the public employees' retirement system, plan
1 providing the benefits and funding provisions covering persons who
first became members of the system prior to October 1, 1977.
(34) "Plan 2" means the public employees' retirement system, plan
2 providing the benefits and funding provisions covering persons who
first became members of the system on and after October 1, 1977, and
are not included in plan 3.
(35) "Plan 3" means the public employees' retirement system, plan
3 providing the benefits and funding provisions covering persons who:
(a) First become a member on or after:
(i) March 1, 2002, and are employed by a state agency or institute
of higher education and who did not choose to enter plan 2; or
(ii) September 1, 2002, and are employed by other than a state
agency or institute of higher education and who did not choose to enter
plan 2; or
(b) Transferred to plan 3 under RCW 41.40.795.
(36) "Index" means, for any calendar year, that year's annual
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.
(37) "Index A" means the index for the year prior to the
determination of a postretirement adjustment.
(38) "Index B" means the index for the year prior to index A.
(39) "Index year" means the earliest calendar year in which the
index is more than sixty percent of index A.
(40) "Adjustment ratio" means the value of index A divided by index
B.
(41) "Annual increase" means((, initially, fifty-nine)) one dollar
and forty-five cents per month per year of service which amount shall
be increased each July 1st by three percent, rounded to the nearest
cent.
(42) "Separation from service" occurs when a person has terminated
all employment with an employer. Separation from service or employment
does not occur, and if claimed by an employer or employee may be a
violation of RCW 41.40.055, when an employee and employer have a
written or oral agreement to resume employment with the same employer
following termination.
(43) "Member account" or "member's account" for purposes of plan 3
means the sum of the contributions and earnings on behalf of the member
in the defined contribution portion of plan 3.
Sec. 26 RCW 41.40.010 and 2004 c 242 s 53 are each amended to
read as follows:
As used in this chapter, unless a different meaning is plainly
required by the context:
(1) "Retirement system" means the public employees' retirement
system provided for in this chapter.
(2) "Department" means the department of retirement systems created
in chapter 41.50 RCW.
(3) "State treasurer" means the treasurer of the state of
Washington.
(4)(a) "Employer" for plan 1 members, means every branch,
department, agency, commission, board, and office of the state, any
political subdivision or association of political subdivisions of the
state admitted into the retirement system, and legal entities
authorized by RCW 35.63.070 and 36.70.060 or chapter 39.34 RCW; and the
term shall also include any labor guild, association, or organization
the membership of a local lodge or division of which is comprised of at
least forty percent employees of an employer (other than such labor
guild, association, or organization) within this chapter. The term may
also include any city of the first class that has its own retirement
system.
(b) "Employer" for plan 2 and plan 3 members, means every branch,
department, agency, commission, board, and office of the state, and any
political subdivision and municipal corporation of the state admitted
into the retirement system, including public agencies created pursuant
to RCW 35.63.070, 36.70.060, and 39.34.030; except that after August
31, 2000, school districts and educational service districts will no
longer be employers for the public employees' retirement system plan 2.
(5) "Member" means any employee included in the membership of the
retirement system, as provided for in RCW 41.40.023. RCW 41.26.045
does not prohibit a person otherwise eligible for membership in the
retirement system from establishing such membership effective when he
or she first entered an eligible position.
(6) "Original member" of this retirement system means:
(a) Any person who became a member of the system prior to April 1,
1949;
(b) Any person who becomes a member through the admission of an
employer into the retirement system on and after April 1, 1949, and
prior to April 1, 1951;
(c) Any person who first becomes a member by securing employment
with an employer prior to April 1, 1951, provided the member has
rendered at least one or more years of service to any employer prior to
October 1, 1947;
(d) Any person who first becomes a member through the admission of
an employer into the retirement system on or after April 1, 1951,
provided, such person has been in the regular employ of the employer
for at least six months of the twelve-month period preceding the said
admission date;
(e) Any member who has restored all contributions that may have
been withdrawn as provided by RCW 41.40.150 and who on the effective
date of the individual's retirement becomes entitled to be credited
with ten years or more of membership service except that the provisions
relating to the minimum amount of retirement allowance for the member
upon retirement at age seventy as found in RCW 41.40.190(4) shall not
apply to the member;
(f) Any member who has been a contributor under the system for two
or more years and who has restored all contributions that may have been
withdrawn as provided by RCW 41.40.150 and who on the effective date of
the individual's retirement has rendered five or more years of service
for the state or any political subdivision prior to the time of the
admission of the employer into the system; except that the provisions
relating to the minimum amount of retirement allowance for the member
upon retirement at age seventy as found in RCW 41.40.190(4) shall not
apply to the member.
(7) "New member" means a person who becomes a member on or after
April 1, 1949, except as otherwise provided in this section.
(8)(a) "Compensation earnable" for plan 1 members, means salaries
or wages earned during a payroll period for personal services and where
the compensation is not all paid in money, maintenance compensation
shall be included upon the basis of the schedules established by the
member's employer.
(i) "Compensation earnable" for plan 1 members also includes the
following actual or imputed payments, which are not paid for personal
services:
(A) Retroactive payments to an individual by an employer on
reinstatement of the employee in a position, or payments by an employer
to an individual in lieu of reinstatement in a position which are
awarded or granted as the equivalent of the salary or wage which the
individual would have earned during a payroll period shall be
considered compensation earnable and the individual shall receive the
equivalent service credit;
(B) If a leave of absence is taken by an individual for the purpose
of serving in the state legislature, the salary which would have been
received for the position from which the leave of absence was taken,
shall be considered as compensation earnable if the employee's
contribution is paid by the employee and the employer's contribution is
paid by the employer or employee;
(C) Assault pay only as authorized by RCW 27.04.100, 72.01.045, and
72.09.240;
(D) Compensation that a member would have received but for a
disability occurring in the line of duty only as authorized by RCW
41.40.038;
(E) Compensation that a member receives due to participation in the
leave sharing program only as authorized by RCW 41.04.650 through
41.04.670; and
(F) Compensation that a member receives for being in standby
status. For the purposes of this section, a member is in standby
status when not being paid for time actually worked and the employer
requires the member to be prepared to report immediately for work, if
the need arises, although the need may not arise.
(ii) "Compensation earnable" does not include:
(A) Remuneration for unused sick leave authorized under RCW
41.04.340, 28A.400.210, or 28A.310.490;
(B) Remuneration for unused annual leave in excess of thirty days
as authorized by RCW 43.01.044 and 43.01.041.
(b) "Compensation earnable" for plan 2 and plan 3 members, means
salaries or wages earned by a member during a payroll period for
personal services, including overtime payments, and shall include wages
and salaries deferred under provisions established pursuant to sections
403(b), 414(h), and 457 of the United States Internal Revenue Code, but
shall exclude nonmoney maintenance compensation and lump sum or other
payments for deferred annual sick leave, unused accumulated vacation,
unused accumulated annual leave, or any form of severance pay.
"Compensation earnable" for plan 2 and plan 3 members also includes
the following actual or imputed payments, which are not paid for
personal services:
(i) Retroactive payments to an individual by an employer on
reinstatement of the employee in a position, or payments by an employer
to an individual in lieu of reinstatement in a position which are
awarded or granted as the equivalent of the salary or wage which the
individual would have earned during a payroll period shall be
considered compensation earnable to the extent provided above, and the
individual shall receive the equivalent service credit;
(ii) In any year in which a member serves in the legislature, the
member shall have the option of having such member's compensation
earnable be the greater of:
(A) The compensation earnable the member would have received had
such member not served in the legislature; or
(B) Such member's actual compensation earnable received for
nonlegislative public employment and legislative service combined. Any
additional contributions to the retirement system required because
compensation earnable under (b)(ii)(A) of this subsection is greater
than compensation earnable under (b)(ii)(B) of this subsection shall be
paid by the member for both member and employer contributions;
(iii) Assault pay only as authorized by RCW 27.04.100, 72.01.045,
and 72.09.240;
(iv) Compensation that a member would have received but for a
disability occurring in the line of duty only as authorized by RCW
41.40.038;
(v) Compensation that a member receives due to participation in the
leave sharing program only as authorized by RCW 41.04.650 through
41.04.670; and
(vi) Compensation that a member receives for being in standby
status. For the purposes of this section, a member is in standby
status when not being paid for time actually worked and the employer
requires the member to be prepared to report immediately for work, if
the need arises, although the need may not arise.
(9)(a) "Service" for plan 1 members, except as provided in RCW
41.40.088, means periods of employment in an eligible position or
positions for one or more employers rendered to any employer for which
compensation is paid, and includes time spent in office as an elected
or appointed official of an employer. Compensation earnable earned in
full time work for seventy hours or more in any given calendar month
shall constitute one service credit month except as provided in RCW
41.40.088. Compensation earnable earned for less than seventy hours in
any calendar month shall constitute one-quarter service credit month of
service except as provided in RCW 41.40.088. Only service credit
months and one-quarter service credit months shall be counted in the
computation of any retirement allowance or other benefit provided for
in this chapter. Any fraction of a year of service shall be taken into
account in the computation of such retirement allowance or benefits.
Time spent in standby status, whether compensated or not, is not
service.
(i) Service by a state employee officially assigned by the state on
a temporary basis to assist another public agency, shall be considered
as service as a state employee: PROVIDED, That service to any other
public agency shall not be considered service as a state employee if
such service has been used to establish benefits in any other public
retirement system.
(ii) An individual shall receive no more than a total of twelve
service credit months of service during any calendar year. If an
individual is employed in an eligible position by one or more employers
the individual shall receive no more than one service credit month
during any calendar month in which multiple service for seventy or more
hours is rendered.
(iii) A school district employee may count up to forty-five days of
sick leave as creditable service solely for the purpose of determining
eligibility to retire under RCW 41.40.180 as authorized by RCW
28A.400.300. For purposes of plan 1 "forty-five days" as used in RCW
28A.400.300 is equal to two service credit months. Use of less than
forty-five days of sick leave is creditable as allowed under this
subsection as follows:
(A) Less than twenty-two days equals one-quarter service credit
month;
(B) Twenty-two days equals one service credit month;
(C) More than twenty-two days but less than forty-five days equals
one and one-quarter service credit month.
(b) "Service" for plan 2 and plan 3 members, means periods of
employment by a member in an eligible position or positions for one or
more employers for which compensation earnable is paid. Compensation
earnable earned for ninety or more hours in any calendar month shall
constitute one service credit month except as provided in RCW
41.40.088. Compensation earnable earned for at least seventy hours but
less than ninety hours in any calendar month shall constitute one-half
service credit month of service. Compensation earnable earned for less
than seventy hours in any calendar month shall constitute one-quarter
service credit month of service. Time spent in standby status, whether
compensated or not, is not service.
Any fraction of a year of service shall be taken into account in
the computation of such retirement allowance or benefits.
(i) Service in any state elective position shall be deemed to be
full time service, except that persons serving in state elective
positions who are members of the Washington school employees'
retirement system, teachers' retirement system, public safety
employees' retirement system, or law enforcement officers' and fire
fighters' retirement system at the time of election or appointment to
such position may elect to continue membership in the Washington school
employees' retirement system, teachers' retirement system, public
safety employees' retirement system, or law enforcement officers' and
fire fighters' retirement system.
(ii) A member shall receive a total of not more than twelve service
credit months of service for such calendar year. If an individual is
employed in an eligible position by one or more employers the
individual shall receive no more than one service credit month during
any calendar month in which multiple service for ninety or more hours
is rendered.
(iii) Up to forty-five days of sick leave may be creditable as
service solely for the purpose of determining eligibility to retire
under RCW 41.40.180 as authorized by RCW 28A.400.300. For purposes of
plan 2 and plan 3 "forty-five days" as used in RCW 28A.400.300 is equal
to two service credit months. Use of less than forty-five days of sick
leave is creditable as allowed under this subsection as follows:
(A) Less than eleven days equals one-quarter service credit month;
(B) Eleven or more days but less than twenty-two days equals one-half service credit month;
(C) Twenty-two days equals one service credit month;
(D) More than twenty-two days but less than thirty-three days
equals one and one-quarter service credit month;
(E) Thirty-three or more days but less than forty-five days equals
one and one-half service credit month.
(10) "Service credit year" means an accumulation of months of
service credit which is equal to one when divided by twelve.
(11) "Service credit month" means a month or an accumulation of
months of service credit which is equal to one.
(12) "Prior service" means all service of an original member
rendered to any employer prior to October 1, 1947.
(13) "Membership service" means:
(a) All service rendered, as a member, after October 1, 1947;
(b) All service after October 1, 1947, to any employer prior to the
time of its admission into the retirement system for which member and
employer contributions, plus interest as required by RCW 41.50.125,
have been paid under RCW 41.40.056 or 41.40.057;
(c) Service not to exceed six consecutive months of probationary
service rendered after April 1, 1949, and prior to becoming a member,
in the case of any member, upon payment in full by such member of the
total amount of the employer's contribution to the retirement fund
which would have been required under the law in effect when such
probationary service was rendered if the member had been a member
during such period, except that the amount of the employer's
contribution shall be calculated by the director based on the first
month's compensation earnable as a member;
(d) Service not to exceed six consecutive months of probationary
service, rendered after October 1, 1947, and before April 1, 1949, and
prior to becoming a member, in the case of any member, upon payment in
full by such member of five percent of such member's salary during said
period of probationary service, except that the amount of the
employer's contribution shall be calculated by the director based on
the first month's compensation earnable as a member.
(14)(a) "Beneficiary" for plan 1 members, means any person in
receipt of a retirement allowance, pension or other benefit provided by
this chapter.
(b) "Beneficiary" for plan 2 and plan 3 members, means any person
in receipt of a retirement allowance or other benefit provided by this
chapter resulting from service rendered to an employer by another
person.
(15) "Regular interest" means such rate as the director may
determine.
(16) "Accumulated contributions" means the sum of all contributions
standing to the credit of a member in the member's individual account,
including any amount paid under RCW 41.50.165(2), together with the
regular interest thereon.
(17)(a) "Average final compensation" for plan 1 members, means the
annual average of the greatest compensation earnable by a member during
any consecutive two year period of service credit months for which
service credit is allowed; or if the member has less than two years of
service credit months then the annual average compensation earnable
during the total years of service for which service credit is allowed.
(b) "Average final compensation" for plan 2 and plan 3 members,
means the member's average compensation earnable of the highest
consecutive sixty months of service credit months prior to such
member's retirement, termination, or death. Periods constituting
authorized leaves of absence may not be used in the calculation of
average final compensation except under RCW 41.40.710(2).
(18) "Final compensation" means the annual rate of compensation
earnable by a member at the time of termination of employment.
(19) "Annuity" means payments for life derived from accumulated
contributions of a member. All annuities shall be paid in monthly
installments.
(20) "Pension" means payments for life derived from contributions
made by the employer. All pensions shall be paid in monthly
installments.
(21) "Retirement allowance" means the sum of the annuity and the
pension.
(22) "Employee" or "employed" means a person who is providing
services for compensation to an employer, unless the person is free
from the employer's direction and control over the performance of work.
The department shall adopt rules and interpret this subsection
consistent with common law.
(23) "Actuarial equivalent" means a benefit of equal value when
computed upon the basis of such mortality and other tables as may be
adopted by the director.
(24) "Retirement" means withdrawal from active service with a
retirement allowance as provided by this chapter.
(25) "Eligible position" means:
(a) Any position that, as defined by the employer, normally
requires five or more months of service a year for which regular
compensation for at least seventy hours is earned by the occupant
thereof. For purposes of this chapter an employer shall not define
"position" in such a manner that an employee's monthly work for that
employer is divided into more than one position;
(b) Any position occupied by an elected official or person
appointed directly by the governor, or appointed by the chief justice
of the supreme court under RCW 2.04.240(2) or 2.06.150(2), for which
compensation is paid.
(26) "Ineligible position" means any position which does not
conform with the requirements set forth in subsection (25) of this
section.
(27) "Leave of absence" means the period of time a member is
authorized by the employer to be absent from service without being
separated from membership.
(28) "Totally incapacitated for duty" means total inability to
perform the duties of a member's employment or office or any other work
for which the member is qualified by training or experience.
(29) "Retiree" means any person who has begun accruing a retirement
allowance or other benefit provided by this chapter resulting from
service rendered to an employer while a member.
(30) "Director" means the director of the department.
(31) "State elective position" means any position held by any
person elected or appointed to statewide office or elected or appointed
as a member of the legislature.
(32) "State actuary" or "actuary" means the person appointed
pursuant to RCW 44.44.010(2).
(33) "Plan 1" means the public employees' retirement system, plan
1 providing the benefits and funding provisions covering persons who
first became members of the system prior to October 1, 1977.
(34) "Plan 2" means the public employees' retirement system, plan
2 providing the benefits and funding provisions covering persons who
first became members of the system on and after October 1, 1977, and
are not included in plan 3.
(35) "Plan 3" means the public employees' retirement system, plan
3 providing the benefits and funding provisions covering persons who:
(a) First become a member on or after:
(i) March 1, 2002, and are employed by a state agency or institute
of higher education and who did not choose to enter plan 2; or
(ii) September 1, 2002, and are employed by other than a state
agency or institute of higher education and who did not choose to enter
plan 2; or
(b) Transferred to plan 3 under RCW 41.40.795.
(36) "Index" means, for any calendar year, that year's annual
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.
(37) "Index A" means the index for the year prior to the
determination of a postretirement adjustment.
(38) "Index B" means the index for the year prior to index A.
(39) "Index year" means the earliest calendar year in which the
index is more than sixty percent of index A.
(40) "Adjustment ratio" means the value of index A divided by index
B.
(41) "Annual increase" means((, initially, fifty-nine)) one dollar
and forty-five cents per month per year of service which amount shall
be increased each July 1st by three percent, rounded to the nearest
cent.
(42) "Separation from service" occurs when a person has terminated
all employment with an employer. Separation from service or employment
does not occur, and if claimed by an employer or employee may be a
violation of RCW 41.40.055, when an employee and employer have a
written or oral agreement to resume employment with the same employer
following termination.
(43) "Member account" or "member's account" for purposes of plan 3
means the sum of the contributions and earnings on behalf of the member
in the defined contribution portion of plan 3.
Sec. 27 RCW 41.40.197 and 1995 c 345 s 5 are each amended to read
as follows:
(1) Beginning July 1, 1995, and annually thereafter, the retirement
allowance of a person meeting the requirements of this section shall be
increased by the annual increase amount.
(2) The following persons shall be eligible for the benefit
provided in subsection (1) of this section:
(a) A beneficiary who has received a retirement allowance for at
least one year by July 1st in the calendar year in which the annual
increase is given and has attained at least age sixty-six by ((July
1st)) December 31st in the calendar year in which the annual increase
is given; or
(b) A beneficiary whose retirement allowance is lower than the
minimum benefit provided under RCW 41.40.1984.
(3) The following persons shall also be eligible for the benefit
provided in subsection (1) of this section:
(a) A beneficiary receiving the minimum benefit on June 30, 1995,
under RCW 41.40.198; or
(b) A recipient of a survivor benefit on June 30, 1995, which has
been increased by RCW 41.40.325.
(4) If otherwise eligible, those receiving an annual adjustment
under RCW 41.40.188(1)(c) shall be eligible for the annual increase
adjustment in addition to the benefit that would have been received
absent this section.
(5) Those receiving a benefit under RCW 41.40.220(1), or a survivor
of a disabled member under RCW 41.44.170(5) shall be eligible for the
benefit provided by this section.
(6) The legislature reserves the right to amend or repeal this
section in the future and no member or beneficiary has a contractual
right to receive this postretirement adjustment not granted prior to
that time.
Sec. 28 RCW 41.40.1984 and 2004 c 85 s 2 are each amended to read
as follows:
(1) Except as provided in subsections (4) and (5) of this section,
no one who becomes a beneficiary after June 30, 1995, shall receive a
monthly retirement allowance of less than twenty-four dollars and
twenty-two cents times the number of years of service creditable to the
person whose service is the basis of such retirement allowance.
(2) Where the retirement allowance payable was adjusted at the time
benefit payments to the beneficiary commenced, the minimum allowance
provided in this section shall be adjusted in a manner consistent with
that adjustment.
(3) Beginning July 1, 1996, the minimum benefit set forth in
subsection (1) of this section shall be adjusted annually by the annual
increase.
(4) Those receiving a benefit under RCW 41.40.220(1) or under RCW
41.44.170 (3) and (5) shall not be eligible for the benefit provided by
this section.
(5) For persons who served as elected officials and whose
accumulated employee contributions and credited interest was less than
seven hundred fifty dollars at the time of retirement, the minimum
benefit under subsection (1) of this section shall be ten dollars per
month per each year of creditable service.
(6) Beginning July 1, 2004, the minimum benefit set forth in
subsection (1) of this section, prior to adjustments set forth in
subsection (2) of this section, for a beneficiary with at least twenty-five years of service and who has been retired at least twenty years
shall be one thousand dollars per month((. The minimum benefit in this
subsection shall not be adjusted by the annual increase provided in
subsection (3) of this section)) which shall be increased each July 1st
by three percent, rounded to the nearest cent.
(7) Beginning July 1, 2005, the minimum benefit set forth in
subsection (1) of this section, prior to adjustments set forth in
subsection (2) of this section, for a beneficiary with at least twenty
years of service and who has been retired at least twenty-five years
shall be one thousand dollars per month which shall be increased each
July 1st by three percent, rounded to the nearest cent.
NEW SECTION. Sec. 29 The following acts or parts of acts are
each repealed:
(1) RCW 41.31.010 (Annual pension increases -- Increased by gain-sharing increase amount) and 1998 c 340 s 1;
(2) RCW 41.31.020 (Gain-sharing increase amount calculated) and
1998 c 340 s 2; and
(3) RCW 41.31.030 (Contractual right to increase not granted) and
1998 c 340 s 3.
NEW SECTION. Sec. 30 Sections 22 through 25 and 27 through 29 of
this act are necessary for the immediate preservation of the public
peace, health, or safety, or support of the state government and its
existing public institutions, and take effect immediately.
NEW SECTION. Sec. 31 Section 25 of this act expires July 1,
2006.
NEW SECTION. Sec. 32 Section 26 of this act takes effect July 1,
2006.