BILL REQ. #: S-4427.1
| State of Washington | 59th Legislature | 2006 Regular Session |
Read first time 01/26/2006. Referred to Committee on Ways & Means.
AN ACT Relating to reducing unfunded liabilities in plan 1 of the public employees' retirement system, plan 1 of the teachers' retirement system, plan 3 of the public employees' retirement system, plan 3 of the teachers' retirement system, and plan 3 of the school employees' retirement system; amending RCW 41.31.010 and 41.31.020; adding new sections to chapter 41.45 RCW; creating a new section; decodifying RCW 41.31.030; repealing RCW 41.31A.010, 41.31A.020, 41.31A.030, and 41.31A.040; and providing an effective date.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
NEW SECTION. Sec. 1 The legislature recognizes that returns on
the investment of retirement plan assets are volatile, and market
volatility is reflected in variations in the funded status of the state
retirement plans over time. The legislature also recognizes that the
long-term liability in the plans 1 of the public employees' retirement
system and the teachers' retirement system remains independent from
short-term investment returns in the market. The legislature seeks to
avoid contribution rate volatility that may unfairly benefit or burden
particular groups of taxpayers with disproportionate responsibilities
for retiring the unfunded liability in the plans 1. Therefore, it is
the intent of the legislature to provide for the systematic payment of
the plans' 1 unfunded liability in a manner that promotes contribution
rate adequacy and stability for the affected systems over time.
NEW SECTION. Sec. 2 A new section is added to chapter 41.45 RCW
to read as follows:
(1) There shall be no suspension of those portions of the basic
state and employer contribution rates that are necessary to pay for the
unfunded actuarial accrued liability for plan 1 of the public
employees' retirement system for the following periods: From July 1,
2006, through June 30, 2009, for the public employees' retirement
system; from July 1, 2006, through June 30, 2009, for the public safety
employees' retirement system; and from September 1, 2006, through
August 31, 2009, for the school employees' retirement system.
(2) There shall be no suspension of those portions of the basic
state and employer contribution rates that are necessary to pay for the
unfunded actuarial accrued liability for plan 1 of the teachers'
retirement system for the period beginning September 1, 2006, and
ending August 31, 2009.
NEW SECTION. Sec. 3 A new section is added to chapter 41.45 RCW
to read as follows:
(1) It is the intent of the legislature to make up the actuarially
required payments for the unfunded actuarial accrued liability in plan
1 of the public employees' retirement system and plan 1 of the
teachers' retirement system that were suspended in the first year of
the 2005-2007 biennium. This change in funding policy requires that
contribution rates for the unfunded actuarial accrued liability in the
plans 1 be reinstated. The rates required in this section are in
addition to the phase-in rates established pursuant to RCW 41.45.062.
(2) For the period beginning July 1, 2006, and ending June 30,
2007, a 3.44 percent contribution is established as part of the basic
state and employer contribution rate for the public employees'
retirement system and the public safety employees' retirement system,
to be used for the sole purpose of amortizing the unfunded actuarial
accrued liability in the public employees' retirement system plan 1.
(3) For the period beginning September 1, 2006, and ending August
31, 2007, a 3.44 percent contribution is established as part of the
basic state and employer contribution rate for the school employees'
retirement system, to be used for the sole purpose of amortizing the
unfunded actuarial accrued liability in the public employees'
retirement system plan 1.
(4) For the period beginning September 1, 2006, and ending August
31, 2007, a 4.05 percent contribution is established as part of the
basic state and employer contribution rate for the teachers' retirement
system, to be used for the sole purpose of amortizing the unfunded
actuarial accrued liability in the teachers' retirement system plan 1.
NEW SECTION. Sec. 4 A new section is added to chapter 41.45 RCW
to read as follows:
(1) Beginning July 1, 2009, a minimum 2.75 percent contribution is
established as part of the basic state and employer contribution rate
for the public employees' retirement system, to be used for the sole
purpose of amortizing the unfunded actuarial accrued liability in the
public employees' retirement system plan 1. This minimum contribution
rate shall remain effective until the actuarial value of assets equals
one hundred twenty-five percent of the actuarial accrued liability or
June 30, 2024, whichever comes first.
(2) Beginning July 1, 2009, a minimum 2.75 percent contribution is
established as part of the basic state and employer contribution rate
for the public safety employees' retirement system, to be used for the
sole purpose of amortizing the unfunded actuarial accrued liability in
the public employees' retirement system plan 1. This minimum
contribution rate shall remain effective 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.
(3) Beginning September 1, 2009, a minimum 2.75 percent
contribution is established as part of the basic state and employer
contribution rate for the school employees' retirement system, to be
used for the sole purpose of amortizing the unfunded actuarial accrued
liability in the public employees' retirement system plan 1. This
minimum contribution rate shall remain effective 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.
(4) Beginning September 1, 2009, a minimum 5.00 percent
contribution is established as part of the basic state and employer
contribution rate for the teachers' retirement system, to be used for
the sole purpose of amortizing the unfunded actuarial accrued liability
in the teachers' retirement system plan 1. This minimum contribution
rate shall remain effective 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.
Sec. 5 RCW 41.31.010 and 1998 c 340 s 1 are each amended to read
as follows:
Beginning ((July 1, 1998)) January 1, 2008, and on January 1st of
even-numbered years thereafter, ((the annual increase amount as defined
in RCW 41.32.010 and 41.40.010 shall be increased by the gain-sharing
increase amount, if any. The monthly retirement allowance of a person
in receipt of the benefit provided in RCW 41.32.489 or 41.40.197 shall
immediately be adjusted to reflect any increase)) the state actuary
shall calculate the amount of extraordinary investment gains for the
teachers' retirement system plan 1 and the public employees' retirement
system plan 1. Extraordinary investment gains attributed to these
plans shall be applied to shorten the amortization period specified in
chapter 41.45 RCW for paying the unfunded actuarial accrued liability
in plan 1 of the teachers' retirement system and plan 1 of the public
employees' retirement system.
Sec. 6 RCW 41.31.020 and 1998 c 340 s 2 are each amended to read
as follows:
(((1) The gain-sharing increase amount shall be the amount of
increase, rounded to the nearest cent, that can be fully funded in
actuarial present value by the amount of extraordinary investment
gains, if any.)) The amount of extraordinary investment gains shall be
calculated as follows:
(((a))) (1) One-half of the sum of the value of the net assets held
in trust for pension benefits in the teachers' retirement system plan
1 fund and the public employees' retirement system plan 1 fund at the
close of the previous state fiscal year;
(((b))) (2) Multiplied by the amount which the compound average of
investment returns on those assets over the previous four state fiscal
years exceeds ten percent.
(((2) The gain-sharing increase amount for July 1998, as provided
for in RCW 41.31.010, is ten cents.))
NEW SECTION. Sec. 7 RCW 41.31.030 is decodified.
NEW SECTION. Sec. 8 The following acts or parts of acts are each
repealed:
(1) RCW 41.31A.010 (Definitions) and 2000 c 247 s 407 & 1998 c 341
s 311;
(2) RCW 41.31A.020 (Extraordinary investment gain -- Credited to
member accounts -- Persons eligible -- Calculation of amount -- Contractual
right not granted) and 2003 c 294 s 4, 2000 c 247 s 408, & 1998 c 341
s 312;
(3) RCW 41.31A.030 (Retroactive extraordinary investment gain--Credited to member accounts -- Persons eligible -- Calculation of amount--Contractual right not granted) and 1998 c 341 s 313; and
(4) RCW 41.31A.040 (Retroactive extraordinary investment gain--Credited to member accounts -- Persons eligible -- Calculation of amount--Contractual right not granted) and 2000 c 247 s 409.
NEW SECTION. Sec. 9 This act takes effect July 1, 2006.