SENATE BILL REPORT

ESSB 6605

BYSenate Committee on Ways & Means (originally sponsored by Senators Hayner, Rasmussen, Nelson, Moore, Saling, Smitherman, Newhouse, Vognild, von Reichbauer, Craswell and Bailey)

Modifying pension portability provisions.

Senate Committee on Ways & Means

Senate Hearing Date(s):February 5, 1988; February 8, 1988

Majority Report:  That Substitute Senate Bill No. 6605 be substituted therefor, and the substitute bill do pass.

      Signed by Senators McDonald, Chairman; Craswell, Vice Chairman; Bluechel, Cantu, Deccio, Hayner, Johnson, Lee, Newhouse, Saling, Smith, Zimmerman.

Minority Report:  Do not pass.

      Signed by Bauer, Fleming, Gaspard, Moore, Talmadge, Vognild, Warnke, Williams, Wojahn.

Senate Staff:Charles Langen (786-7715)

                  February 16, 1988

AS PASSED SENATE, FEBRUARY 15, 1988

BACKGROUND:

In 1987 the Legislature adopted portability provisions for the Public Employees' Retirement System (PERS), State-wide City Employees' Retirement System (SCERS) whose membership is capped, Teachers' Retirement System (TRS), and Washington State Patrol Retirement System (WSPRS) to become effective on July 1, 1988.  The retirement systems of Seattle, Spokane and Tacoma are eligible to be included upon completion of certain actions of the city councils and positive action of the Legislature.  The Law Enforcement Officers' and Fire Fighters' Retirement System (LEOFF), the Judicial Retirement System (JRS), the Judges' Retirement System (capped as to membership), and the retirement systems of the institutions of higher education are ineligible for portability.

The principal provisions of this benefit are (1) the establishment of the category of dual membership which means membership held in two or more of the eligible retirement systems, (2) the opportunity to reestablish membership within a specified period of time in an eligible system from which contributions were withdrawn, (3) the ability to combine service in order to determine eligibility for a retirement allowance, (4) the use of the highest period of compensation in a dual member's combined service to determine the average final compensation within prescribed conditions, and (5) a spousal death benefit based on the assumption that the deceased dual member is in all systems at the time of death.

SUMMARY:

The average base salary used in determining the respective average final compensation is to be the average of the highest 60 months compensation, including overtime, prior to retirement, excluding periods of authorized leaves of absence.  The dual member must have five or more years of service in one system in which dual membership is held in order to receive a benefit under portability.

Members of LEOFF II are included in the portability benefit.

A surviving spouse of a dual member who dies in service is not eligible for the spousal death benefit under WSPRS.

A member of PERS or TRS who enters employment under the jurisdiction of the retirement systems of Seattle, Spokane or Tacoma may choose to retain membership in PERS and TRS rather than become a member of the retirement systems of Seattle, Spokane or Tacoma.

If a benefit payable by a system under the portability provisions is less than $50, the system may pay the dual member a lump sum payment in lieu of a monthly benefit.  The Legislature expressly intends that the member who receives a settlement under this section shall be deemed to be retired from the system making the lump sum payment.

Appropriation:    none

Revenue:    none

Fiscal Note:      available

Effective Date:July 1, 1988

Senate Committee - Testified: Jerry Allard, State Actuary; Karen Davis, WEA