HOUSE BILL REPORT

HB 2643

BYRepresentatives Hine, D. Sommers, Sayan, McLean, H. Sommers, Silver, R. King, Anderson, Winsley and Spanel; by request of Joint Committee on Pension Policy

Changing survivorship options for members of state retirement systems.

House Committe on Appropriations

Majority Report:  The substitute bill be substituted therefor and the substitute bill do pass.  (25)

      Signed by Representatives Locke, Chair; Grant, Vice Chair; H. Sommers, Vice Chair; Silver, Ranking Republican Member; Youngsman, Assistant Ranking Republican Member; Appelwick, Bowman, Brekke, Dorn, Doty, Ebersole, Ferguson, Hine, Inslee, May, McLean, Nealey, Padden, Peery, Rust, Spanel, Sprenkle, Valle, Wang and Wineberry.

House Staff:Randy Acker (786-7153)

AS REPORTED BY COMMITTEE ON APPROPRIATIONS FEBRUARY 1, 1990

BACKGROUND:

Three problem areas exist within the retirement system survivor benefit provisions.

First, when a member retires from one of the state retirement systems other than the Law Enforcement Officers' and Fire Fighters' plan I (LEOFF I) or the Washington State Patrol Retirement System (WSPRS), he or she can opt for a reduced benefit in exchange for survivor benefit. Under current statute a member is limited to selecting a benefit where the survivor receives an amount equal to the member's full monthly benefit or one-half the member's benefit.

Second, if a member of one of the state retirement systems, other than LEOFF I or WSPRS, takes a disability retirement, he or she cannot opt for a reduced monthly benefit with a survivor benefit.  This causes some members to hold onto their jobs even though their physical condition is such that they should take disability retirement.

Finally, there are currently no provisions in statute that require a member to obtain his or her spouse's consent prior to selecting a retirement option.  This runs contrary to the community property policy of this state.  To the extent that the benefit was earned during the marriage, the nonmember spouse has a property interest in the benefit.

SUMMARY:

SUBSTITUTE BILL:  The current survivor options are repealed and in their place the Department of Retirement Systems is given authority to adopt whatever survivor options it deems reasonable.  The Department of Retirement Systems must at least enact the two survivor options currently found in statute.  All options offered must be actuarially equivalent to the standard allowance, that is, the benefit payment stream that does not include a survivor benefit.

Disability retirees under the Judicial, LEOFF I, Teachers, and Public Employees Retirement Systems are given the same survivor options as service retirees.

Members are required to obtain spousal consent to the retirement benefit payment option chosen.  If the member and his or her spouse cannot agree on a benefit payment option a joint and 50 percent survivor option will be paid to the member with the nonmember spouse being named as the beneficiary.

SUBSTITUTE BILL COMPARED TO ORIGINAL:  Technical corrections are made.  An appropriation is added.

Appropriation:    $28,000 from the Retirement Systems Expense Fund.

Fiscal Note:      Requested January 5, 1990.

House Committee ‑ Testified For:    Ernest La Palm, Employment Security Department.

House Committee - Testified Against:      No one.

House Committee - Testimony For:    A survivors option plan for individuals who are disabled is a positive measure that should be supported.  This legislation will provide much needed continued financial support to survivors in an already difficult situation, and provide the member with more reasonable options in pursuing a disability retirement.

House Committee - Testimony Against:      None.