SENATE BILL REPORT

SHB 2643

BYHouse Committee on Appropriations (originally sponsored by Representatives 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

Senate Committee on Ways & Means

Senate Hearing Date(s):February 22, 1990; February 23, 1990

Majority Report:  Do pass as amended.

      Signed by Senators McDonald, Chairman; Craswell, Vice Chairman; Amondson, Bailey, Bauer, Bluechel, Cantu, Fleming, Gaspard, Johnson, Lee, Matson, Moore, Newhouse, Niemi, Owen, Talmadge, Warnke, Williams, Wojahn.

Senate Staff:Michael Groesch (786-7715)

                  February 27, 1990

AS REPORTED BY COMMITTEE ON WAYS & MEANS, FEBRUARY 23, 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.

On and after April 27, 1989, survivors of disability retirees were allowed to receive unexpended member contributions standing to the credit of the deceased member.

SUMMARY:

The current survivor options are repealed and in their place the Department of Retirement Systems is given authority to adopt whatever survivor options it deems reasonable.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.

Survivors of those disabled retirees who died prior to April 27, 1989, are allowed to receive the unexpended member contributions standing to the credit of the deceased.

Appropriation:    $28,000 from the retirement systems expense fund

Revenue:    none

Fiscal Note:      requested January 5, 1990

SUMMARY OF PROPOSED SENATE AMENDMENT:

The appropriation is removed and enactment of the bill is made contingent on funding in the budget.

Senate Committee - Testified: Rep. Lorraine Hine; Senator Stan Johnson; Graeme Sackrison, Deputy Assistant Commissioner, Legislative and Financial Admin. Branch, Employment Security (pro); Dick Randell, Public Employees of Washington