SENATE BILL REPORT

SB 5749

BYSenators Anderson, Matson, Owen and Smitherman

Authorizing self-insured employers to purchase annuities to pay pension benefits.

Senate Committee on Economic Development & Labor

Senate Hearing Date(s):February 15, 1989; February 28, 1989

Majority Report:  Do pass as amended.

      Signed by Senators Lee, Chairman; Anderson, Vice Chairman; McDonald, McMullen, Matson, Murray, Smitherman, Warnke, Williams.

Senate Staff:David Cheal (786-7576)

                  March 1, 1989

AS REPORTED BY COMMITTEE ON ECONOMIC DEVELOPMENT & LABOR, FEBRUARY 28, 1989

BACKGROUND:

When a worker covered by industrial insurance is awarded a pension or dies as a result of an industrial injury, the department or self-insurer must make provision for future payment of the required benefits.  The Department of Labor and Industries must place an appropriate amount in the reserve fund or the self-insurer must pay cash into the reserve fund, depending on whether the injured worker's employer insured through the state fund or was self-insured.

As an alternative to the cash payment, a self-insurer may file a bond or assign a savings account from a commercial bank to the department.  Under this alternative, the department pays benefits directly to the claimant or beneficiary and the department is reimbursed periodically from the bond or assigned account.

SUMMARY:

In addition to the current provisions for purchasing bonds or assigning cash accounts, self-insurers are allowed to purchase annuities to secure pension obligations.  The department shall adopt rules governing this alternative.

The adequacy of the annuity can be adjusted periodically based upon redeterminations by the Insurance Commissioner as to the outstanding obligations of the case.

Under the alternative of either the bond, assigned account, or annuity, the self-insurer makes payments directly to the claimant instead of making payments through the department, as is currently done.

SUMMARY OF PROPOSED COMMITTEE AMENDMENT:

Language is reinstated which requires assigned savings accounts to be from federally or state chartered banks authorized to do business in the state of Washington.

Appropriation:    none

Revenue:    none

Fiscal Note:      none requested

Senate Committee - Testified: Lee Eberle (for); Jody Moran, Jeff Johnson