H-4111              _______________________________________________

                                                   HOUSE BILL NO. 2920

                        _______________________________________________

State of Washington                               51st Legislature                              1990 Regular Session

By Representatives Sayan, Brumsickle, Todd, Bowman, Wineberry, Winsley, Fraser, Rasmussen and Basich

Read first time 1/24/90 and referred to Committee on Appropriations.

AN ACT Relating to adjustments in retirement benefits; amending RCW 41.32.485; and amending section 1, chapter 272, Laws of 1989 (uncodified).

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

        Sec. 1.  Section 1, chapter 272, Laws of 1989 (uncodified) is amended to read as follows:

          The legislature recognizes that inflation erodes the purchasing power of retirement benefits.  Although the benefit provided to state retirees from social security is fully protected, the benefits provided by  the public employees' retirement system, plan I, and the teachers' retirement system, plan I provide an automatic cost-of-living adjustment ((only)) for persons who receive the minimum benefit and for those whose pensions' purchasing power has eroded forty percent after they reach age sixty-five.

          The purpose of this act is to add provisions to the teachers' retirement system and the public employees' retirement system which will help mitigate the impact of inflation on retirees of those systems.  These additional provisions are intended to reflect and implement the following policies:

          (1) The minimum benefit is increased in order to provide a more adequate basic standard of living to persons who retired long ago under lower salaries and less generous retirement benefit formulas; and

          (2) Retirees whose benefits have lost ((forty percent of their)) purchasing power are made eligible for automatic adjustments which are provided in a manner that ((is consistent with the retirement age and benefit provisions of)) utilizes the same criteria for members of plan I and plan II of the teachers' retirement system and the public employees' retirement system.

        Sec. 2.  Section 2, chapter 96, Laws of 1979 ex. sess. as last amended by section 5, chapter 272, Laws of 1989 and RCW 41.32.485 are each amended to read as follows:

          (1) Notwithstanding any provision of law to the contrary, effective July 1, 1989, as a cost-of-living adjustment, no beneficiary receiving a retirement allowance pursuant to this chapter shall receive, as the pension portion of that retirement allowance, less than ((fourteen dollars and eighty-two)) eighteen dollars and seventy-five cents per month for each year of service creditable to the person whose service is the basis of the pension.  Portions of a year shall be treated as fractions of a year and the decimal equivalent shall be multiplied by ((fourteen dollars and eighty-two)) eighteen dollars and seventy-five cents.  Where the pension payable was adjusted at the time benefit payments to the beneficiary commenced, the minimum pension provided in this section shall be adjusted in a manner consistent with that adjustment.

          (2) Notwithstanding any provision of law to the contrary, effective July 1, 1979, the retirement allowance of each beneficiary who either is receiving benefits pursuant to RCW 41.32.520 or 41.32.550 as of December 31, 1978, or commenced receiving a monthly retirement allowance under this chapter as of a date no later than July 1, 1974, shall be permanently increased by a post-retirement adjustment.  This adjustment shall be in lieu of any adjustments provided under RCW 41.32.499(6) as of July 1, 1979, or July 1, 1980, for the affected beneficiaries.  Such adjustment shall be calculated as follows:

          (a) Retirement allowances to which this subsection and subsection (1) of this section are both applicable shall be determined by first applying subsection (1) and then applying this subsection.  The department shall determine the total years of creditable service and the total dollar benefit base accrued as of December 31, 1978, except that this determination shall take into account only those beneficiaries to whom this subsection applies;

          (b) The department shall multiply the total benefits determined in (a) of this subsection by six percent and divide the dollar value thus determined by the total service determined in (a) of this subsection.  The resultant figure shall then be a post-retirement increase factor which shall be applied as specified in (c) of this subsection;

          (c) Each beneficiary to whom this subsection applies shall receive an increase which is the product of the factor determined in (b) of this subsection multiplied by the years of creditable service.

          (3) The provisions of subsections (1) and (2) of this section shall not be applicable to those receiving benefits pursuant to RCW 41.32.540 or 41.32.760 through 41.32.825.