AN ACT Relating to cost-of-living adjustments to mitigate the impact of inflation occurring after age sixty-five for retired members of the public employees' and teachers' retirement systems; amending RCW 41.32.005 and 41.40.005; adding a new section to chapter 41.40 RCW; adding a new section to chapter 41.32 RCW; and creating a new section.

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

NEW SECTION. Sec. 1. 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.

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.

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 plan II of the teachers' retirement system and the public employees' retirement system.

NEW SECTION. Sec. 2. A new section is added to chapter 41.40 RCW to read as follows:

(1) Beginning July 1, 1989, and every year thereafter, the department shall determine the following information for each retired member or beneficiary:

(a) The dollar amount of the retirement allowance received by the retiree on the first day of July in the year the retiree turned age sixty-five;

(b) The index for the calendar year prior to the year that the retiree reached age sixty-five, to be known for purposes of this section as "index A";

(c) The index for the calendar year prior to the date of determination, to be known for purposes of this section as "index B"; and

(d) The ratio obtained when index B is divided by index A.

(2) If the value of the ratio obtained when index B is divided by index A is greater than 1.67 the ratio shall be the annual adjustment to the retirement allowance received by the member at age sixty-five and shall be applied beginning with the July payment. In no event, however, shall the annual adjustment:

(a) Produce a retirement allowance which is lower than the retirement allowance received prior to the adjustment;

(b) Exceed three percent in the initial annual adjustment; or

(3) For members who were not retired at age sixty-five, the ratio obtained in subsection (1)(d) of this section shall be applied to the initial retirement allowance received by the member.

(4) For beneficiaries of members who die prior to age sixty-five: (a) The retirement allowance used in subsection (1)(a) of this section shall be the allowance received by the beneficiary on the first day of July in the year the member would have turned age sixty-five; and (b) index A shall be the index for the calendar year prior to the year the member would have turned age sixty-five.

(5) For the purposes of this section, "index" means, for any calendar year, that year's average consumer price index‑-Seattle, Washington area for urban wage earners and clerical workers, all items, compiled by the bureau of labor statistics, United States department of labor.

NEW SECTION. Sec. 3. A new section is added to chapter 41.32 RCW to read as follows:

(1) Beginning July 1, 1989, and every year thereafter, the department shall determine the following information for each retired member or beneficiary:

(a) The dollar amount of the retirement allowance received by the retiree on the first day of July in the year the retiree turned age sixty-five;

(b) The index for the calendar year prior to the year that the retiree reached age sixty-five, to be known for purposes of this section as "index A";

(c) The index for the calendar year prior to the date of determination, to be known for purposes of this section as "index B"; and

(d) The ratio obtained when index B is divided by index A.

(a) Produce a retirement allowance which is lower than the retirement allowance received prior to the adjustment;

(b) Exceed three percent in the initial annual adjustment; or

(3) For members who were not retired at age sixty-five, the ratio obtained in subsection (1)(d) of this section shall be applied to the initial retirement allowance received by the member.

Sec. 4. Section 19, chapter 293, Laws of 1977 ex. sess. and RCW 41.32.005 are each amended to read as follows:

The provisions of the following sections of this chapter shall apply only to those persons who establish membership in the retirement system on or before June 30, 1977: RCW 41.32.250, 41.32.260, 41.32.270, 41.32.280, 41.32.290, 41.32.300, 41.32.310, 41.32.320, 41.32.330, 41.32.340, 41.32.350, 41.32.360, 41.32.365, 41.32.366, 41.32.380, 41.32.390, 41.32.430, 41.32.440, 41.32.470, 41.32.480, 41.32.491, 41.32.492, 41.32.493, 41.32.4931, 41.32.4932, 41.32.494, 41.32.4943, 41.32.4944, 41.32.4945, 41.32.497, 41.32.498, 41.32.4982, 41.32.4983, 41.32.499, 41.32.500, 41.32.510, 41.32.520, 41.32.522, 41.32.523, 41.32.530, 41.32.540, 41.32.550, 41.32.560, 41.32.561, 41.32.565, 41.32.567, 41.32.570, section 3 of this act, and 41.32.583.

Sec. 5. Section 21, chapter 295, Laws of 1977 ex. sess. as amended by section 6, chapter 249, Laws of 1979 ex. sess. and RCW 41.40.005 are each amended to read as follows:

The provisions of the following sections of this chapter shall apply only to persons who establish membership in the retirement system on or before September 30, 1977: RCW 41.40.150, 41.40.160, 41.40.170, 41.40.180, 41.40.185, 41.40.190, 41.40.193, 41.40.195, 41.40.200, 41.40.210, 41.40.220, 41.40.230, 41.40.235, 41.40.250, 41.40.260, 41.40.270, 41.40.280, 41.40.300, 41.40.310, 41.40.320, section 2 of this act, and 41.40.330.