BILL REQ. #: H-1765.6
| State of Washington | 60th Legislature | 2007 Regular Session |
Read first time 03/19/2007. Referred to Committee on Appropriations.
AN ACT Relating to retirement system gain-sharing and alternate benefits; amending RCW 41.31A.020, 41.32.765, 41.32.835, 41.32.875, 41.35.420, 41.35.610, 41.35.680, 41.40.630, and 41.40.820; adding a new section to chapter 41.32 RCW; adding a new section to chapter 41.40 RCW; creating new sections; repealing RCW 41.31.010, 41.31.020, 41.31.030, 41.31A.010, 41.31A.020, 41.31A.030, and 41.31A.040; providing effective dates; and declaring an emergency.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
Sec. 1 RCW 41.31A.020 and 2003 c 294 s 4 are each amended to read
as follows:
(1) On January 1, 2004, and on January 1st of even-numbered years
thereafter, the member account of a person meeting the requirements of
this section shall be credited by the extraordinary investment gain
amount.
(2) The following persons, hired prior to July 1, 2007, shall be
eligible for the benefit provided in subsection (1) of this section:
(a) Any member of the teachers' retirement system plan 3, the
Washington school employees' retirement system plan 3, or the public
employees' retirement system plan 3 who earned service credit during
the twelve-month period from September 1st to August 31st immediately
preceding the distribution and had a balance of at least one thousand
dollars in their member account on August 31st of the year immediately
preceding the distribution; or
(b) Any person in receipt of a benefit pursuant to RCW 41.32.875,
41.35.680, or 41.40.820; or
(c) Any person who is a retiree pursuant to RCW 41.34.020(8) and
who:
(i) Completed ten service credit years; or
(ii) Completed five service credit years, including twelve service
months after attaining age fifty-four; or
(d) Any teacher who is a retiree pursuant to RCW 41.34.020(8) and
who has completed five service credit years by July 1, 1996, under plan
2 and who transferred to plan 3 under RCW 41.32.817; or
(e) Any classified employee who is a retiree pursuant to RCW
41.34.020(8) and who has completed five service credit years by
September 1, 2000, and who transferred to plan 3 under RCW 41.35.510;
or
(f) Any public employee who is a retiree pursuant to RCW
41.34.020(8) and who has completed five service credit years by March
1, 2002, and who transferred to plan 3 under RCW 41.40.795; or
(g) Any person who had a balance of at least one thousand dollars
in their member account on August 31st of the year immediately
preceding the distribution and who:
(i) Completed ten service credit years; or
(ii) Completed five service credit years, including twelve service
months after attaining age fifty-four; or
(h) Any teacher who had a balance of at least one thousand dollars
in their member account on August 31st of the year immediately
preceding the distribution and who has completed five service credit
years by July 1, 1996, under plan 2 and who transferred to plan 3 under
RCW 41.32.817; or
(i) Any classified employee who had a balance of at least one
thousand dollars in their member account on August 31st of the year
immediately preceding the distribution and who has completed five
service credit years by September 1, 2000, and who transferred to plan
3 under RCW 41.35.510; or
(j) Any public employee who had a balance of at least one thousand
dollars in their member account on August 31st of the year immediately
preceding the distribution and who has completed five service credit
years by March 1, 2002, and who transferred to plan 3 under RCW
41.40.795.
(3) The extraordinary investment gain amount shall be calculated as
follows:
(a) One-half of the sum of the value of the net assets held in
trust for pension benefits in the teachers' retirement system combined
plan 2 and 3 fund, the Washington school employees' retirement system
combined plan 2 and 3 fund, and the public employees' retirement system
combined plan 2 and 3 fund at the close of the previous state fiscal
year not including the amount attributable to member accounts;
(b) Multiplied by the amount which the compound average of
investment returns on those assets over the previous four state fiscal
years exceeds ten percent;
(c) Multiplied by the proportion of:
(i) The sum of the service credit on August 31st of the previous
year of all persons eligible for the benefit provided in subsection (1)
of this section; to
(ii) The sum of the service credit on August 31st of the previous
year of:
(A) All persons eligible for the benefit provided in subsection (1)
of this section;
(B) Any person who earned service credit in the teachers'
retirement system plan 2, the Washington school employees' retirement
system plan 2, or the public employees' retirement system plan 2 during
the twelve-month period from September 1st to August 31st immediately
preceding the distribution;
(C) Any person in receipt of a benefit pursuant to RCW 41.32.765,
41.35.420, or 41.40.630; and
(D) Any person with five or more years of service in the teachers'
retirement system plan 2, the Washington school employees' retirement
system plan 2, or the public employees' retirement system plan 2;
(d) Divided proportionally among persons eligible for the benefit
provided in subsection (1) of this section on the basis of their
service credit total on August 31st of the previous year.
(4) The legislature reserves the right to amend or repeal this
section in the future and no member or beneficiary has a contractual
right to receive this distribution not granted prior to that time.
Sec. 2 RCW 41.32.765 and 2000 c 247 s 902 are each amended to
read as follows:
(1) NORMAL RETIREMENT. Any member with at least five service
credit years of service who has attained at least age sixty-five shall
be eligible to retire and to receive a retirement allowance computed
according to the provisions of RCW 41.32.760.
(2) EARLY RETIREMENT. Any member who has completed at least twenty
service credit years of service who has attained at least age fifty-five shall be eligible to retire and to receive a retirement allowance
computed according to the provisions of RCW 41.32.760, except that a
member retiring pursuant to this subsection shall have the retirement
allowance actuarially reduced to reflect the difference in the number
of years between age at retirement and the attainment of age sixty-five.
(3) ALTERNATE EARLY RETIREMENT.
(a) Prior to January 2, 2008, any member who has completed at least
thirty service credit years and has attained age fifty-five shall be
eligible to retire and to receive a retirement allowance computed
according to the provisions of RCW 41.32.760, except that a member
retiring pursuant to this subsection shall have the retirement
allowance reduced by three percent per year to reflect the difference
in the number of years between age at retirement and the attainment of
age sixty-five.
(b) On or after January 2, 2008, any member who has completed at
least thirty service credit years and has attained age fifty-five shall
be eligible to retire and to receive a retirement allowance computed
according to the provisions of RCW 41.32.760, except that a member
retiring pursuant to this subsection shall have the retirement
allowance reduced as follows:
| Retirement Age | Percent Reduction | |
| 55 | 20% | |
| 56 | 17% | |
| 57 | 14% | |
| 58 | 11% | |
| 59 | 8% | |
| 60 | 5% | |
| 61 | 4% | |
| 62 | 3% | |
| 63 | 2% | |
| 64 | 1% | |
Sec. 3 RCW 41.32.835 and 1995 c 239 s 105 are each amended to
read as follows:
(1) All teachers who first become employed by an employer in an
eligible position on or after ((July 1, 1996, shall be members of plan
3)) July 1, 2007, shall have a period of ninety days to make an
irrevocable choice to become a member of plan 2 or plan 3. At the end
of ninety days, if the member has not made a choice to become a member
of plan 2, he or she becomes a member of plan 3.
(2) For administrative efficiency, until a member elects to become
a member of plan 3, or becomes a member of plan 3 by default under
subsection (1) of this section, the member shall be reported to the
department in plan 2, with member and employer contributions. Upon
becoming a member of plan 3 by election or by default, all service
credit shall be transferred to the member's plan 3 defined benefit, and
all employee accumulated contributions shall be transferred to the
member's plan 3 defined contribution account.
(3) The plan choice provision as set forth in section 3, chapter .
. . (this act), Laws of 2007 was intended by the legislature as a
replacement benefit for gain-sharing. Until there is legal certainty
with respect to the repeal of chapter 41.31A RCW, the right to plan
choice under this section is noncontractual, and the legislature
reserves the right to amend or repeal this section. Legal certainty
includes, but is not limited to, the expiration of any: Applicable
limitations on actions; and periods of time for seeking appellate
review, up to and including reconsideration by the Washington supreme
court and the supreme court of the United States. Until that time, all
teachers who first become employed by an employer in an eligible
position on or after July 1, 2007, may choose either plan 2 or plan 3
under this section. If the repeal of chapter 41.31A RCW is held to be
invalid in a final determination of a court of law, and the court
orders reinstatement of gain-sharing or other alternate benefits as a
remedy, then all teachers who first become employed by an employer in
an eligible position on or after the date of such reinstatement shall
be members of plan 3.
Sec. 4 RCW 41.32.875 and 2006 c 33 s 1 are each amended to read
as follows:
(1) NORMAL RETIREMENT. Any member who is at least age sixty-five
and who has:
(a) Completed ten service credit years; or
(b) Completed five service credit years, including twelve service
credit months after attaining age forty-four; or
(c) Completed five service credit years by July 1, 1996, under plan
2 and who transferred to plan 3 under RCW 41.32.817;
shall be eligible to retire and to receive a retirement allowance
computed according to the provisions of RCW 41.32.840.
(2) EARLY RETIREMENT. Any member who has attained at least age
fifty-five and has completed at least ten years of service shall be
eligible to retire and to receive a retirement allowance computed
according to the provisions of RCW 41.32.840, except that a member
retiring pursuant to this subsection shall have the retirement
allowance actuarially reduced to reflect the difference in the number
of years between age at retirement and the attainment of age sixty-five.
(3) ALTERNATE EARLY RETIREMENT.
(a) Prior to January 2, 2008, any member who has completed at least
thirty service credit years and has attained age fifty-five shall be
eligible to retire and to receive a retirement allowance computed
according to the provisions of RCW 41.32.840, except that a member
retiring pursuant to this subsection shall have the retirement
allowance reduced by three percent per year to reflect the difference
in the number of years between age at retirement and the attainment of
age sixty-five.
(b) On or after January 2, 2008, any member who has completed at
least thirty service credit years and has attained age fifty-five shall
be eligible to retire and to receive a retirement allowance computed
according to the provisions of RCW 41.32.840, except that a member
retiring pursuant to this subsection shall have the retirement
allowance reduced as follows:
| Retirement Age | Percent Reduction | |
| 55 | 20% | |
| 56 | 17% | |
| 57 | 14% | |
| 58 | 11% | |
| 59 | 8% | |
| 60 | 5% | |
| 61 | 4% | |
| 62 | 3% | |
| 63 | 2% | |
| 64 | 1% | |
NEW SECTION. Sec. 5 A new section is added to chapter 41.32 RCW
under the subchapter heading "plan 1" to read as follows:
(1) Beginning July 1, 2009, the annual increase amount as defined
in RCW 41.32.010(46) shall be increased by an amount equal to $0.34 per
month per year of service minus the 2008 gain-sharing increase amount
under RCW 41.31.010 as it exists on the effective date of this section.
This adjustment shall not decrease the annual increase amount, and is
not to exceed $0.13 per month per year of service. The legislature
reserves the right to amend or repeal this section in the future and no
member or beneficiary has the contractual right to receive this
adjustment to the annual increase amount not granted prior to that
time.
(2) The adjustment to the annual increase amount as set forth in
section 5, chapter . . . (this act), Laws of 2007 was intended by the
legislature as a replacement benefit for gain-sharing. If the repeal
of chapter 41.31 RCW is held to be invalid in a final determination of
a court of law, and the court orders reinstatement of gain-sharing or
other alternate benefits as a remedy, then this adjustment to the
annual increase amount shall not be included in future annual increase
amounts paid on or after the date of such reinstatement.
Sec. 6 RCW 41.35.420 and 2000 c 247 s 905 are each amended to
read as follows:
(1) NORMAL RETIREMENT. Any member with at least five service
credit years who has attained at least age sixty-five shall be eligible
to retire and to receive a retirement allowance computed according to
the provisions of RCW 41.35.400.
(2) EARLY RETIREMENT. Any member who has completed at least twenty
service credit years and has attained age fifty-five shall be eligible
to retire and to receive a retirement allowance computed according to
the provisions of RCW 41.35.400, except that a member retiring pursuant
to this subsection shall have the retirement allowance actuarially
reduced to reflect the difference in the number of years between age at
retirement and the attainment of age sixty-five.
(3) ALTERNATE EARLY RETIREMENT.
(a) Prior to January 2, 2008, any member who has completed at least
thirty service credit years and has attained age fifty-five shall be
eligible to retire and to receive a retirement allowance computed
according to the provisions of RCW 41.35.400, except that a member
retiring pursuant to this subsection shall have the retirement
allowance reduced by three percent per year to reflect the difference
in the number of years between age at retirement and the attainment of
age sixty-five.
(b) On or after January 2, 2008, any member who has completed at
least thirty service credit years and has attained age fifty-five shall
be eligible to retire and to receive a retirement allowance computed
according to the provisions of RCW 41.35.400, except that a member
retiring pursuant to this subsection shall have the retirement
allowance reduced as follows:
| Retirement Age | Percent Reduction | |
| 55 | 20% | |
| 56 | 17% | |
| 57 | 14% | |
| 58 | 11% | |
| 59 | 8% | |
| 60 | 5% | |
| 61 | 4% | |
| 62 | 3% | |
| 63 | 2% | |
| 64 | 1% | |
Sec. 7 RCW 41.35.610 and 1998 c 341 s 202 are each amended to
read as follows:
(1) All classified employees who first become employed by an
employer in an eligible position on or after ((September 1, 2000, shall
be members of plan 3)) July 1, 2007, shall have a period of ninety days
to make an irrevocable choice to become a member of plan 2 or plan 3.
At the end of ninety days, if the member has not made a choice to
become a member of plan 2, he or she becomes a member of plan 3.
(2) For administrative efficiency, until a member elects to become
a member of plan 3, or becomes a member of plan 3 by default under
subsection (1) of this section, the member shall be reported to the
department in plan 2, with member and employer contributions. Upon
becoming a member of plan 3 by election or by default, all service
credit shall be transferred to the member's plan 3 defined benefit, and
all employee accumulated contributions shall be transferred to the
member's plan 3 defined contribution account.
(3) The plan choice provision as set forth in section 7, chapter .
. . (this act), Laws of 2007 was intended by the legislature as a
replacement benefit for gain-sharing. Until there is legal certainty
with respect to the repeal of chapter 41.31A RCW, the right to plan
choice under this section is noncontractual, and the legislature
reserves the right to amend or repeal this section. Legal certainty
includes, but is not limited to, the expiration of any: Applicable
limitations on actions; and periods of time for seeking appellate
review, up to and including reconsideration by the Washington supreme
court and the supreme court of the United States. Until that time, all
classified employees who first become employed by an employer in an
eligible position on or after July 1, 2007, may choose either plan 2 or
plan 3 under this section. If the repeal of chapter 41.31A RCW is held
to be invalid in a final determination of a court of law, and the court
orders reinstatement of gain-sharing or other alternate benefits as a
remedy, then all classified employees who first become employed by an
employer in an eligible position on or after the date of such
reinstatement shall be members of plan 3.
Sec. 8 RCW 41.35.680 and 2006 c 33 s 2 are each amended to read
as follows:
(1) NORMAL RETIREMENT. Any member who is at least age sixty-five
and who has:
(a) Completed ten service credit years; or
(b) Completed five service credit years, including twelve service
credit months after attaining age forty-four; or
(c) Completed five service credit years by September 1, 2000, under
the public employees' retirement system plan 2 and who transferred to
plan 3 under RCW 41.35.510;
shall be eligible to retire and to receive a retirement allowance
computed according to the provisions of RCW 41.35.620.
(2) EARLY RETIREMENT. Any member who has attained at least age
fifty-five and has completed at least ten years of service shall be
eligible to retire and to receive a retirement allowance computed
according to the provisions of RCW 41.35.620, except that a member
retiring pursuant to this subsection shall have the retirement
allowance actuarially reduced to reflect the difference in the number
of years between age at retirement and the attainment of age sixty-five.
(3) ALTERNATE EARLY RETIREMENT.
(a) Prior to January 2, 2008, any member who has completed at least
thirty service credit years and has attained age fifty-five shall be
eligible to retire and to receive a retirement allowance computed
according to the provisions of RCW 41.35.620, except that a member
retiring pursuant to this subsection shall have the retirement
allowance reduced by three percent per year to reflect the difference
in the number of years between age at retirement and the attainment of
age sixty-five.
(b) On or after January 2, 2008, any member who has completed at
least thirty service credit years and has attained age fifty-five shall
be eligible to retire and to receive a retirement allowance computed
according to the provisions of RCW 41.35.620, except that a member
retiring pursuant to this subsection shall have the retirement
allowance reduced as follows:
| Retirement Age | Percent Reduction | |
| 55 | 20% | |
| 56 | 17% | |
| 57 | 14% | |
| 58 | 11% | |
| 59 | 8% | |
| 60 | 5% | |
| 61 | 4% | |
| 62 | 3% | |
| 63 | 2% | |
| 64 | 1% | |
Sec. 9 RCW 41.40.630 and 2000 c 247 s 901 are each amended to
read as follows:
(1) NORMAL RETIREMENT. Any member with at least five service
credit years who has attained at least age sixty-five shall be eligible
to retire and to receive a retirement allowance computed according to
the provisions of RCW 41.40.620.
(2) EARLY RETIREMENT. Any member who has completed at least twenty
service credit years and has attained age fifty-five shall be eligible
to retire and to receive a retirement allowance computed according to
the provisions of RCW 41.40.620, except that a member retiring pursuant
to this subsection shall have the retirement allowance actuarially
reduced to reflect the difference in the number of years between age at
retirement and the attainment of age sixty-five.
(3) ALTERNATE EARLY RETIREMENT.
(a) Prior to January 2, 2008, any member who has completed at least
thirty service credit years and has attained age fifty-five shall be
eligible to retire and to receive a retirement allowance computed
according to the provisions of RCW 41.40.620, except that a member
retiring pursuant to this subsection shall have the retirement
allowance reduced by three percent per year to reflect the difference
in the number of years between age at retirement and the attainment of
age sixty-five.
(b) On or after January 2, 2008, any member who has completed at
least thirty service credit years and has attained age fifty-five shall
be eligible to retire and to receive a retirement allowance computed
according to the provisions of RCW 41.40.620, except that a member
retiring pursuant to this subsection shall have the retirement
allowance reduced as follows:
| Retirement Age | Percent Reduction | |
| 55 | 20% | |
| 56 | 17% | |
| 57 | 14% | |
| 58 | 11% | |
| 59 | 8% | |
| 60 | 5% | |
| 61 | 4% | |
| 62 | 3% | |
| 63 | 2% | |
| 64 | 1% | |
Sec. 10 RCW 41.40.820 and 2006 c 33 s 3 are each amended to read
as follows:
(1) NORMAL RETIREMENT. Any member who is at least age sixty-five
and who has:
(a) Completed ten service credit years; or
(b) Completed five service credit years, including twelve service
credit months after attaining age forty-four; or
(c) Completed five service credit years by the transfer payment
date specified in RCW 41.40.795, under the public employees' retirement
system plan 2 and who transferred to plan 3 under RCW 41.40.795;
shall be eligible to retire and to receive a retirement allowance
computed according to the provisions of RCW 41.40.790.
(2) EARLY RETIREMENT. Any member who has attained at least age
fifty-five and has completed at least ten years of service shall be
eligible to retire and to receive a retirement allowance computed
according to the provisions of RCW 41.40.790, except that a member
retiring pursuant to this subsection shall have the retirement
allowance actuarially reduced to reflect the difference in the number
of years between age at retirement and the attainment of age sixty-five.
(3) ALTERNATE EARLY RETIREMENT.
(a) Prior to January 2, 2008, any member who has completed at least
thirty service credit years and has attained age fifty-five shall be
eligible to retire and to receive a retirement allowance computed
according to the provisions of RCW 41.40.790, except that a member
retiring pursuant to this subsection shall have the retirement
allowance reduced by three percent per year to reflect the difference
in the number of years between age at retirement and the attainment of
age sixty-five.
(b) On or after January 2, 2008, any member who has completed at
least thirty service credit years and has attained age fifty-five shall
be eligible to retire and to receive a retirement allowance computed
according to the provisions of RCW 41.40.790, except that a member
retiring pursuant to this subsection shall have the retirement
allowance reduced as follows:
| Retirement Age | Percent Reduction | |
| 55 | 20% | |
| 56 | 17% | |
| 57 | 14% | |
| 58 | 11% | |
| 59 | 8% | |
| 60 | 5% | |
| 61 | 4% | |
| 62 | 3% | |
| 63 | 2% | |
| 64 | 1% | |
NEW SECTION. Sec. 11 A new section is added to chapter 41.40 RCW
under the subchapter heading "plan 1" to read as follows:
(1) Beginning July 1, 2009, the annual increase amount as defined
in RCW 41.40.010(41) shall be increased by an amount equal to $0.34 per
month per year of service minus the 2008 gain-sharing increase amount
under RCW 41.31.010 as it exists on the effective date of this section.
This adjustment shall not decrease the annual increase amount, and is
not to exceed $0.13 per month per year of service. The legislature
reserves the right to amend or repeal this section in the future and no
member or beneficiary has the contractual right to receive this
adjustment to the annual increase amount not granted prior to that
time.
(2) The adjustment to the annual increase amount as set forth in
section 11, chapter . . . (this act), Laws of 2007 was intended by the
legislature as a replacement benefit for gain-sharing. If the repeal
of chapter 41.31 RCW is held to be invalid in a final determination of
a court of law, and the court orders reinstatement of gain-sharing or
other alternate benefits as a remedy, then this adjustment to the
annual increase amount shall not be included in future annual increase
amounts paid on or after the date of such reinstatement.
NEW SECTION. Sec. 12 The following acts or parts of acts are
each repealed, effective January 2, 2008:
(1) RCW 41.31.010 (Annual pension increases -- Increased by gain-sharing increase amount) and 1998 c 340 s 1;
(2) RCW 41.31.020 (Gain-sharing increase amount calculated) and
1998 c 340 s 2;
(3) RCW 41.31.030 (Contractual right to increase not granted) and
1998 c 340 s 3;
(4) RCW 41.31A.010 (Definitions) and 2000 c 247 s 407 & 1998 c 341
s 311;
(5) RCW 41.31A.020 (Extraordinary investment gain -- Credited to
member accounts -- Persons eligible -- Calculation of amount -- Contractual
right not granted) and 2003 c 294 s 4, 2000 c 247 s 408, & 1998 c 341
s 312;
(6) RCW 41.31A.030 (Retroactive extraordinary investment gain--Credited to member accounts -- Persons eligible -- Calculation of amount--Contractual right not granted) and 1998 c 341 s 313; and
(7) RCW 41.31A.040 (Retroactive extraordinary investment gain--Credited to member accounts -- Persons eligible -- Calculation of amount--Contractual right not granted) and 2000 c 247 s 409.
NEW SECTION. Sec. 13 If any part of this act is found to be in
conflict with a final determination by the federal internal revenue
service that is a prescribed condition to favorable tax treatment of
one or more of the retirement plans, the conflicting part of this act
is inoperative solely to the extent of the conflict and with respect to
the individual members directly affected. This finding does not affect
the operation of the remainder of this act in its application to the
members concerned. The legislature reserves the right to amend or
repeal this act in the future as may be required to comply with a final
federal determination that amendment or repeal is necessary to maintain
the favorable tax treatment of a plan.
NEW SECTION. Sec. 14 Any action brought under this act must be
commenced within three years after the effective date of this section.
NEW SECTION. Sec. 15 If any provision of this act or its
application to any person or circumstance is held invalid, the
remainder of the act or the application of the provision to other
persons or circumstances is not affected.
NEW SECTION. Sec. 16 Sections 1, 3, and 7 of this act are
necessary for the immediate preservation of the public peace, health,
or safety, or support of the state government and its existing public
institutions, and take effect July 1, 2007.