WSR 14-23-063
[Filed November 18, 2014, 8:48 a.m.]
Original Notice.
Preproposal statement of inquiry was filed as WSR 14-19-087.
Title of Rule and Other Identifying Information: Chapter 296-14 WAC, Industrial insurancePension tables, pension discount rate and mortality tables, new WAC 296-14-8810.
Hearing Location(s): Department of Labor and Industries (L&I), 7273 Linderson Way S.W., Auditorium, Tumwater, WA 98501, on December 23, 2014, at 2 p.m.
Date of Intended Adoption: January 6, 2015.
Submit Written Comments to: Suzy Campbell, P.O. Box 44208, Olympia, WA 98504-4208, e-mail, fax (360) 902-4960, by 5 p.m. on December 24, 2014.
Assistance for Persons with Disabilities: Contact Sharon Avery by December 16, 2014, at or (360) 902-4252.
Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The current mortality tables used to determine the funding needs for injured workers who are totally permanently disabled and for survivors of fatally injured workers are over thirty years old. The department conducted a study of pensioned injured workers and their spouses in our system from 2001 to 2012 together with 2000 U.S. Census data. The study revealed the pension tables no longer reflect the current experience of pension beneficiaries funded by the pension reserve fund. These tables need to be updated for life expectancy and gender.
The pension discount rate is the interest rate used to account for the time value of money when evaluating the present value of future pension payments. The current pension discount rate of 6.5 percent is too high given market rates of long-term Treasury bonds, which are considered by the actuaries for establishing discount rates. The department has worked with the workers' compensation advisory committee (WCAC) to develop a plan that would reduce the pension discount rate from the current 6.5 percent to 6.4 percent and continue to adjust annually, through 2022, until it reaches 4.5 percent.
The department plans to update the mortality tables and reduce the pension discount rate.
Statutory Authority for Adoption: RCW 51.04.020, 51.44.070(1), 51.44.080.
Statute Being Implemented: RCW 51.44.070.
Rule is not necessitated by federal law, federal or state court decision.
Name of Proponent: L&I, governmental.
Name of Agency Personnel Responsible for Drafting: Suzy Campbell, Tumwater, Washington, (360) 902-5003; Implementation: Sandi Haerling, Tumwater, Washington, (360) 902-5006; and Enforcement: Vickie Kennedy, Tumwater, Washington, (360) 902-4997.
No small business economic impact statement has been prepared under chapter 19.85 RCW. L&I is exempt from preparing a small business economic impact statement under RCW 19.85.025(3) referencing RCW 34.05.310 (4)(f) since the purpose of this rule making is to set or adjust fees pursuant to legislative standards.
A cost-benefit analysis is not required under RCW 34.05.328. L&I is exempt from preparing a cost-benefit analysis under RCW 34.05.328 (5)(b)(vi) since the purpose of this rule making is to set or adjust fees pursuant to legislative standards.
November 18, 2014
Joel Sacks
WAC 296-14-8810 Pension tables, pension discount rate and mortality tables.
(1) The department uses actuarially determined pension tables for calculating pension annuity values, required pension reserves, and actuarial adjustments to monthly benefit amounts.
(a) The department's actuaries calculate the pension tables based on:
(i) Mortality tables from nationally recognized sources;
(ii) The department's experience with rates of mortality, disability, and remarriage for annuity recipients; and
(iii) A pension discount rate of 6.4 percent.
(b) The department's actuaries periodically investigate whether updates to the mortality tables relied on or the department's experience with rates of mortality, disability, and remarriage by its annuity recipients warrant updating the department's pension tables.
(2) To obtain a copy of any of the department's pension tables, contact the department of labor and industries actuarial services.