Frequently Asked Questions

 

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What different retirement plans does Washington State offer and who is eligible?

Public Employees' Retirement System (PERS): State employees and employees of political subdivisions (with some exceptions).  PERS membership also includes "non-certificated" school employees first hired before October 1, 1977.

Public Safety Employees' Retirement System (PSERS): Certain employees whose jobs contain a high degree of physical risk to their own personal safety and who provide public protection of lives and property, but whom are not eligible for LEOFF membership. PSERS opened on July 1, 2006.

School Employees’ Retirement System (SERS): Classified employees of school districts and employees of educational service districts first hired after September 30, 1977.  SERS opened on September 1, 2000.

Teachers' Retirement System (TRS): Teachers, school superintendents, educational staff associates (ESA’s).

Law Enforcement Officers' and Fire Fighters' Retirement System (LEOFF): Fire fighters, law enforcement officers (sheriffs, University of Washington and city police officers, and town marshals), port police (Port of Seattle), and Department of Fish and Wildlife enforcement officers.

Washington State Patrol Retirement System (WSPRS): Commissioned officers of the Washington State Patrol.

Judicial Retirement System (JRS) / Judges: Elected and appointed judges;  these systems are closed to new members.  Newly appointed judges are members of PERS.

Higher Education Retirement System: Faculty of institutions of higher education and non-faculty, as specified by the Board of Regents or Trustees.

Volunteer Firefighters' and Reserve Officers' Relief and Pension Act: Fire fighters who are neither members of a municipal fire department nor full-time, paid members of LEOFF, and reserve police officers.

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What plan design does each retirement plan use?

LEOFF 1 is a defined benefit retirement, medical, and disability plan.

PERS 1 and TRS 1 are defined benefit retirement and disability plans.

LEOFF 2, PERS 2, TRS 2, SERS 2, PSERS 2, WSP 1, and WSP 2 are defined benefit retirement plans.

PERS 3, TRS 3, and SERS 3 are hybrid plans with defined benefit and defined contribution components.

Higher Education Retirement Plans Provide benefits through defined contribution accounts administered by third-party investment corporations. The Higher Ed plans also include a state-funded supplemental benefit guaranteeing a minimum benefit level.

Volunteer Fire Fighters’ and Reserve Officers’ Relief and Pensions is a medical and disability plan combined with a defined benefit retirement plan.

JRS and Judges are defined benefit retirement plans.

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What is the difference between a defined benefit plan and a defined contribution plan?

A defined benefit plan provides a guaranteed monthly retirement benefit for life; it is based on service credit and average final compensation, not the amount the member or employer contributes. A defined contribution plan is a retirement benefit based on the amount contributed and the performance of the investments; there is no guaranteed benefit.  A hybrid plan (such as the Plans 3 of PERS, SERS, and TRS) combine elements of both defined benefit and defined contribution plans.

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What are contribution rates?

The State Actuary recommends how much employees and employers should pay (as a percent of total pay) to keep the system funded.  OSA studies the experience and financial condition of the Washington State retirement systems and makes recommendations to the Select Committee on Pension Policy (SCPP) and the Pension Funding Council (PFC) on how to keep the system soundly funded. The SCPP forwards recommendations to the PFC and the Legislature.

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What are the current and future contribution rates?

The Office of the State Actuary calculates current contribution rates and projects future contribution rates. This information can be found on the Contribution Rate Projection webpage.

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What is gain-sharing?

Gain-sharing is a mechanism enacted by the Legislature in 1998 for increasing retirement benefits based on investment returns. When the Legislature enacted gain-sharing, it reserved the right to amend or repeal the act in the future. In 2007, the Legislature repealed the distribution of extraordinary gains after 2008.

 

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What is a COLA and how is it calculated?

A COLA is a cost-of-living adjustment that allows retirement benefits to maintain purchasing power by growing with inflation.  PERS 1 and TRS 1 have a fixed dollar amount ($1.73 in 2008, $1.83 in 2009) per month per year of service, see Plan 1 COLA increases.  LEOFF Plan 1 members receive a COLA that matches the Consumer Price Index (CPI).  The other plans have a percentage increase, which is the lower of the CPI or 3 percent.

 

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What is the Consumer Price Index (CPI)?

The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.  The CPI is used as a measure to represent the rate of inflation.  Some COLAs are calculated based on the CPI. See CPI historical increases .

 

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What is the optional COLA?

Members in Plan 1 can elect to receive an optional COLA in exchange for an initial reduction in their pension. The maximum COLA applied in any year is 3 percent.  If inflation exceeds 3 percent in a year, the amount above 3 percent is "banked" to be used in future years if inflation falls below 3 percent. Visit the DRS website for additional information.

 

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What OPEB reporting changes does GASB 45 require?

Government Accounting Standards Board (GASB) 45 requires the disclosure of certain Other Post-Employment Benefit (OPEB) costs and liabilities (e.g., retiree health care) as well as the disclosure of specific parameters for their determination. The OSA, with the assistance of the Office of Financial Management, disclosed this information in the 2007 OPEB Report, published August 14, 2007.  For more information about OPEB and GASB 45 reporting, see the OPEB section of this website, which also contains an OPEB liability calculation tool.

 

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How do I verify whether or not someone is a credentialed actuary?

There are several agencies you may contact to verify actuarial credentials.

Joint Board for the Enrollment of Actuaries Internal Revenue Service (JBEA)  

OPR

1111 Constitution Avenue NW

Washington, DC  20224

Phone: 202.622.8229

Fax: 202.622.8300 

The JBEA regulates the credentialing of actuaries practicing in the pension field and issues pension actuaries' enrollment numbers.  Enrolled Actuaries may use the initials EA.

American Academy of Actuaries

1100 17th Street NW 7th Floor

Washington, DC 20036

Phone: 202.223.8196

Fax: 202.872.1948

The American Academy of Actuaries is a professional organization of actuaries practicing mainly in the United States and Canada. Members may use the initials MAAA (Member, American Academy of Actuaries).

Society of Actuaries

475 North Martingale #600

Schaumburg, Illinois 60173

Phone: 847.706.3500

Fax: 847.706.3599

The Society of Actuaries (SOA) administers examinations that lead to professional designation of Associate or Fellow of the SOA (ASA or FSA).

Conference of Consulting Actuaries

388 Salem Lake Drive, Suite H

Long Grove, Illinois 60047-6400 

Phone: 847.719.6500

Fax: 847.719.6506

Members of the Conference of Consulting Actuaries are also designated as either a Fellow (FCA) or Associate (ACA).

 

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What is the Select Committee on Pension Policy (SCPP)?

The SCPP studies issues and policies affecting the state's public employee retirement systems. The Committee studies benefits design, eligibility requirements and pension funding methods, and makes recommendations to the Legislature. Visit the SCPP website .

 

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What is the LEOFF 2 Retirement Board?

The Washington State Law Enforcement Officers' and Fire Fighters' Plan 2 Retirement Board (LEOFF 2) was created by Initiative 790 in November 2002. Board members are appointed by the Governor. The LEOFF 2 Retirement Board studies pension issues, sets contribution rates, and recommends pension policy to the Legislature in the interest of LEOFF 2 members.