Select Committee on Pension Policy Begins Interim Work

The Select Subcommittee on Pension Policy (SCPP) last met on June 19 to review operating procedures, upcoming adjustments to contribution rates (see article below), and disability pension benefits and to take testimony from both employee and employer groups on their desires for work by the Committee during the next seven months. The SCPP is a committee of legislators and employee and employer representatives who study pension issues between sessions and make recommendations to the Legislature. Many pension issues are very complicated and pension bills are often not seriously considered unless the SCPP has reviewed the issue.

The SCPP has indicated an interest in addressing disability pension benefits but has just begun to gather information and data on the State’s current benefits. Additional hearings will be held on this subject and we will keep you informed of various proposals.

Many of the employee groups outlined requests for enhanced benefits. AWC testified and asked the Committee to “slow down.” Rates are increasing, the gain-sharing issue remains unresolved given current legal challenges, and current pension benefits are very competitive when cities hire new employees. We do not need nor can we afford additional significant enhancements.

At this time, it remains unclear which issues the SCPP will seriously consider. Please watch for updates in future Bulletins.

Pension System Contribution Rate Update

The following is a simple chart of contribution rates for local governments and their employees. The rates reflect the repeal of gain-sharing, the cost of the January 2008 gain-sharing event, and the cost of the benefit enhancements enacted this past session (including the reductions in early retirement factors outlined in ESB 2391, the bill that repealed gain-sharing).

It is important to note that there are also a couple of other changes that impact the rates as of July 1, 2007 and September 1, 2007:

The Department of Retirement Systems has reduced the administrative expense rate that is added to employer rates from .18% to .16% as of 9/1/07.
The PERS employer rates include a component to fund the PERS 1 unfunded liability. That amount is 1.79% effective 7/1/07, increasing to 1.82% effective 9/1/07.

PENSION CONTRIBUTION RATES – EMPLOYERS

1/1/07 - 6/31/07

7/1/07 - 8/31/07

9/1/07 - 6/30/08

7/1/08 - 6/30/09

7/1/09 - 6/30/11 (Projected)

7/1/11 - 6/30/13 (Projected)

PERS 1, 2, & 3

5.46%

6.12%

6.13%

8.31%

9.10%

9.12%

PSERS

8.53%

8.54%

8.55%

9.43%

10.17%

10.24%

LEOFF 1

0.18%

0.18%

0.16%

0.16%

0.18%

0.16%

LEOFF 2

4.90%

5.35%

5.33%

5.46%

5.39%

5.26%

PENSION CONTRIBUTION RATES – EMPLOYEES

7/1/06 - 6/30/07

7/1/07 - 6/30/08

7/1/08 - 6/30/09

7/1/09 - 6/30/11 (Projected)

7/1/11 - 6/30/13 (Projected)

PERS 1

6.00%

6.00%

6.00%

6.00%

6.00%

PERS 2

3.50%

4.15%

5.45%

5.43%

5.38%

PSERS

6.57%

6.57%

6.57%

6.57%

6.57%

LEOFF 1

0.00%

0.00%

0.00%

0.00%

0.00%

LEOFF 2

7.85%

8.60%**

8.82%

8.71%

8.49%

** Note: The State Actuary has recommended supplemental LEOFF 2 employer and employee rate increases effective 9/1/07 (.03% for employees and .02% for employers) due to 2007 legislation. Assuming the LEOFF 2 Board adopts those recommendations, the LEOFF 2 employer rate will increase to 5.35% as of 9/1/07 and the LEOFF 2 member rate will increase to 8.63% as of the same date.

For a more detailed chart showing the components of the various rates, go to the State Actuary’s website at http://osa.leg.wa.gov and click on Contribution Rates.

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