Challenges to state pension system changes go before the State Supreme Court this week

Posted 23-Oct-2013

The Washington Supreme Court will hear oral arguments this coming Thursday (Oct. 24) on two lawsuits related to changes in the state’s pension systems.

One case centers on a law which provided early retirement and other benefits as a replacement for gain sharing benefits, which were repealed. The other case involves the Legislature’s discontinuation of annual benefit increases for retirees in two of the state’s older pension plans.

Both the gain sharing and annual increase cases involve similar legal issues. Earlier this year, the Supreme Court decided to accept direct review of both lawsuits and hear them as companion cases.

The Court’s proceedings will begin at 9:00 a.m. Thursday and will be carried live on the public affairs network TVW.

At issue in one case is a law from 2008 which repealed gain sharing provisions for members and retirees of certain state retirement plans and replaced them with other pension-related benefits, including options for early retirement. In approving the replacement benefits, the Legislature made them contingent on the successful repeal of gain sharing.

A King County Superior Court ruling found that the repeal of gain sharing was invalid, but it also held that the state can terminate the replacement benefits if gain sharing is ultimately reinstated.

Under the law, the replacement benefits continue to be available until there is legal certainty regarding all issues of the case. (See our related article, Gain sharing litigation: ‘Legal certainty’ and the 2008 early retirement factors). Earlier this month, the Supreme Court issued an order suspending a gain sharing payment scheduled for early 2014 pending a final ruling in the case.

The other case that will go before the Supreme Court concerns a 2011 law which discontinued an annual increase provided to certain retirees and beneficiaries in the Public Employees’ Retirement System Plan 1 (PERS 1) and the Teachers’ Retirement System Plan 1 (TRS 1). Both plans have been closed to new members since 1977.

When the annual increases were approved in 1995, the Legislature specified that they were not a contractual right and that the state reserved the right to amend or repeal them. A Thurston County Superior Court ruling, however, found that the repeal was a violation of the state constitution.

It is not known how long it will take for an opinion to be issued after oral arguments are heard.

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