State Supreme Court will hear arguments on gain sharing, automatic increases Oct. 24

Posted 05-Jun-2013

Updated July 8, 2013

Editor's Note: This article has been updated to include the confirmed date for oral arguments.

The Washington State Supreme Court has agreed to accept direct review of litigation over discontinuation of annual benefit increases for retirees from two of the state’s older pension plans — and will hear that case in conjunction with arguments over a separate lawsuit related to gain sharing and early retirement provisions in other pension plans.

Under an order signed June 4 by Chief Justice Barbara Madsen, the court will hear arguments on the gain sharing and annual increase cases together. On July 8, the court confirmed that oral arguments in both cases will be heard Oct. 24, 2013.

The order also set forth an accelerated schedule for the parties in the annual increase case to submit written briefs to the court.

In May, the court agreed to accept direct review of lower court rulings on a 2007 law which repealed gain sharing provisions for members of certain state retirement plans and replaced them with other pension-related benefits, including options for early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. Legal certainty is not reached until all parties have used up their opportunities for appeal.

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.

A ruling in Thurston County Superior Court found that the Legislature improperly repealed the increases. 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. The trial court ruled, however, that the repeal was a violation of the state constitution.

Following the ruling, the state petitioned the Supreme Court to take direct review of the annual increases case.

The court has agreed to hear the gain sharing and annual increase lawsuits as companion cases. It is not known how long it will take for a ruling to be issued after oral arguments are heard.

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