Subject: DRS Email 13-013, Clarification of ESHB 1981

  • Notice No.: 13-013
  • Date: June 14, 2013
  • Applies to: Higher Education Employers
  • Subject: DRS Email 13-013, Clarification of ESHB 1981

This notice is to provide clarification of the administration of ESHB 1981, which passed in 2011. Originally, DRS stated that if a new employee made a choice to participate in a Higher Education Retirement Plan (HERP) in a faculty or non- faculty position on or after July 1, 2011; they would remain in HERP and never be given another choice, regardless of change in institutions or position type. If a new employee chose Plan 3 on or after July 1, 2011, they would be provided a second choice if they changed position types.

After discussion with some of you, DRS reevaluated our original position and determined that irrevocability of choice will be based on employer, position type and the choice made.

Example 1:
Employee chooses HERP at WSU and later leaves to work for UW, the employee will be provided a new choice between HERP and Plan 3.

For the purposes of administering this law, all of the Community and Technical Colleges are considered one employer (institution) as the State Board of Community and Technical Colleges oversees one retirement plan for all.

Example 2:
A new employee in a faculty position elects to participate in TRS Plan 3 at WSU and later leaves for UW, for a faculty position. The employee will continue to participate in TRS Plan 3 at UW. Once a DRS System is chosen, the employee will remain in that system with future employers unless they change position type.

Please see the Membership Options for Higher Ed Q & A for more examples.

System Choice for new higher education employees
Effective July 1, 2011, new employees (with no past HERP history) hired into a HERP-eligible position have a choice between retirement systems. The employee will have 30 days to choose either the HERP or Plan 3 (PERS is non-faculty; TRS is faculty). If a choice isn’t made within 30 days, the employer will default the employee to the HERP.

Higher education employers cannot offer HERP to new employees who have retired or are eligible to retire from any retirement plan administered by DRS and listed in RCW 41.50.030. Employers can use the online Member Reporting Verification (MRV) to verify if the employee is retired. To determine if an employee is eligible to retire, please use this guideline and then contact ESS if needed.

If your employee chooses Plan 3 they must complete the Higher Education Plan 3 Investment Program Form. Please forward the form to DRS.

We have added more examples and updated the following tools for determining system and plan:

Membership Options for Higher Ed Q & A

Retirement Membership Options – Faculty

Retirement Membership Options – Non Faculty

Retirees Returning to Work (RRTW)

In January 2012, RRTW rules changed. Changes to work limits impacted primarily Plan 1 members of TRS and PERS who would no longer be able to work in excess of 867 hours without their pension being suspended. Higher education employers also began reporting DRS retirees working in HERP-eligible positions on the retirement transmittal. These hours count toward the retiree’s work limits.

Rehired retirees who were participating in a HERP before July 1, 2011, could continue to do so; however they are subject to the new return to work rules.

Rate Change - HERP Supplemental Benefit Fund

A HERP supplemental benefit fund for the purpose of funding future benefit obligations of HERP supplemental benefits was created.

In January 2012, Higher education employers began reporting the total HERP compensation for all participating employees and employer contributions equal to .25 percent of the reported compensation.

The new supplemental contribution rate of .50 percent goes into effect July 1, 2013.

Questions
Should you have any questions regarding this notice please reply to this email or contact Employer Support Services at 360-664-7200, option 2, or 800-547-6657, option 6, option 2.

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