Gain Sharing Bill

Frequently Asked Questions

February 2009

1. How does an Early Reduction Factor (ERF) affect my benefit?

   If you retire before the normal retirement age of 65, an ERF is applied to your benefit. The ERF reduces your benefit to reflect the expectation that you will be receiving your benefit for a longer period of time. Reductions are prorated based on the length of time between your age at retirement and age 65. Please see our brochure, Thinking About Retiring Early?

2. Who can use the 2008 Early Reduction Factors (ERF)?

   Members of Plans 2 and 3 of TRS, SERS, and PERS who are at least age 55 and have at least 30 years of service credit, may choose between the 2008 ERF and the three percent ERF. See chart in question #4.

3. When did the 2008 ERFs become effective?

   The 2008 ERFs became effective on:

   • July 1, 2008 for PERS Plan 2 and 3 members.
   • September 1, 2008 for SERS and TRS Plan 2 and 3 members.

4. Do I have a choice between the three percent ERF and the 2008 ERF?

   Yes. You can choose either one if you retire early with 30 years of service credit after age 55.

   Existing ERF		Retirement Age	New 2008 ERF
   Reduction Factor	Percent of a Normal Benefit You Receive		Reduction Factor	Percent of a Normal Benefit You Receive
   30%	70%	55	20%	80%
   27%	73%	56	17%	83%
   24%	76%	57	14%	86%
   21%	79%	58	11%	89%
   18%	82%	59	8%	92%
   15%	85%	60	5%	95%
   12%	88%	61	2%	98%
   9%	91%	62	0%	100%
   6%	94%	63	0%	100%
   3%	97%	64	0%	100%

   
   

5. If I retire using the 2008 ERF, can I return to work and continue to receive my benefit?

   If you retire using the 2008 ERF, and then return to work in any capacity for a DRS-covered employer before age 65, you will not receive your monthly benefit payments for any month in which you work. Your benefit will be stopped the first of the month you return to work, and will restart the first of the month after you stop working.

   Once you reach age 65, you will be covered by the return to work rules for those not using the 2008 ERF. Please see our brochure, Thinking About Working After Retirement? for your system and plan details.

6. If I retire early using the 2008 ERF, can I return to work as a contractor, independent contractor or personal service contractor and continue to receive my benefit?

   If you retire using the 2008 ERF and are not age 65, you cannot earn direct compensation from a DRS-covered employer for services performed and continue to receive a monthly benefit. You are not entitled to receive your monthly benefit payments for any month in which you work.

   If you are age 65 or older and working as a contractor, independent contractor or personal service contractor for a DRS-covered employer, it will not impact your benefit payments.

7. If I retire early using the three percent ERF, can I return to work and continue to receive my benefit?

   Yes. If you retire using the three percent ERF and wait 30 days before returning to work for a DRS-covered employer, you can return to work for 867 hours before having your benefit payments stopped. Please see our brochure, Thinking About Working After Retirement? for your plan and system details.

8. If I retire using the 2008 ERF or the three percent ERF and return to membership, will I have an ERF choice when I re-retire?

   If you still have not reached normal retirement age (65) when you re-retire, you will have a choice between the three percent ERF and the 2008 ERF.

9. How do I calculate my benefit using the 2008 ERF?

   To calculate your benefit for early retirement with 30 years of service, multiply your full benefit by the factor in the Benefit You Receive column shown under Do I have a choice between the three percent ERF and the 2008 ERF?

10. Can I get a retirement benefit estimate using the ERFs?

    Yes. You can create a comparison benefit estimate by using the self-service benefit estimator, available online through our DB Access application. You can also get a written estimate from us.

11. I am a member of two retirement plans. Can I retire using the 2008 ERF?

    Yes. If you are a member of Plans 2 and 3 of TRS, SERS or PERS with at least 30 service credit years (in one or more of the dual member systems and plans*) you can use the 2008 ERF.

    *Dual member systems and plans eligible for combining service credit are:

    • Teachers' Retirement System (TRS) Plan 1, 2 and 3;
    • School Employees' Retirement System (SERS) Plan 2 and 3;
    • Public Employees' Retirement System (PERS) Plan 1, 2 and 3;
    • Law Enforcement Officers' and Fire Fighters' Retirement System (LEOFF) Plan 2;
    • Washington State Patrol Retirement System (WSPRS) Plan 2;
    • Public Safety Employees' Retirement System (PSERS) Plan 2;
    • Retirement systems of first class cities; and
    • Statewide City Employees' Retirement System (SCERS).

12. As a TRS member, can I use out-of-state service credit purchased under the Public Education Experience Program for the 2008 ERF?

    Yes. When you purchase your out-of-state service using the Public Education Experience Program, it becomes creditable service for the Washington State Teachers' Retirement System and can be used for the 2008 ERF benefit calculation. You must purchase the out-of-state service before you retire.

13. As a TRS member, can I use out-of-state service from the Out-of-State Service Program for the 2008 ERF?

    Yes. The Out-of-State Program allows you to use your out-of-state service to meet the years of service requirement, but it does not become Washington State Teachers' Retirement System credit and will not be used to calculate your retirement benefit.

    If you use the Out-of-State Program, your benefit will first be reduced based on life expectancy factors from the state actuary for each year of out-of-state service used to meet early retirement eligibility. The 2008 ERF will then be applied.

14. What happens if the law which provided the 2008 ERF is found to be invalid?

    The law which provided this benefit was part of the legislation that ended gain sharing. The law contained directions on what will happen should the law be invalidated:

    • Plan 2 and 3 members of PERS, SERS and TRS who retired using the 2008 ERF and have received at least one retirement payment will keep their benefit as calculated.
    • Plan 2 and 3 members of PERS, SERS and TRS who at the time of the court action have not retired, or have retired but have not yet received at least one retirement payment, will be subject to the early retirement factors (three percent reduction) that were in place before the new law went into effect.