A cost-of-living adjustment (COLA) is an annual adjustment applied to your retirement income to reflect changes in the economy (inflation). Most DRS retirement plans offer a COLA, but Plan 1 members in PERS and TRS only have a COLA if they selected it during retirement. View the 2025 COLA percentages by retirement date and plan. When will I receive the 2025 COLA? LEOFF Plan 1 COLAs take effect April 1 and start with April 30 benefit payments. All other DRS Plan COLAs take effect July 1 and start with July 31 benefit payments. You need to be retired by July 1 for at least one year to be eligible for a COLA. Once you’re eligible, you’ll receive any COLA starting with the pension payment issued at the end of July, and every year after. You don’t need to apply to receive the COLA – it’s automatic. How much will the COLA be? The maximum annual COLA you can receive for most DRS plans is 3%. If inflation that year is above 3%, the additional amount is applied to future adjustments (called COLA banking). Any year inflation is lower than 3%, the COLA can pull from banked amounts in prior years. This happens automatically and the adjustment is made for you. You could receive a different adjustment each year, depending on the amount available in your COLA bank. Will PERS 1 and TRS 1 receive a benefit increase? If the legislature changes the current law, most of these retirees could receive a one-time increase in July. There are several bills that could affect this decision. You can track all bills here.

Did you know that you started earning a pension benefit when you were hired into public service in Washington state? If you didn’t know until just now, we understand. A new job can be overwhelming – loads of information is served up to you all at once. You may have overlooked, or not had time to absorb the information your employer gave you about retirement benefits through DRS. But don’t worry; we’ve got you covered! Just follow this beginner’s retirement guide to help you understand your benefits and the decisions you need to make as a new hire. Enroll in a plan For some plans, you are automatically enrolled by your employer. This is often the case when a plan only has one active plan option at a time. If you don’t see your plan listed here, you can skip this section. Public employees, teachers and school employees: PERS, TRS or SERS member? If so, you have 90 days to choose a retirement plan. The Plan Choice section can help you decide which plan is right for you. Choose a plan Law enforcement, firefighters, Washington State Patrol: LEOFF and WSPRS members can complete this enrollment form. Higher education employees: If you are eligible for HERP, see your Plan 3 options. Answers to the questions new hires ask most often System, plan, what? DRS administers 15 different retirement plans to public service members throughout Washington. Each plan uses system and plan number labels. You don’t need to memorize them all, but knowing about them will help you navigate the DRS website in the years to come. Why does this matter? It’s good to know which plan and system you are in, so you’ll know immediately if a new rule or piece of legislation applies to you. Each system is a type of employment covered by the plan. Here are all the systems: Public Employees’ Retirement System (PERS) Teachers’ Retirement System (TRS) School Employees’ Retirement System (SERS) Law Enforcement Officers’ and Fire Fighters’ Retirement System (LEOFF) Washington State Patrol Retirement System (WSPRS) Public Safety Employees’ Retirement System (PSERS) In addition to systems, each DRS retirement plan is labeled with a plan number: 1, 2 or 3. Each number represents different rules and plan structures. For example, Plan 2 is always a pension plan that you and your employer both contribute to. Plan 3 is always a pension program your employer funds and a separate investment program you fund. Plan 1 is closed. What about DCP? Deferred Compensation Program is not actually a plan or system, but it is a separate voluntary savings program administered by DRS. If your employer doesn’t offer Washington’s DCP, ask about other additional retirement savings programs you can enroll in to increase your income in retirement. How do I set up my DRS online account? After receiving your first paycheck from your employer, you can set up access and view your account information online. See more about online accounts and how to create yours. Why was I enrolled in DCP? How do I opt out? State agencies, higher educations and a few additional public employers have DCP automatic enrollment for new hires. Read more about automatic enrollment, including instructions for how to modify or opt out of your enrollment. Do I have to contribute to a retirement plan? Yes. A retirement plan is a required part of the benefits package for Washington public service employees. Both Plan 2 and Plan 3 offer a lifetime pension benefit. The pension amount depends on how long you work in public service and your salary. Can I change my contribution rate in Plan 2 or Plan 3? Plan 2: No. Your contribution rate is determined by the state Pension Funding Council. The rate can change every two years. See the most recent rates. Plan 3: You can only change your contribution rate if you change employers. You select (or default into) a rate when you first enroll in your plan. See all Plan 3 rates. How do I add a beneficiary? In the event of your death, DRS needs to know where to send your retirement account balance. Choose your beneficiaries now. Make this choice through your online account once you are enrolled in a plan or complete a paper form. More resources Podcast episodes for new hires: Ep 11 – How to save for retirement with DCP Ep 14 – Choosing between Plans 2 and 3 Ep 15 – How to choose a financial advisor Ep 16 – Options for those who only work a few years Podcasts covering many other retirement topics are available on the Fund Your Future with DRS webpage. Additional information View a recorded webinar on choosing a plan, or see all available webinars. Every plan has a guide page. Read about your plan. About – DRS serves current and former public employees in 15 different retirement plans. Updates – Get email or text news from DRS. On topics you choose. DRS has a glossary, available anytime you need it.

While public employees have lots of ways to save for retirement, two of the most popular are IRC Section 457(b) and Section 403(b) plans. Both provide for pre-tax contributions taxed as income when withdrawn, but there are some differences to consider when choosing the best option for you. Many Washington public employees have access to a pre-tax 457(b) plan through the Deferred Compensation Program (DCP) or similar savings plan. 403(b) plans are most often found in schools and aren’t administered by DRS. Both plans allow you to contribute directly from your paycheck before taxes, lowering your tax liability for the year. If you make $50,000 per year and contribute $2,500 of your salary to either type of plan, your taxes will be based on an income of $47,500. The $2,500 contribution is taxable upon withdrawal. Both plans also have “catch-up” provisions for folks approaching retirement to save beyond plan limits. The plans differ in terms of contribution limits – how much you can defer and save each year – and when you can withdraw your contributions. 403(b) In 2025, you can contribute, or defer, up to $23,500 from your salary under a section 403(b) plan. Having more than one account doesn’t matter; this limit includes all 403(b) accounts. However, 457(b) contributions don’t count against this limit, so you could contribute $23,500 in your 403(b) and an additional $23,500 in a 457(b). Having 403(b) and 457(b) plans is one way to defer more than $23,500. Once you’re 50 and older, you can contribute an additional $7,500 per year. And, if you’ve been with your employer for 15 years, you may contribute an additional $3,000 per year, up to a lifetime total of $15,000. Other catch-up provisions may also apply.   You can withdraw without penalty once you turn 59.5, and you must start withdrawing when you turn 73, unless you’re still working for the covered employer. Find out more about 403(b) plans on the IRS website. 457(b) DCP is a 457(b) plan. In 2025, total contributions can be $23,500. What’s the advantage of a 457(b)? Portability. If you leave the employer sponsoring your 457(b) plan, you can withdraw at any age without penalty. However, you can only withdraw contributions under specific circumstances while you’re still working. Like a 403(b) plan, you’ll have to withdraw when you reach 73 under most circumstances. 457(b) plans also allow those 50 or older to contribute an additional $7,500 per year, but they have another catch-up option that allows people three years from plan-specific retirement age, essentially, to double their annual contributions. Find out more about 457(b) plans at the IRS website. Choosing between 403(b) and 457(b) plans Many customers only have access to one type of plan and can use it effectively to help them retire securely. However, if you work in education and would like to save more, check with your employer to see if you’re able to invest in both 457(b) and 403(b) plans. Most public workers in education have access to both.  Contribution, withdrawal and catch-up provisions are important factors to consider. Fund performance and fees are also critical to consider. This is where Washington’s DCP shines. With some of the lowest fees in the marketplace, DCP investments are guided by the experts at the Washington State Investment Board. There are options for folks who want to set-it-and-forget-it or for those who want to take a more active role in investing. DCP also offers a Roth option for tax-free withdrawals once certain conditions have been met. Find out more at www.drs.wa.gov/dcp.

When you purchase an annuity from the state of Washington, you receive a guaranteed monthly income from that annuity for the rest of your life. Annuities are not impacted by market swings, and you cannot outlive them. Annuity income is in addition to your pension. Your monthly annuity payment will depend on several factors, including your purchase amount and your age. If you die before you (and your designated survivor) receive your purchase amount in payments, your beneficiary will receive a balance refund. Keep in mind that once you set up an annuity, you cannot change the income amount. One you begin receiving payments, you cannot cancel the annuity. Annuities are taxable income. It’s important to speak with a tax advisor to understand how that may impact you. Types of annuities DRS offers three types of annuities: plan annuities, service credit annuity and TAP annuity. Purchasing service credit A service credit annuity allows you to purchase from 1 month up to 60 additional months of service credit, which will increase your monthly pension income as if you had worked that many additional months. The increased monthly amount you will receive from this annuity will add to your pension, but it does not give you actual service credits that are used to calculate your base pension and you cannot use it to reach vesting status or to retire early. If you’re planning on returning to public service work after retirement, you’ll need to understand the return to work limits and how they may impact receiving your pension and annuity payments. A service credit annuity has the same survivor option and Cost of Living (COLA) adjustment as your pension and must be purchased at time of retirement. You can use your pretax DCP funds to purchase it. Cash can also be used to purchase this annuity. If you have a DCP Roth balance, you can take a cash withdrawal from your Roth balance to purchase this annuity. To create an estimate, Log in to your online account and select Purchasing Service. Plan annuity Plans 1, 2 and 3 for all retirement systems each offer their own annuity. Plan annuities offer the same survivor and Cost of Living (COLA) adjustment as your pension. Your beneficiary will receive a balance refund if you die before you (and your designated survivor) receive your purchase amount in payments. Plan annuities must be purchased at the time of retirement and can be purchased with your DCP funds or through other approved funding sources. You’ll continue to receive these payments if you return to work. How much does an annuity pay? An age 65 Plan 2 member with no survivor who purchases an annuity for $50,000 could expect to receive an $283 payment added to their pension for the rest of their life. To create an estimate, Log in to your online account and select Purchasing Annuity. TAP annuity TAP annuities are available to Plan 3 members.  TAP annuities feature a guaranteed 3% yearly Cost of Living (COLA) increase. They offer the ability to extend your annuity payments to a survivor, and a balance refund if you pass before you (and your designated survivor) have been paid out your purchase amount. TAP annuities can be purchased any time after you separate from employment but may only be purchased once per plan. You can start receiving payments at any age, but your first payment may take up to 90 days. This TAP Annuity calculator can help you estimate your monthly income, including the annual 3% increase. Additional resources: Transcript - Episode 44 – All about the Plan 3 TAP Annuity