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Plan 3 has two parts—a defined benefit and a defined contribution. Your employer contributes to your defined benefit. You contribute to the defined contribution. You choose your investment program and contribution rate for the defined contribution part of your plan. Once chosen, your defined contribution rate is permanent unless you change employers.

Defined benefit

(employer funded pension)


Defined contribution

(your investment contributions)


Total Plan 3

A 1% defined benefit plan

Lifetime benefit

Once you meet age and service requirements and you’ve applied for retirement, you will receive a guaranteed monthly benefit for your lifetime. Your benefit is based on your years of service credit and the pay you’ve earned.

Service credit years (SCY) The number of years you are credited for working. 

Average Final Compensation (AFC) The average of your highest consecutive 60 months earnings, wherever they are in your service. 


The 1% defined benefit formula used to calculate your retirement is:

1% x SCY x AFC = monthly benefit


If you worked full time every month for 15 years and your average monthly pay for your highest consecutive five years was $4,000, your monthly benefit would be $600.

1% x 15 SCY x $4,000 AFC = $600 monthly benefit

And a contribution you select

Choose from six contribution rates

Option A: 5% all ages
Option B:5% up to age 35 6% ages 35 through 44 7.5% age 45 and older
Option C: 6% up to age 35 7.5% ages 35 through 44 8.5% age 45 and older
Option D:7% all ages
Option E:10% all ages
Option F:15% all ages

If you don’t choose a contribution rate, it will default to option A: 5%. Once your rate is set, you can change it only when you change employers. Changing means working for a different employer, not another division or unit at your current workplace.

Choosing a rate

Ideally, you want to choose your contribution rate based on three considerations: retirement income needs, years until retirement and current budget.

To come up with a target retirement income, it’s standard practice to base it on about 80% of what you believe your income will be five to 10 years before you retire.


Online tools and calculators can help you determine the impact and benefits of different contribution rates. These tools include a Take Home Pay Estimator and a disbursement calculator (for estimating what an ending account balance will pay monthly during retirement). For tools and resources, visit the Education Section.

Choosing Your investment options

Two investment programs

The defined contribution part of Plan 3 offers you the choice between two investment programs: the Self-Directed Investment Program and the Washington State Investment Board Program (WSIB). Transfer funds between the two at any time, but you can only contribute to one program at a time.

If you choose the Self-Directed Investment Program, you can take two different approaches. One is the Build and Monitor approach, and the other is One-Step Investing.

One-Step Investing

In this Self-Directed Investment Program, your investments are automatically adjusted for you.

The One-Step Investing approach is made up of Retirement Strategy Funds. Each one is diversified and automatically rebalances, adjusting your asset mix as you move toward a target date for retirement that meets your needs and lifestyle.

To select the Retirement Strategy Fund that’s right for you, take the year you were born and add it to the age you expect to retire or withdraw your funds. The sum is your target date.

Example: 1993 (birth year) + 65 (retirement age) = 2058 (target date) Pick the fund with the date closest to your target date. In this case, 2060 would be the Retirement Strategy Fund.

Retirement Strategy Funds
From lowest risk to highest

The Retirement Maturity Strategy Fund is for investors who have been retired for 15 years or more.

Build and Monitor

In this Self-Directed Investment Program, you select, monitor and adjust your investments.

With Build and Monitor, you select your own mix of individual funds and decide how much to invest in each one. Choose from a menu of professionally managed funds listed in the chart below. You are responsible for monitoring your investments and making changes as you see fit for your circumstances.

The WSIB Investment Program

If you have your contributions directed to the Washington State Investment Board Program, WSIB will invest them in its Total Allocation Portfolio (TAP). A monthly valued fund, the TAP is a diversified mix of U.S. and international stocks, bonds, private equity and real estate investments.

Deciding on an investment program

The WSIB Investment Program

This program is also called the WSIB Total Allocation Portfolio or TAP, which is the name of the fund the program uses. The TAP is a fairly aggressive balanced fund that is intended for long term investing. The investment strategy is to create a portfolio mix designed to generate maximum return in the long term at a prudent level of risk. It includes some asset classes not available in the Self-Directed Investment Program, which increases the portfolio’s diversification but causes it to be a monthly valued portfolio.

Self-Directed Investment Program

Within the Self-Directed Program, you can choose one of two approaches—Build and Monitor or One-Step Investing. To determine which one might be right for you, ask yourself these questions:

  1. Do I want to select my own mix of individual funds?
  2. Am I comfortable deciding how much to invest in each fund?
  3. Do I have the time to keep an eye on my investments and make changes as I get closer to retirement?

If the answer to any of these questions is yes, you might be interested in the Build and Monitor approach to investing. If the answer to any of these questions is no, you might be interested in the One-Step Investing approach.

If you choose from the seven investment funds as part of the Build and Monitor approach to investing, you will be responsible for monitoring your account balances and periodically rebalancing if necessary to maintain your investment objectives.

The One-Step Investing approach is designed for those who answered no to any of the questions above. If you are not interested in selecting, monitoring or making changes to your investments, the Retirement Strategy Fund might be right for you.

More information on both WSIB’s TAP program and the Self-Directed Investment Program is available in the Plan 3 Investments section.

If you do not select an investment program

What happens if I don’t make a selection? Your contributions will default into the Self-Directed Investment Program. In this case, all your contributions will be invested in the Retirement Strategy Fund that assumes you’ll retire at age 65. However, you can change your investment selections at any time.

Retirement age and service credit requirements

Retirement with a full benefit: Age 65. If you have at least 10 years of service credit and you’re age 65, you can retire with a full benefit. If you have at least five years of service credit, you can retire at age 65 with a full benefit if you earned at least one of your five years of service credit after age 44.

How it works: You’re age 47 and have five years of service credit. You earned three years of service credit after the age of 44. You choose to leave public service and begin drawing from the defined contribution part of your plan. You plan to delay receiving your defined benefit until age 65. Because you have earned at least one year of service credit after age 44, you can retire with a full benefit at age 65 even though you only have five years of service credit.

Early retirement with a reduced benefit: Ages 55 to 64 with at least 10 years of service credit. If you retire early, your monthly benefit is reduced to reflect that you will receive it for a longer period of time. The earlier you retire, the larger the reduction.

There is less of a benefit reduction for early retirement if you have 30 or more years of service credit. Your benefit will be reduced by 5% for each year (prorated monthly) before you turn age 65. Again, the earlier you retire, the larger the reduction.

Leaving employment before you’re eligible to retire

Your employer contributions

The defined benefit part of your plan is designed to provide you with a source of income throughout your retirement. For this reason, you can’t withdraw the contributions your employer makes to this part of your plan.

Your contributions

In Plan 3, it is possible to withdraw your contributions and investment earnings from your defined contribution any time after you leave all public service. However, withdrawal could reduce an important source of your retirement income.

Plan 3 members, if you have at least 20 years of service credit when you leave employment and do not start receiving your defined benefit, it will increase by about 3% each year you delay receiving it, up to age 65.

Plan 3 annuities

An annuity purchase is a way to convert your investments to a guaranteed lifetime income stream, providing the security of a set monthly payment that can cover part or all of your fixed expenses.

However, flexibility is not a feature of annuities. If your fixed expenses increase, annuities do not allow you to adjust payment amounts to meet changing needs. With annuities, you are trading market risk and account growth for the guarantee that you will not outlive your account balance. For more information about annuities, including the TAP Annuity, visit purchasing an annuity.


Asset mix:
An investment portfolio that is invested in any combination of the three major classes of assets: (1) cash and equivalents, (2) fixed income instruments (bonds), and (3) equity instruments (common stocks or ordinary shares).
Average Final Compensation (AFC):
The monthly average of your 60 highest paid consecutive service credit months.
Cost-of-Living Adjustment (COLA):
In Plan 2 and in the defined benefit part of Plan 3, on July 1 of every year following your first full year of retirement, your monthly benefit is adjusted by the percentage change in the Consumer Price Index, to a maximum of 3% per year. This percentage change can increase or decrease your benefit.
Defined benefit:
A predetermined retirement benefit, also called a pension plan. • Plan 2 defined benefit: 2% x your SCY x your AFC. Both you and your employer make contributions to your defined benefit. • Plan 3 defined benefit: 1% x your SCY x your AFC. Your employer makes contributions to the defined benefit part of your plan.
Defined contribution:
For Plan 3 members, an amount based on your contributions and the performance of the investments you choose. Investment returns (both gains and losses) are applied to your account.
Early retirement:
In most cases, if you retire before you turn age 65, your monthly benefit is reduced to reflect the fact that you will receive it over a longer period of time. The amount of the reduction depends on how much younger than age 65 you are when you retire and the amount of service credit you have.
Full retirement:
For all members, a retirement benefit that is not reduced because you retired from public service at age 65.
Interest or interest rate:
An amount that your contributions earn.
Normal retirement:
The age you’re entitled to receive a full retirement benefit.
Your retirement benefit. Portfolio: A collection of investments. Return: A measure of how your investments perform. Returns consist of interest, dividends, and gains or losses in the value of the principal. Your investment returns can be positive or negative.
The probability that an investment will lose value or fail to gain in value.
Service credit years (SCY):
We calculate your service credit years by dividing your total service credit months by 12. Twelve months equals one year of service credit. For more information about service credit earned for your system (PERS, SERS or TRS), see your member handbook.
The point at which you have earned a defined benefit. • Plan 2 members are vested after earning five years of service credit. • In Plan 3, you are vested after earning 10 years of service credit in most cases or after five years of service credit, depending on your age and when your service credit was earned. However, you have no vesting requirements for the defined contribution part of your benefit and may take distributions at any time after you leave public employment.
Beneficiary Designation

Members, you can update your beneficiary information from your online retirement account. Select “My Account” in the navigation menu and then “View/Edit” beside “Beneficiary.”

(If you prefer to fill out and mail in a printed form, select this link.)