Employer Newsletter spring/summer 2011

2011 Legislation

The Legislature adjourned the 2011 session after passing five retirement-related bills. This legislative summary includes effective dates, dates signed by the Governor and a short description of each bill.

HB 1263:

PSERS Employer Definition
This law modifies the employer definition within PSERS to include correctional entities formed by PSERS employers under the Interlocal Cooperation Act (RCW 39.34).

Signed into law by the Governor April 14, 2011. Effective January 1, 2011.

HB 1625:

Default Investment Option for Plan 3
This law changes the investment option for new employees who default into membership in PERS, TRS or SERS Plan 3 by failing to choose a retirement plan within the allotted 90 days. The current default investment option is investing in the Commingled Trust Fund, called the Total Allocation Portfolio, or TAP. The new default investment option will be the Retirement Strategy Fund (also known as a target fund date) that assumes the member will retire at age 65 and is based on their birth year. The member will still retain the option to change his/her investment choices at any time.

Signed into law by the Governor April 15, 2011. Effective July 22, 2011.

ESHB 1981:

Retire/Rehire and Higher Education Retirement Plans
The law affects retirees by:

  • Limiting to 867 the hours a retiree from Plan 1 of PERS and TRS can work before a pension benefit is suspended. This limit applies to all retirees beginning January 1, 2012; and

The law affects higher education employees by:

  • Applying the return to work provisions of PERS, SERS, TRS and PSERS to higher education positions eligible for the Higher Education Retirement Plans (HERPs). This means that all PERS retirees who returned to work for a higher education institution and subsequently enrolled in a HERP will only be able to work 867 hours before suspension of the pension benefit. Previously, these retirees were treated as if they returned to work in an ineligible position, and were not subject to any limits;
  • Limiting the ability of higher education institutions and entities to offer HERPs only to exempt employees;
  • Prohibiting a higher education institution from offering participation in a HERP to any newly hired employee that has retired or is eligible to retire from a DRS-administered retirement system;
  • Giving newly hired employees eligible for participating in a HERP the option to participate in PERS or TRS Plan 3, or participate in a HERP;
  • Requiring the Office of the State Actuary to oversee an actuarial valuation of the guaranteed minimum retirement benefit provisions.
  • Discontinuing the guaranteed minimum retirement benefit provisions for all newly hired HERP participants;
  • Requiring higher education institutions to submit a percentage of HERP-covered employees’ salary to DRS to be invested by the Washington State Investment Board. These funds will be used to pay supplemental benefits to eligible HERP retirees. This provision is effective January 1, 2012;
  • Giving the Select Committee on Pension Policy the authority to review HERP benefits and make recommendations to the Legislature, and;
  • Limiting General Fund payments to higher education institutions and entities to no more than six percent of salary in matching contributions to HERP participants.

    Signed into law by the Governor: June 15, 2011. Effective July 1, 2011.

SHB 2021:

Eliminating the Plan 1 Annual Adjustment for PERS and TRS Retirees
This law eliminates an automatic annual benefit increase for retirees/beneficiaries in PERS and TRS Plan 1 after June 30, 2011. It does not existing benefits. The law also lowers the minimum employer contribution rates for the unfunded liability in both plans.

Signed into law by the Governor: May 16, 2011. Effective: June 30, 2011.

HB 2070:

Determining Average Salary When Calculating Retirement Benefits of Public Employees
This law requires the DRS to include qualifying compensation that was foregone during the 2011-2013 biennium in calculating the pension benefits of a retiring government employee. Qualifying compensation includes the three percent salary reduction for state employees. This applies to members of PERS, TRS, SERS, PSERS, WSPRS and LEOFF Plan 2.

Signed into law by the Governor: May 31, 2011. Effective: July 1, 2011.


If you have questions, please call ESS at 360-664-7200 (option 2) or 1-800-547-6657 (option 6, option 2).