The legislature of the Washington State has provided pension coverage over the past so many decades through the Department of Retirement Systems to cover the following employees:
- State or Public Employees (Public Employees’ Retirement System) (PERS)
- City and Public Safety Employees (PSERS)
- Teachers (TRS)
- Classified Employees of Public Educational Institutions (SERS)
- Law Enforcement Officers and Fire Fighters (LEOFF)
- State Patrol Officers (WSPRS)
- Judges (JRS)
The largest group among the above members is the State or Public Employees.
Administration of Pension Plan
The State Actuary oversees the Washington Public Employees’ Retirement System. It evaluates the plan on an annual basis. The data is employed to recommend adjustments to the rates of contribution to the funding of the Pension Council. The State Actuary evaluates the amount of money that has to be annually contributed to take care of the pension benefits the employees are projected to earn during the tenure of public service.
An employee becomes vested after earning five or more years of service credit in the retirement system. The employee earns the service credit by putting in seventy hours or more of contribution in thirty days, earning a service credit equivalent of one month.
Features of the PERS (Public Employees Retirement System)
The contribution rate for the retirement system in Washington State is 6.00% by the employee and 1.38% by the employer.
The employee can request an estimate of his retirement benefits two years prior to retiring. The monthly pension benefit is calculated by taking the final average compensation and multiplying it by years of credit service (a maximum of thirty). This product is then multiplied by a factor of 2%. The final average compensation is calculated by taking the average of the monthly pay from the highest earned two-year period in which the employee has earned the service credit.
Receipt of Pension Benefits
The earliest that an employee can start receiving the pension benefit will depend on the age and the earned service credit. The employee can retire at any age after accumulating thirty or more service credit years. Retirement can also be taken at age 55 with twenty five or more service credit years or at age 60 with five or more service credit years. If the employee wants to retire at a later date, then the retirement can be taken at age 65 with five or more service credit years.
The employee can make a request in writing for an official estimate of the expected monthly pension benefit. When the employee dies after retirement, the survivor has to contact the Department of Retirement Systems without losing much time. The beneficiary designation can be updated by the employee at any given time when the employee is an active member. In case the primary beneficiary does not survive the employee, a contingent beneficiary has to be appointed. The pension benefit will finally go to the estate of the employee if even the contingent beneficiary does not survive the employee member.
The pension funds in the state of Washington are being invested at a return of 5.5% per annum. This is also compounded on a quarterly basis on the contributions made by the employee towards the pension fund. As of April 2013, the active members were 291,711. There were 148,536 retirees. The trust fund assets are worth 67.9 billion dollars. 1.4 billion dollars is paid in retirement benefits every year. The level of funding is at 64%.
Pension Cost of Living Adjustment (COLA)
The employee can choose to take a reduction in the initial pension benefit and also receive a cost of living adjustment that is declared every year. This adjustment is generally dependent on the Consumer Price Index ever since it was legislated in 1987. The adjustment is being done at 1.7% during 2013-14.
Seattle Times has recently reported an analysis that was done on the Retirement System for Public Employees in the State of Washington This analysis was done employing data that was market-based. It pegged the gap between the current value of the pension funds and assets of almost 68 billion dollars to the future promised pension benefits. The pension sector is moving slowly to this market based stance where pension is being treated as a state debt. Changes in market value have to be recognized instantly now rather than waiting for many years to make it run smoothly as per the editorial.