Thursday, February 29, 2024

Plan 1 Pension Bills Pass Appropriations Committee

Plan 1 Pension Bills Pass Appropriations Committee

On Thursday, February 23, the Washington State House of Representatives Appropriations Committee passed Substitute House Bill 1057 and House Bill 1201, bills that relate to the Plan 1 (PERS 1 and TRS 1) pension systems.

SHB 1057, which will provide a one-time 3% cost-of-living-adjustment to Plan 1 retirees not to exceed $110 per month, unanimously passed the committee with an amendment.  The amendment, introduced by Rep. Steve Bergquist (D, Renton), alters the bill to have it financed not through a specific appropriation, but through funds already allocated to Plan 1.  Additionally, the amendment delays the payment of ongoing funds for the one-time Plan 1 COLAs granted in 2018, 2020, and 2022.  This change will not revoke the one-time increases Plan 1 retirees received.

Before passage of the bill, the prime sponsor, Rep. Drew Stokesbary (R, Auburn) spoke to the importance of providing COLAs to retirees on fixed incomes, especially during times of steep inflation.  On February 20, the Senate Ways & Means Committee passed the companion bill SB 5350 without amendment.  Both bills now wait to be scheduled for a floor vote in their respective chambers.

The Appropriations Committee also passed HB 1201, a bill that ends paydowns of the TRS 1 and PERS 1 unfunded liabilities in 2024 and 2025 respectively, the years the plans are anticipated to reach full funding.  On February 20, the Senate Ways & Means Committee passed the companion bill SSB 5294 with an amendment to decrease funding over a more gradual trajectory.  Both bills now also wait to be scheduled for a floor vote in their respective chambers.

PERS 1 and TRS 1 are the only pension plans administered by the Department of Retirement Systems that do not receive automatic COLAs.  Plans 2 and 3 members receive automatic COLAs of up to 3% every July based on inflation.  If inflation exceeds 3%, the excess amount is “banked” and used the next year inflation is below 3%.

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