Washington

Overview

The Washington Department of Retirement Systems (DRS) is the primary state retirement system in Washington, administering retirement benefits for all employees of the state, public school teachers, and most employees of political subdivisions that have elected to participate. The cities of Seattle, Tacoma, and Spokane maintain retirement plans for their general employees and many cities maintain retirement plans for firefighters. The DRS administers 11 defined benefit plans and five defined contribution plans.

The other state retirement system is the Washington Law Enforcement Officers' and Firefighters Plan 2.

The DRS governance structure is different from most other state retirement systems: rather than a governing board, the DRS is a state agency whose director is appointed by the governor. DRS assets are managed by the Washington State Board of Investment.

Plan Design

Most new hires in Washington may choose between a defined benefit plan and a hybrid, DB-DC plan. Public safety employees participate only in a defined benefit plan.

According to the US Government Accountability Office, 91 percent of employees of state and local government in Washington participate in Social Security.

Access plan design detail

Authorizing Statutes and Board Structure

The Select Committee on Pension Policy, made up of 20 members, including eight legislators, is assigned the following powers and duties:
(1) Study pension issues, develop pension policies for public employees in state retirement systems, and make recommendations to the legislature;
(2) Study the financial condition of the state pension systems, develop funding policies, and make recommendations to the legislature;
(3) Consult with the chair and vice chair on appointing members to the state actuary appointment committee upon the convening of the state actuary appointment committee established under RCW 44.44.013; and
(4) Receive the results of the actuarial audits of the actuarial valuations and experience studies administered by the pension funding council pursuant to RCW 41.45.110. The select committee on pension policy shall study and make recommendations on changes to assumptions or contribution rates to the pension funding council prior to adoption of changes under RCW 41.45.030, 41.45.035, or 41.45.060.

Details regarding the composition of these and other retirement boards is accessible via the Retirement and Investment Board Characteristics search tool located at the bottom of this page.

Fiduciary Duty/Prudence Standard

Revised Code of Washington 43.33A.140 describes the Washington State Board of Investment’s investment standard of care, as follows:
The state investment board shall invest and manage the assets entrusted to it with reasonable care, skill, prudence, and diligence under circumstances then prevailing which a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an activity of like character and purpose.
The board shall:
(1) Consider investments not in isolation, but in the context of the investment of the particular fund as a whole and as part of an overall investment strategy, which should incorporate risk and return objectives reasonably suited for that fund; and
(2) Diversify the investments of the particular fund unless, because of special circumstances, the board reasonably determines that the purposes of that fund are better served without diversifying. However, no corporate fixed-income issue or common stock holding may exceed three percent of the cost or six percent of the market value of the assets of that fund.
 

Legal Protections of Retirement Benefits

No explicit constitutional protection for public pension benefits, but courts provide protection based on impairment of contract principles. Bakenhus v. City of Seattle, 296 P.2d536 (1956) (public pension rights are contractual, based on a state promise made when the employee enters employment); Leonard v. City of Seattle, 503 P.2d 741, 747-48 (Wash. 1972) (pension rights vest "day to day" and year to year" creating a property right which vests completely upon retirement); Retired Public Employees Council of Washington v. Charles, 62 P.3d 470 (Wash. 2003) (appropriations bill lowering employer contributions did not violate the state constitutional prohibition against impairment of public contracts absent any indication that the lower contribution prevented the successful operation of the system or lessened the value of the retirement system). (WA CONST., Article 1, §23) Source: Robert Klausner, Esq., State Constitutional Protections for Public Sector Retirement Benefits
 

See also the following search tools: