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Get Up to Speed on Pensions Back to Top |
New to the Legislature or state pensions? Knowledgeable about pensions, but want a refresher or an update on current events? This webinar provided by OSA staff is for you! At the end of this webinar, you will walk away with an understanding of some pension basics like who’s covered, who governs our state pensions, how they are funded, how well-funded they are, and a better understanding of current events and how they affect pensions.
Recording of the OSA webinar available
here. [Video presentation, 57:39] Portions of the Get Up to Speed on Pensions webinar are linked below to highlight certain subjects.
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What is a Pension?
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A pension provides guaranteed lifetime income in retirement to members that satisfy the benefit eligibility requirements. It is also referred to as a “defined benefit” because the guaranteed income is based on a benefit formula defined in the plan document or law.
Get Up to Speed on Pensions [4:37] – [6:18] [2-minute video presentation]
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Washington State Retirement Systems Back to Top |
Washington State has different pension systems that vary based on an employee’s occupation and employer, including public employees, K-12 employees, and public safety personnel. These systems are administered by the Department of Retirement Systems (DRS). A full list with details of the various pension plans is available on the
DRS’ website.
Get Up to Speed on Pensions [7:14] – [9:01] [2-minute video presentation] Each retirement system has a unique covered population. Individual plans (or tiers) within each retirement system vary by number of members, employers, and benefit design. The most recent information regarding member salary, age, obtained service credits, and retirement benefits can be found
here.
Get Up to Speed on Pensions [10:22] – [14:30] [4-minute video presentation]
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WA State Pension Plan Design Back to Top |
The benefit design a member is eligible for is based on which retirement system a member belongs, when they were hired, and if they selected a plan 2 or hybrid plan 3 benefit, if applicable.
 A summary of the individual plan provisions can be viewed
here and full details can be found on the
DRS’ website. More information can also be found in the
Retiring Early in the Washington State Retirement Plans education presentation.
Get Up to Speed on Pensions [9:01] – [10:22] [2-minute video presentation] For a deeper dive into the history of Washington pension plan design, please visit our
Historical Background page.
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Cost-Of-Living Adjustments
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Hire date could determine if a member is eligible for annual
cost of living adjustments (COLAs) in retirement. In addition to the information on OSA’s website linked above, the Department of Retirement Systems maintains information on the cost-of-living adjustments available to plan members. Click
here for more information on DRS's website.
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WA State Pension Plan Governance Back to Top |
Pension plan governance plays a critical role in structuring and delivering benefits to plan members. Washington state’s governance has also evolved over the years to the system that is in place today that is summarized in the following graphic.
 The following videos (from 2009) provide additional background on pension governance today. There is additional information on the various roles and general timeline when it comes to funding the pension plans in the
Funding Process in Washington section of this webpage. For a deeper dive into the history of Washington pension plan governance, please visit our
Historical Background page.
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Pension Plan Funding Basics Back to Top |
The actual cost of a pension plan is equal to the cost of benefits paid plus expenses minus the actual returns on invested contributions. The timing on contribution payments will determine the actual total costs expected to be covered by investment returns as illustrated in the following graphic.
Washington State’s funding policy pays over time with the goal of fully funding each member’s benefit by the time they retire. More specific funding goals are found in statute and summarized on our
Pension Funding Intent webpage. For more information on pension plan funding, including the following topics, please see
Get Up to Speed on Pensions [14:53] – [24:23] [10-minute video presentation]
- Intergenerational equity
- Unfunded actuarial accrued liability (UAAL)
- Investing pension assets
The following links are to outside resources that discuss more details relating to actuarial science and plan funding: |
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Funding Process in Washington
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Pension funding in Washington is determined by the funding policy set by the Legislature and includes the following steps:
Washington State Investment Board (WSIB) sets investment strategy. OSA calculates contribution rates.
Select Committee on Pension Policy (SCPP) may recommend contribution rates.
Pension Funding Council (PFC) and the
Law Enforcement and Fire Fighters’ Retirement System (LEOFF) Plan 2 Board adopt contribution rates. Legislature may adjust contribution rates. DRS charges contribution rates. Employers and employees pay required rates.
For additional details, please see
Get Up to Speed on Pensions [24:23] – [29:01] [5-minute video presentation] For more details on the contribution rate-setting process or the pension related authority granted to specific agencies, please visit our webpages on
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Current and Projected Contribution Rates
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The State Actuary calculates and certifies contribution rates based on the funding policies, methods, and assumptions set in current law to determine how much employees and employers should pay (as a percent of total pay) to prefund the benefits of the systems. Current contribution rates are available on the
DRS website. Projected contribution rates can be found on OSA’s
Contribution Rate Projection page.
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Glossary
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For a glossary of pension and actuarial terms, click
here.
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