Everyone should be aware that the Legislature will start a new session on January 10, 2022. It is a sixty-day session and will be a “virtual” session like the last one. There have already been a lot of bills pre-filed. Several are targeted at fixing some of the anti-police bills passed in the last session. Hopefully they will correct these problems.
LEOFF 2
As of now only one pension bill impacting LEOFF has been pre-filed. It is HB 1701. It impacts only LEOFF 2 and, if passed, would make significant improvements in the pension. For example, if you are LEOFF 2 and retired before 2/2/2021 with 25 years of service you could receive a payment of $30,000. If you retired after that date you would have additional options, but it appears that every LEOFF 2 member will get either a lump sum payment or a pension increase.
We will be putting out more information as it becomes available. Remember it is a proposed bill and, while it appears likely to pass, it still has to make it through the session and get the Governor’s signature—don’t buy a new car yet.
This bill purchases the following LEOFF 2 benefit improvements using the LEOFF 2 Benefit Improvement Account:
- Members retired as of February 1, 2021, receive a one-time lump sum payment of $100 per month of service credit
- Provides a minimum lump sum benefit of $20,000 to duty-death beneficiaries, and duty disability retirees
- Members new to LEOFF 2 after February 1, 2021, receive an increased multiplier for their years of service after 15 and up to 25 years
- Members active in LEOFF 2 as of February 1, 2021, have the option between the lump sum payment payable at retirement or the increased multiplier
This bill also allows retirees to purchase an annuity with their lump sum payment, with a required minimum payment of $20,000. Benefit improvements under this bill will begin January 16, 2023.
In addition to the benefit improvements, this bill also:
- Freezes LEOFF 2 contribution rates through the 2025 fiscal year
- Transfers funds from the LEOFF 2 Trust Fund to the Benefit Improvement Account to allow for the purchase of the benefit improvements using the Benefit Improvement Account
- Puts the current LEOFF 2 minimum rate funding policy into statute
- Creates an offset to ensure that the cost of the benefit improvements does not result in an increase to the plan’s contribution rates
LEOFF 1
We have yet to hear of any legislation impacting LEOFF 1. There is one rumor of an attempt being made to merge LEOFF 1 with TRS 1, but we think it is an old rumor based on the unsuccessful bill in the last session. We are trying to follow that rumor back to its source. Our best sources advise us that nothing impacting LEOFF 1 is planned or anticipated.
We need to remember that so long as the legislature is in session the danger exists. Part of the danger is because the surplus for LEOFF 1 was at $1.9 billion as of the 2020 Valuation. A new Valuation is due in July, and it is expected to be significantly higher. The LEOFF 2 Benefit Enhancement Account increased from $300 million to $460 million over the same period.
The underlying hope is that the move towards benefit enhancement for LEOFF 2 can be applied to LEOFF 1 as well. Stay tuned. It is a good time to contact your legislators and urge support for HB 1701. HB 1588 and HB 1589 are a couple of others that deserve support—there are more.
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