OLYMPIA — Legislation signed into law this week by the governor will protect public employee’s retirement plans from any budget moves because of the pandemic.
Average final salary and earned service credits must include any compensation that was forgone as a result of reduced work hours, mandatory leave without pay, temporary layoffs, furloughs, reductions to the current pay, or other similar measures resulting from the COVID-19 budgetary crisis.
Senate Bill 5021, sponsored by Sen. Sam Hunt (D-22) contains two overlapping provisions. The first provides that pension plans would continue as if an employee did not have reduction in salary or earned service credit because of budget adjustments brought on by the pandemic. The second provision states that the pension benefit of an employee is not reduced by participating in an employment insurance shared-work program.
“There should be no penalty on retirement accrual for public employees if they are subject to either decreased salary or by being a part of the shared-work program,” said Hunt. “These employees are fundamental to our communities functioning and staying safe. They are our teachers, our firefighters, our municipal court employees. And their public service should be honored as much when they go to retire.”
Most of the state’s public employees are covered by a pension plan administered by the state Department of Retirement Systems (DRS). Since the pensions are based on average final compensation and years of service, an employee who is furloughed or placed on unpaid leave could potentially face reduced pension benefits. DRS estimates it retires around 12,000 people a year, about half of whom will require additional considerations for pension plans due to decreased salary or participation in a shared-work program. Employees who were furloughed were encouraged to utilize the shared-work program.
This provision applies prospectively and retroactively to July 28, 2013, to be in accordance with federal mandates.