SSB 5862
SignedSenate
TRS & PERS plan 1 COLA
Providing a cost-of-living adjustment for plan 1 retirees of the teachers' retirement system and public employees' retirement system.
- Introduced (completed)
- Committee (completed)
- Floor Vote (completed)
- Opposite Chamber (completed)
- Governor (completed)
- Signed (completed)
How does a bill become law?
- Introduced: The bill is filed and assigned a number.
- Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
- Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
- Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
- Governor: The Governor reviews the bill and decides whether to sign or veto it.
- Signed: The bill has been signed into law.
AI Analysis
This bill provides annual cost-of-living adjustments (COLAs) for retirees of the Teachers' Retirement System (TRS) and Public Employees' Retirement System (PERS) Plan 1, with the amount and cap varying by the year they were receiving benefits. Starting in 2026, some retirees will receive uncapped 3% increases.
- Provides annual cost-of-living adjustments (COLAs) for TRS and PERS Plan 1 retirees based on their monthly benefit amount.
- Sets different COLA percentages and caps depending on the year: 1.5% with a $62.50 cap for retirees who were on the rolls as of July 1, 2017 or 2019, and 3% with a $110.00 cap for retirees as of July 1, 2021–2023.
- Starting in 2026, the COLA for retirees on the rolls as of July 1, 2025 will be 3% of their monthly benefit with no cap.
- Excludes retirees receiving benefits under certain special provisions (e.g., disability or survivor benefits) from receiving these COLAs.
Who is affected
- TRS Plan 1 retirees — Retirees from the Teachers Retirement System (TRS) Plan 1 who were receiving benefits on or before July 1, 2025, will receive annual cost-of-living adjustments (COLAs) starting in 2026, based on their monthly benefit amount and subject to annual caps.
- PERS Plan 1 retirees — Retirees from the Public Employees Retirement System (PERS) Plan 1 who were receiving benefits on or before July 1, 2025, will receive annual cost-of-living adjustments (COLAs) starting in 2026, based on their monthly benefit amount and subject to annual caps.
- Retirees under special benefit provisions — Current and future TRS and PERS Plan 1 retirees who retired under specific special provisions (e.g., disability or survivor benefits under RCW 41.32.489, 41.32.540 for TRS or RCW 41.40.1984 for PERS) are excluded from these COLAs.
Pro/Con Analysis
Potential Benefits (3)
The bill provides a guaranteed annual cost-of-living adjustment for TRS and PERS Plan 1 retirees, helping to preserve their purchasing power against inflation.
FinancialPeopleRef: Sec. 1(1)-(6) and Sec. 2(1)-(6) establish annual percentage increases to monthly benefits.By increasing retirement income, the bill helps retirees afford rising healthcare and prescription drug costs, which are a major expense for this demographic.
HealthcarePeopleRef: Sec. 1(6) and Sec. 2(6) specify a 3% increase effective July 1, 2026, for those on the rolls as of July 1, 2025.The uncapped 3% increase for the 2025 cohort ensures that the adjustment keeps pace with inflation more accurately than the previous capped amounts, providing stronger financial security for a large group of retirees.
FinancialLean peopleRef: Sec. 1(6) and Sec. 2(6) remove the previous dollar cap for the 2025 cohort.
Potential Concerns (3)
The removal of the cap on the 3% COLA for the 2025 cohort creates an uncapped liability for the state, leading to significantly higher long-term fiscal obligations compared to previous capped years.
FinancialLean industryRef: Sec. 1(6) and Sec. 2(6) remove the dollar cap on the 3% COLA for beneficiaries on the rolls as of July 1, 2025.Because the COLA is calculated as a percentage of the monthly benefit, retirees with higher salaries and larger pension bases receive disproportionately larger dollar increases, concentrating the financial benefit among higher-earning public employees.
FinancialLean industryRef: Sec. 1(6) and Sec. 2(6) apply the 3% increase to the full monthly benefit amount without a cap.The bill excludes certain disability and survivor beneficiaries from receiving these cost-of-living adjustments, creating a disparity where similarly situated retirees do not receive the same inflation protection.
Rights & LibertiesLean industryRef: Sec. 1(7) and Sec. 2(7) explicitly exclude beneficiaries receiving benefits pursuant to specific disability or survivor statutes.
Who Is Most Affected
- TRS and PERS Plan 1 RetireesPositive Impact
TRS and PERS Plan 1 retirees will receive increased monthly benefits, directly improving their financial stability and ability to cover living expenses.
- State Government / General FundNegative Impact
The state government faces increased annual expenditures to fund these benefits, which may require reallocation of funds or additional revenue to maintain fiscal balance.
- Disability and Survivor Benefit RecipientsNegative Impact
Retirees receiving disability or survivor benefits under specific statutes are excluded from these COLAs, leaving them without this specific inflation adjustment.
- Active Public EmployeesMixed Impact
Active public employees may view this as a commitment to the value of their future retirement benefits, potentially influencing retention and morale, though the primary direct impact is on current retirees.