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.
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 (5)
Starting in 2026, retirees who were on the rolls as of July 1, 2025 will receive uncapped 3% annual COLAs — a significant benefit for retirees, especially those with higher monthly benefits. However, because the benefit scales with the monthly benefit amount, wealthier retirees (e.g., those with >$4,000/month benefits) receive substantially more in absolute dollars than lower-income retirees, and the state’s long-term liability increases without a cap.
FinancialPeopleRef: Sec. 1(6) & Sec. 2(6)The bill introduces tiered COLAs with caps ($62.50 or $110), which provide meaningful but modest inflation relief — especially for lower-income retirees. However, the caps effectively limit real purchasing power gains for those with higher benefits, and the phased rollout (e.g., 1.5% for 2017 retirees) means some retirees receive less than others for no clear actuarial or equity rationale.
FinancialPeopleRef: Sec. 1(1)–(5) & Sec. 2(1)–(5)Disability and survivor benefit recipients are excluded from COLAs, despite facing similar or greater cost-of-living pressures — especially disabled retirees who may have higher medical expenses and fixed incomes. This creates inequity within the retirement system and leaves a vulnerable group behind.
FinancialPeopleRef: Sec. 1(7) & Sec. 2(7)The bill increases state pension liabilities, which could strain the retirement systems’ funding ratios over time — potentially requiring future benefit cuts or tax increases elsewhere to maintain solvency, indirectly affecting all Washingtonians through higher taxes or reduced public services.
FinancialLean peopleRef: Fiscal Impact sectionBy excluding disability and survivor beneficiaries from COLAs, the bill may exacerbate financial hardship for disabled retirees — increasing reliance on public assistance programs (e.g., SNAP, Medicaid, housing assistance), which can strain local social service and public safety resources.
Public SafetyPeopleRef: Sec. 1(6) & Sec. 2(6)
Potential Concerns (5)
Starting in 2026, retirees who were on the rolls as of July 1, 2025 will receive uncapped 3% annual COLAs — a significant benefit for retirees, especially those with higher monthly benefits. However, because the benefit scales with the monthly benefit amount, wealthier retirees (e.g., those with >$4,000/month benefits) receive substantially more in absolute dollars than lower-income retirees, and the state’s long-term liability increases without a cap.
FinancialPeopleRef: Sec. 1(6) & Sec. 2(6)The bill introduces tiered COLAs with caps ($62.50 or $110), which provide meaningful but modest inflation relief — especially for lower-income retirees. However, the caps effectively limit real purchasing power gains for those with higher benefits, and the phased rollout (e.g., 1.5% for 2017 retirees) means some retirees receive less than others for no clear actuarial or equity rationale.
FinancialPeopleRef: Sec. 1(1)–(5) & Sec. 2(1)–(5)Disability and survivor benefit recipients are excluded from COLAs, despite facing similar or greater cost-of-living pressures — especially disabled retirees who may have higher medical expenses and fixed incomes. This creates inequity within the retirement system and leaves a vulnerable group behind.
FinancialPeopleRef: Sec. 1(7) & Sec. 2(7)The bill increases state pension liabilities, which could strain the retirement systems’ funding ratios over time — potentially requiring future benefit cuts or tax increases elsewhere to maintain solvency, indirectly affecting all Washingtonians through higher taxes or reduced public services.
FinancialLean peopleRef: Fiscal Impact sectionBy excluding disability and survivor beneficiaries from COLAs, the bill may exacerbate financial hardship for disabled retirees — increasing reliance on public assistance programs (e.g., SNAP, Medicaid, housing assistance), which can strain local social service and public safety resources.
Public SafetyPeopleRef: Sec. 1(6) & Sec. 2(6)
Who Is Most Affected
Low- and moderate-income retirees (especially those with monthly benefits under $2,500) will see meaningful but capped increases — improving real income stability, though not fully offsetting inflation. The uncapped 3% COLA for 2025 retirees is especially valuable for those who retired more recently and have higher benefit levels.
Higher-income retirees (e.g., those with monthly benefits over $4,000) will receive the largest dollar increases — especially those who retired in 2025 and receive uncapped 3% COLAs. These individuals are disproportionately concentrated in urban, higher-earning cohorts and may not need the benefit as much as lower-income retirees.
Disabled and survivor beneficiaries are explicitly excluded, despite often having higher fixed costs (e.g., medical, assistive devices) and lower alternative income sources. This group is likely to experience relative financial decline over time.
The state’s pension systems (TRS and PERS) will face higher long-term liabilities, which could pressure future funding decisions — potentially leading to higher employer/employee contribution rates or future benefit reforms that could affect current and future workers.
Local governments that employ teachers and public workers may face higher employer contribution rates if the pension systems become underfunded due to increased liability — potentially affecting public services or local tax levies.