The bill amends Washington state retirement system laws to enhance the actuarial funding of various pension systems. It establishes a systematic funding process aimed at fully funding specific retirement plans and amortizing unfunded liabilities within designated timeframes. Key provisions include the suspension of contribution rates during the 2025-2027 and 2027-2029 fiscal biennia, and the requirement to amortize costs for benefit improvements over a fixed 15-year period. Additionally, the bill revises long-term economic assumptions, reducing the inflation growth assumption from 3.5% to 2.75% and the investment rate of return assumption from 8% to 7.25%.

The legislation also outlines methods for calculating employer contribution rates to ensure they adequately cover normal costs and amortize unfunded liabilities. It specifies that costs for benefit improvements in the public employees' and teachers' retirement systems will be amortized over a 15-year period, with a zero rate for certain intervals. The bill introduces new supplemental rates for various retirement systems to fund benefit increases, changes the calculation period for automatic postretirement adjustments from ten years to fifteen years, and sets minimum contribution rates for employers. Effective from July 1, 2025, to June 30, 2027, these changes aim to address unfunded actuarial accrued liabilities and enhance the financial stability of the retirement systems, with the act deemed necessary for the immediate preservation of public peace, health, or safety.

Statutes affected:
Original Bill: 41.45.010, 41.45.060, 41.45.030
Bill as Passed Legislature: 41.45.010, 41.45.035, 41.45.060, 41.45.030, 41.45.150
Session Law: 41.45.010, 41.45.035, 41.45.060, 41.45.030, 41.45.150