Several bills are pending in the Legislature, which would provide a “one-time” cost of living increases to retirees in PERS/TRS 1 retirement plans. Because these are closed plans (that is, there are no new workers to pay retirement savings into them), WSAC worries that a well-meaning attempt to help low-income retirees will end up costing taxpayers without really helping those in need.

The current PERS/TRS 1 increase bills are:

  • HB 1390 – This bill would provide a one-time 3 percent increase to the retirement benefits of retirees in the Public Employees’ Retirement System and the Teachers’ Retirement System Plans 1, up to a maximum of $62.50 per month. This bill has not moved so far this year (it was introduced last year), but remains eligible for passage on the House Floor.
  • SB 6165 – This bill would provide a one-time 1.5 percent increase to the retirement benefits of retirees in the Public Employees’ Retirement System and the Teachers’ Retirement System Plans 1, up to a maximum of $22 per month. This bill was heard last week, and WSAC testified with concerns. Interestingly, no one testified in favor of the bill: retirees testifying said it did not help them enough.

What’s wrong with giving retirees a cost of living allowance?

Nothing is wrong with providing a reasonable cost-of-living allowance to those retirees who need it. WSAC would prefer to target those at the lower end of the benefit scale so that more significant increases can help those with the greatest need instead of a flat percentage spread out to the entire pool. Granting a simple percentage increase to everyone is problematic because:

  • As a matter of simple math, those who need the most will get the least, while those better off will get the most;
  • The cost to the fund is too great if everyone is increased by the same percentage. These retirement funds are generally closed, with no new entrants and very few (fewer every year) workers paying into them. Any shortfalls will have to be made up by county taxpayers.
  • Increases to one class of retirees strikes others as unfair, and neither the state nor the counties can afford to make it fair by providing increases to every retiree in every plan.
  • The “bow wave” is a problem: increased costs tend to carry forward, so increases are not “one-time”; they are monthly costs to the fund from that point on.

WSAC will continue to work with everyone involved to find responsible solutions that keep the retirement accounts solvent, treat all retirees equitably, and help those in need.