Please Contact Your Senator.

 As feared, the “Plan 4” proposal that failed to make it out of the Senate on time was resurrected as part of the Senate budget.  SB 5851 could be voted on within the next few days and it’s critical that you call your Senator and ask them to VOTE NO on this poor policy.

As reported earlier, SB 5851 would create a new option for current and new employees.  Those choosing this option would enter a 401-K pension plan that would rely solely on the stock market returns.  Although this plan is “voluntary” it directly harms Plan 2 and 3 because it removes new entrants and shifts the cost to current Plan members. It also harms the State Investment Board’s ability to invest in stable, long term assets which will lower the returns and raise rates for everyone.

All Senators need to be contacted, but this is especially true if your Senator is one of the following:

Eide tracey.eide@leg.wa.gov                         Schoesler  mark.schoesler@leg.wa.gov

Hargrove  mark.hargrove@leg.wa.gov            Shin  paull.shin@leg.wa.gov

Hatfield  brian.hatfield@leg.wa.gov               Benton don.benton@leg.wa.gov

King curtis.king@leg.wa.gov                         Roach  pam.roach@leg.wa.gov

SB 5851 is unnecessary

• Plans 2 and 3 are fully funded and among the best-managed in the country.
•  The State of Washington already provides a 100% employee contribution, Deferred Compensation program and a plan that combines a deferred contribution with a defined benefit plan (PERS 3). 
•  By the State’s own admission, very few employees are interested in joining this proposed plan.
•  There is already a plan in place to pay back the unfunded liability in Plan 1 and rates have been adjusted to meet the anticipated economic challenges in front of us.

SB 5851 is harmful to existing PERS plans and to employees

• The creation of this new plan would require funds be held from investments to account for the new plan members right to withdraw their money at any time. This need for liquidity will cost the other plans in investment returns.  Every new member joining this new plan would increase the risk to the State Investment Board’s ability to make sound, long term investments. That will harm the entire system.
• SB 5851 will increase Plan 2 and Plan 3 member rates.  Why should members of other plans subsidize the rates for a plan they don’t even want?
• While the plan is voluntary, the choice is irrevocable.
• Making the new plan the default plan will drive up the cost of the other plans even higher. Putting people who don’t make a choice in the plan that requires the most member involvement makes no sense.
• The fiscal note states that should investment returns exceed the assumed rate of return, then any savings in this plan could become additional costs.  The trust fund has gained an 8.57% return since inception in 1992 and the State Investment Board has outperformed the state’s assumed rate of return in 14 out of 20 years.