HB 2034: Concerning termination and restatement of plan 1 of the law enforcement officers' and firefighters' retirement system. - Washington

Engrossed Second Substitute Bill → Second Substitute Passed Legislature · 6 edits

MODERATE

This bill terminates the long-dormant LEOFF Plan 1 and replaces it with a new restated system to prevent future unfunded liabilities, while simultaneously updating the legal definitions and administrative rules for all Washington public retirement systems to reflect this new structure. The changes ensure that the new system is actuarially sound and compliant with federal tax laws, while preserving existing benefits for current retirees and members.

Scope change

The bill's scope expanded to include the creation of a new 'Restated Law Enforcement Officers' and Firefighters' Retirement System' (Plan 1) and a new 'Pension Surplus Holding Account,' while redefining the scope of all other retirement systems to reference the new chapter number.

TIMELINE

The termination and restatement of LEOFF Plan 1 is now scheduled to take effect on June 30, 2029, replacing the previous date of June 30, 2024.

FISCAL

A new 'Pension Surplus Holding Account' was created to hold remaining assets from the old Plan 1 after the transfer of actuarially sufficient funds to the new system.

DEFINITION

Throughout the bill, references to the new chapter created by this act were updated from 'section 507' to 'section 503' to correct the statutory citation.

REQUIREMENT

The funding requirements for the new restated system were adjusted to transfer 110% of the actuarial present value of projected benefits, with an independent audit of this calculation.

New study requirements were added for the Select Committee on Pension Policy to evaluate oversight entities and the administration of pension boards.

ELIGIBILITY

Definitions of 'Plan 1' and 'Plan 2' were updated to reflect the termination of the old Plan 1 and the establishment of the new restated system.

Second Substitute Bill → Engrossed Second Substitute Bill · 3 edits · Mar 12, 2026

MINOR

This bill updates the legislative title to reflect that a new retirement chapter has been enacted, changing references from 'section 504' to 'section 507'. It also adds three new RCW sections (41.26.715, 41.26.720, 41.26.730) to the list of amended statutes, indicating the creation of a new retirement system chapter. These changes formalize the restatement of the law enforcement and firefighter retirement system under a new chapter number.

Scope change

The bill's scope now explicitly includes a new chapter (created in section 507) alongside the existing law enforcement and firefighter retirement system (chapter 41.26), expanding the legal framework governing these retirement plans.

TECHNICAL

Added references to new RCW sections 41.26.715, 41.26.720, and 41.26.730 in the bill's summary of amendments, indicating the creation of a new retirement chapter.

Changed all references to the new retirement chapter from 'section 504' to 'section 507' throughout the bill text.

DEFINITION

Updated the definition of 'Plan 1' to specify that members transferred to the new retirement system are covered under the chapter created in section 507.

Bill → Substitute Bill · 6 edits

MODERATE

The bill was amended to strengthen protections for surplus retirement assets, clarifying that members have no right to surplus funds once liabilities are satisfied. It also added specific audit requirements for asset transfers, updated investment rules to include 'qualified or eligible funds,' and included a provision to revert funds to the plan with interest if federal law requires it. Additionally, a new vesting incentive for nonvested members was added.

Scope change

The bill's scope was expanded to include a new vesting benefit for nonvested members and added specific audit and reversion procedures for surplus assets.

FISCAL

Added a requirement for an independent audit by the pension funding council to verify the actuarial calculation of assets transferred to the new fund.

Added a provision requiring that if funds are reverted to the state, they must be returned to the plan with interest if federal law mandates it.

ELIGIBILITY

Added a new benefit for nonvested members who elect to retire immediately, granting them five years of additional service credit and a $25,000 lump sum.

REQUIREMENT

Modified the investment rules to allow commingling funds with other 'qualified or eligible' funds rather than just 'other funds'.

Added a requirement for a direct trustee-to-trustee transfer of assets and specified that the state actuary must determine the present value as of June 30, 2029.

DEFINITION

Clarified that members have no right to surplus assets once all plan liabilities are satisfied, changing the previous language about 'actuarial soundness'.

Substitute Bill → Second Substitute Bill · 5 edits

MODERATE

This bill updates the legislative session year from 2025 to 2026 and changes the bill number. It modifies the funding target for the restated law enforcement retirement fund from 120% to 110% of projected benefits and directs $569 million of surplus funds to a climate commitment account. Several expiration dates for temporary pension protections were extended from 2025 to 2030, and the statute of limitations for legal challenges to the plan termination was extended to December 31, 2027.

Scope change

The bill's scope remains focused on terminating and restating the LEOFF Plan 1 retirement system, but the financial mechanics and specific timelines for related pension protections have been adjusted.

FISCAL

The required transfer amount for the restated LEOFF Plan 1 fund was reduced from 120% to 110% of the actuarial present value of projected benefits.

A specific allocation of $569,000,000 from the remaining LEOFF Plan 1 assets was added to be deposited into the climate commitment account.

TIMELINE

Temporary provisions allowing certain retirees to work without pension reduction were extended from July 1, 2025, to January 1, 2030.

The statute of limitations for filing legal challenges regarding the LEOFF Plan 1 termination was extended from June 30, 2027, to December 31, 2027.

TECHNICAL

The legislative session year was updated from 2025 to 2026, and the bill number was changed to reflect its status as a Second Substitute Bill.

Concerning termination and restatement of plan 1 of the law enforcement officers' and firefighters' retirement system.

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