CURRENT PERS 2 members have the option of switching to a new retirement plan starting September 1, 2002.

Called PERS 3, the new plan divides retirement benefits into two components. It is known as a “hybrid plan.”

Members should take a careful look at the benefits and drawbacks of each plan before making their final decisions. View a table summarizing the pros and cons.

When members retire under PERS 2 they are guaranteed 2 percent of their average final compensation for every year of service in the system. That benefit cannot change or be taken away. PERS 2 is a “defined benefit” that does not rely on the performance of stocks or bonds.

Under PERS 3 the guaranteed benefit is cut in half to 1 percent of Average Final Compensation (AFC) times years of service. An additional 1 percent is based on investment returns and is therefore at risk (even the principal amount). Plan 3 was developed at a time when the stock market was skyrocketing and many workers who relied on those enormous returns are now rethinking their retirement plans. The Legislature created this new option to relieve the State of its legal obligation to retirees. Under Plan 3, employees assume one half of the risks.

Much attention has been paid to the transfer payment offered to switch from Plan 2 to Plan 3. It is extremely important to remember that this is simply your retirement money given back to you for giving up 1 percent of your guaranteed retirement benefit. It is not “new” money and should not be viewed as anything extra.

Council 2 has been working with the Department of Retirement Systems to develop educational materials and resources.

They can be reached at 1-800-547-6657 or in Olympia at 360-664-7066.

Their Web site address is: www.wa.gov/drs.