Committee briefs PERS‑1/TERS‑1 COLA proposals; committee may revisit in 2026 session

Committee staff and presenters reviewed recent legislative proposals to provide cost‑of‑living adjustments (COLAs) for closed Plan 1 retirement systems (PERS 1 and TERS 1). Staff summarized the SEPP (Select Committee on Pension Policy) recommendation endorsed during the legislative session: an ongoing COLA indexed to the Seattle–Tacoma–Bellevue CPI with a 3 percent annual cap and a banking provision, implemented after a one‑time 3 percent payment in the first year to ease administration.

Melinda (staff/OAG support) briefed members on three bills from the session: House Bill 1292 and Senate Bill 5113 (SEPP‑endorsed companion bills implementing an ongoing COLA with a one‑time initial 3 percent bridge), Senate Bill 5085 (a merger proposal that would combine three closed plans and would also include COLA language), and House Bill 1474 (a narrower one‑time permanent increase targeted to lower pensions). She reminded members that action is not required today but that the committee can pursue additional briefings before the 2026 session.

Staff and OSA noted the interplay of enacted statutory changes (including the recently passed bill that adjusted the timing of UAL payments and revised the assumed rate of return) and said actuarial fiscal notes for COLA bills would be updated to reflect the most recent valuation and the economic assumptions ultimately adopted by the Pension Funding Council.

Stakeholders who testified during the meeting urged the committee to adopt durable inflation protection for Plan 1 retirees. Associations representing school retirees and emergency‑services retirees asked the committee to keep the SEPP recommendation or to prefer the merger bill that included COLA language; municipal associations urged caution about long‑term employer costs and asked for protections to avoid shifting unplanned costs to cities and counties.

Staff outlined next steps: committee members may request additional briefings or wait until the 2026 session when retained bills will return; staff will publish updated fiscal materials and agency responses in advance of the October meeting. No formal committee action on COLA policy was taken during this session.