2012 Comprehensive Annual Financial Report - the City of Tukwila

CITY OF TUKWILA: 2012 CAFRNOTES TO THE FINANCIAL STATEMENTSPublic Safety Employee’s Retirement System (PSERS) Plan 2Plan DescriptionPSERS is a cost-sharing multiple-employer retirement system comprised of a single defined benefitplan, PSERS Plan 2. PSERS was created by the 2004 legislature and became effective July 1, 2006.PSERS Plan 2 membership includes full-time employees of a covered employer on or before July 1,2006, who meet at least one of the PSERS eligibility criteria, and elected membership during the electionperiod of July 1, 2006 to September 30, 2006; and those full-time employees, hired on or after July 1,2006 by a covered employer, that meet at least one of the PSERS eligibility criteria.A covered employer is one that participates in PSERS. Covered employers include the following: state ofWashington agencies: Department of Corrections, Department of Natural Resources, Parks andRecreation Commission, Gambling Commission, Washington State Patrol, and Liquor Control Broad;Washington State counties; and Washington State cities except for Seattle, Tacoma and Spokane.To be eligible for PSERS, an employee must work on a full-time basis and have one of the following:Completed a certified criminal justice training course with authority to arrest, conduct criminalinvestigations, enforce the criminal laws of Washington and carry a firearm as part of the job.Primary responsibility to ensure the custody and security of incarcerated or probationaryindividuals. Limited authority to function as a Washington peace officer, as defined in RCW 10.93.020.Primary responsibility to supervise eligible members who meet the above criteria.PSERS defined benefit retirement benefits are financed from a combination of investment earnings andemployer and employee contributions. PSERS retirement benefit provisions are established in Chapter41.37 RCW and may be amended only by the State Legislature.PSERS Plan 2 members are vested after the completion of five years of eligible service. PSERS Plan 2members may retire at the age of 65 with five years of service, or at the age of 60 with at least 10 yearsof PSERS service credit, with an allowance of two percent of the average final compensation (AFC) peryear of service. The AFC is the monthly average of the member’s 60 consecutive highest-paid servicecredit months, excluding any severance pay such as lump-sum payments for deferred sick leave,vacation or annual leave. Plan 2 members who retire prior to the age of 60 receive reduced benefits. Ifretirement is at age 53 or older with at least 20 years of service, a three percent per year reduction foreach year between the age at retirement and age 60 applies. There is no cap on years of service credit;and a cost-of-living allowance is granted (based on the Consumer Price Index), capped at three percentannually.PSERS Plan 2 provides disability benefits. There is no minimum amount of service credit required foreligibility. Eligibility is based on the member being totally incapacitated for continued employment with aPSERS employer and leaving that employment as a result of the disability. The disability allowance istwo percent of the average final compensation (AFC) for each year of service. AFC is based on themember’s 60 consecutive highest creditable months of service. Service credit is the total years andmonths of service credit at the time the member separates from employment. Benefits are actuariallyreduced for each year that the member’s age is less than 60 (with ten or more service credit years inPSERS), or less than 65 (with fewer than ten service credit years).PSERS Plan 2 members can purchase service credit for military service that interrupts employment.Additionally, PSERS members who become totally incapacitated for continued employment while87