EMPLOYEES RETIREMENT ‑- SERVICE CREDIT AND RETIREMENT RIGHTS ‑- PARTICIPATION IN MORE THAN ONE RETIREMENT SYSTEM BY CHANGE OF EMPLOYMENT

EMPLOYEES RETIREMENT ‑- SERVICE CREDIT AND RETIREMENT RIGHTS ‑- PARTICIPATION IN MORE THAN ONE RETIREMENT SYSTEM BY CHANGE OF EMPLOYMENT.

The law in question must be liberally construed toward the end that service credit and retirement rights of officers and employees who change employment from one public agency within the state to another and thereby participate in more than one retirement system, shall be preserved and accumulated.

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                                                                   April 13, 1951

State Employees' Retirement System
215 East Fifth Avenue
Olympia, Washington                                                                                              Cite as:  AGO 51-53 No. 17

Attention:  Mr. Samuel P. Totten, Executive Secretary

Gentlemen:

            We have your letter of March 20, 1951, in which you ask us to provide an opinion as to the intent and scope of the provisions of House Bill 427, (now chapter 98, Laws of 1951 ‑ effective June 7, 1951).

            The conclusion reached may be summarized as follows:

            The law in question must be liberally construed toward the end that service credit and retirement rights of officers and employees who change employment from one public agency within the state to another and thereby participate in more than one retirement system, shall be preserved and accumulated.

                                                                     ANALYSIS

            Chapter 98, Laws of 1951, enacted into law by the signature of the Governor, will become operative in June, 1951.  This legislation establishes a general policy to be followed by all retirement systems covering public employees within the State of Washington.

             [[Orig. Op. Page 2]]

            In approaching this problem we must of necessity give full effect to the legislative intent as embodied in the statutes in question.  In our search for this intent, the first section of the law must serve as our guide.  In this section we find a direct statement to the effect that

            "It is the intent of this act to allow the preservation, accumulation and retention of service credits towards eventual retirement by officers and employees who by reason of employment by more than one public agency in the state may participate in one or more retirement or pension systems."

            This seems a very clear statement to the effect that the paramount and controlling purpose must be benefit to the employee.  The sovereignty of each of the retirement systems involved is maintained by the second sentence of the section in question which reads:

            "It is also intended that sovereignty of the various retirement and pension systems operating in the state shall not be intruded upon and the eventual granting of pensions and/or annuities to such officers and employees shall remain under the control of and be controlled by act of the governing bodies of such retirement or pension systems except as specifically set forth herein."

            It must necessarily be, however, that where the welfare or benefit of the employee is at stake the retirement systems at interest must make every attempt to evolve an agreement which will serve the best interests of the member and in order to accomplish this we find that section 3 of the Act provides as follows:

            "It is hereby specifically provided that the governing bodies referred to in Section 2 hereof may allow persons to recover or regain credit lost or lapsed by reason of previous lack of authority to proceed as intended in this act, such recovery to be allowed under rules separately established by the aforementioned governing bodies."

             [[Orig. Op. Page 3]]

            Further, it should be noted that section 5 does not preclude the receipt of more than one pension except to the extent that where more than one pension is actually earned, the amount in question shall not exceed the benefits procurable from the last system participated in.

            It is quite obvious that the statute in question may in certain cases have a tendency to increase costs.  We can only presume that this is a fact of which the legislature was aware, hence, the intent in question must be given consideration even where to do so would work an apparent increase of cost to any one system or even in some cases, a disparity of costs as between systems.

            In dealing with any subject as broad as that covered by chapter 98, Laws of 1951, the ultimate good to be achieved must prevail over accidental costs or disparities.  The answer to any objection raised on the grounds of cost alone is that the overall purpose is to achieve efficiency in the operation of public enterprises by securing and retaining the best type of personnel available and by maintaining a standard of compensation and security which will lead to continuity in employment and a satisfactory attitude among employees.

            In answer to the objection that a person under the law in question might attain pension benefits at an early age and secure other public employment allowing compensation and additional benefits, is that retirement plans properly conceived are not merely welfare measures.  They are, as has been pointed out by our courts, a form of deferred compensation and are in no sense a gift.  Further, retirement benefits are based on an implied contract between the employer and employee and when the employee has completed the terms of the contract by serving to the required age or for the necessary period of years, his contract is completed and he is entitled to the benefits involved.  The accidental fact that a retirement system may provide for benefits at such an early age that the member is able to enter other employment and perform efficiently for a further period of years, is no reason why additional benefits cannot be accumulated.  It is quite obvious that employment conditions vary in different branches of government and it may well be to the advantage of a certain type of operation to retire an employee at a young age while in others, older employees may serve with efficiency for longer periods of time.  It would seem, therefore, that in view of the intent expressed in the statute and a realization of the true purpose of retirement plans, there can be no valid objection if a member chooses to retire and collect his benefits, then enter other public service where further benefits can be secured.

             [[Orig. Op. Page 4]]

            The Retirement Board must realize that the subject in question is vital and has been recognized not alone by private industry, but by the Federal Government.  There are perhaps twenty retirement systems operating in this state with which members will be exchanged and between which agreements will have to be brought into existence over the next few years to protect the rights of such members.  Naturally, the terms and conditions of these agreements will vary as between the different organizations involved, however, the basic principle of liberal construction and benefit to the employee must be adhered to in order to give the legislation in question its proper construction.

Very truly yours,

SMITH TROY
Attorney General