PARTICIPATION BY PERSONS ELIGIBLE FOR OTHER PENSIONS

PENSIONS ‑- RETIREMENT ‑- PUBLIC EMPLOYEES RETIREMENT SYSTEM ‑- PARTICIPATION BY PERSONS ELIGIBLE FOR OTHER PENSIONS

If an individual becomes a member of PERS subsequent to the effective date of chapter 105, Laws of 1975-76, 2nd Ex. Sess., and at the time he becomes a member is not covered by either subsections (1) or (2) of § 1 of that act, the fact that he may later attain a status encompassed by subsections (1) and (2) does not mean that from the date he acquires such a status he can no longer acquire service credits in the public employees' retirement system.

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                                                               November 16, 1976

Honorable Ronald L. Myles
Director, Department of
Retirement Systems
1025 East Union
Olympia, Washington 98504                                                                                                               Cite as:  AGLO 1976 No. 69

Dear Sir:

            By recent letter you have requested the opinion of this office on a question pertaining to the proper application of § 1, chapter 105, Laws of 1975-76, 2nd Ex. Sess. which relates to the eligibility of certain persons to obtain membership in, or related rights under, the various public retirement systems in our state including the Public Employees' Retirement System (PERS).  As set forth in your letter the question which you have asked reads as follows:

            ". . .  If an individual becomes a member of the Public Employees' Retirement System subsequent to the effective date of chapter 105, Laws of 1975-76, 2nd ex.sess., and at the time he becomes a member is not covered by either subsections (1) or (2) of section 1 of that act, does the fact that he may later attain a status encompassed by subsections (1) or (2) mean that from the date he acquires such a status he can no longer acquire service credits in the Public Employees' Retirement System?"

            We answer this question in the negative for the reasons set forth in our analysis.

                                                                     ANALYSIS

            Although you have not identified any particular factual situation in posing the foregoing question we believe that it would be helpful, for illustrative purposes at the outset, to describe, hypothetically, the kind of case which could give rise to the problem with which you are concerned.  Accordingly, let us assume the case of an individual who is 48 years of age and has recently separated from employment as a municipal law enforcement officer after 16 years of such service.  Since March 1, 1970, he has been a member of the law enforcement officers' and fire fighters' retirement system (LEOFF) in accordance with RCW 41.26.040.  At  [[Orig. Op. Page 2]] the time of his separation from service he determined not to withdraw his contributions to the LEOFF retirement fund but, instead, he elected to remain a vested member of that system in accordance with RCW 41.26.090(2).  Because of that decision, although he is notnow eligible to receive a retirement allowance from the LEOFF system, he will become eligible to do so ". . . on the first day following his attainment of age fifty. . . ."  RCW 41.26.090(2).  In the meantime, however, he has become employed in a full time capacity by a state agency1/ in an eligible position within the meaning of RCW 41.40.010(23) and RCW 41.40.120.  Accordingly, under the terms of the latter statute he is required, in the absence of any other law to the contrary, to become a member of PERS.

            Bearing this illustrative factual situation in mind we next turn to the recent legislative enactment which has given rise to your question.  Section 1, chapter 105, Laws of 1975-76, 2nd Ex. Sess., which became effective on March 25, 1976, provides as follows with regard to members of PERS and other designated public retirement systems, including LEOFF:2/

            "Notwithstanding any other provision of law to the contrary, on and after the effective date of this 1976 amendatory act, any member or former member who

            "(1) receives a retirement allowance earned by said former member as deferred compensation from any public retirement system authorized by the general laws of this state, or

            "(2) is eligible to receive a retirement allowance from any public retirement system listed in section 5 of this act, but chooses not to apply, or

            "(3) is the beneficiary of a disability allowance from any public retirement system listed in section 5 of this act shall be estopped from becoming a member of or accruing any contractual rights whatsoever in any other public  [[Orig. Op. Page 3]] retirement system listed in section 5 of this act:  PROVIDED, That subsections (1) and (2) of this section shall not apply to persons who have accumulated less than fifteen years service credit in any such system."

            Your question, as we understand it, arises because this section not only purports to estop an individual from "becoming a member" of another public retirement system but also from "accruing any contractual rights whatsoever" in any such system if and when he is encompassed by the provisions of the new law.  Because an individual such as the hypothetical person we have described above was neither receiving nor eligible to receive a service retirement allowance from another pension system (in this case the LEOFF system) at the time he became a state employee in a position covered by PERS, § 1, chapter 105, supra, does not bar him from thereby becoming a member of PERS in accordance with the mandate of RCW 40.41.120, supra.  But what is to happen to him when, two years later, upon attaining age 50, he begins to receive (or at least is eligible to receive) pension benefits from LEOFF as a vested member of that system under RCW 41.26.090, supra?  The following three possible answers to that question would appear to exist:

            (1) The individual involved will be required to continue participating in PERS ‑ meaning that he will be required to keep making employee contributions under RCW 41.40.330 ‑ but will not be entitled to receive any further service credit for an eventual PERS retirement allowance.

            (2) He will, instead, then cease to be a member of PERS, even though he is still employed in an eligible position, and will thereafter neither make any further employee's contributions nor receive any further service credit.

            (3) Notwithstanding his simultaneous receipt of (or eligibility for) a LEOFF service retirement allowance he will continue to participate fully in PERS both by making further employee's contributions and by receiving further service credit.

            Of these three alternatives it seems clear to us, at the outset, that the first one is clearly unacceptable.  It is a well-established principle of statutory construction that where a law is open to two constructions, one of which  [[Orig. Op. Page 4]] will render it constitutional and the other unconstitutional or open to grave doubt in this respect, the former construction and not the latter is to be adopted.  Soundview Pulp Co. v. Taylor, 21 Wn.2d 261, 150 P.2d 839 (1944), and cases cited therein.  Yet it can hardly be doubted that a law which would require a public employee to make monetary contributions to a pension fund while at the same time depriving him of any pension service credits in return would be highly suspect in terms of constitutional due process standards.3/   This leaves us, then, with alternatives (2) and (3).

            In considering alternative (2) it is first to be noted that at least five years of service credit are needed in order to qualify for a service retirement allowance from PERS under RCW 41.40.180.  Therefore, the result of this alternative would also be of questionable constitutionality under due process principles.  This would be so because it would require one (such as our hypothetical individual) having less than five years to go until attaining eligibility for a vested pension under his prior pension system to participate in (and contribute to) PERS until attaining such eligibility without acquiring in exchange any significant pension right other than (at most) that of a return of his own contributions ‑ and even this result would require a reading of RCW 41.40.260,supra, as having been impliedly amended for the reason that, under the express terms of that statute, a member only becomes entitled to a refund of contributions upon ceasing to be an employee; and, in a case such as that which we have here hypothecated, that would not have occurred.

            In addition, alternative (2) would also require a finding of two other implied amendments to the provisions of the PERS law, chapter 41.40 RCW.  Clearly, § 1 of chapter 105,supra, has impliedly amended the provisions of RCW 41.40.120 which relate to mandatory initial membership in PERS for those covered by the new law.  However, in order to terminate the membership status of a person who has already become a member one would also have to find an implied amendment not only to RCW 41.40.260,supra, but to RCW 41.40.150 (termination of membership) and RCW 41.40.010(9) (creditable service) as well.  Yet it is also a well established rule that implied amendments are not favored and cannot be found unless no other construction is available.  Misterek v. Washington Mineral Products, Inc., 85 Wn.2d 166, 531 P.2d 805 (1975).

             [[Orig. Op. Page 5]]

            Other rules of statutory construction to be considered include one which says that statutes relating to the same subject matter should be construed together so as to produce a harmonious result.  White v. City of North Yakima, 87 Wash. 191, 151 Pac. 645 (1915); Kruse v. Collins, 171 Wash. 200, 17 P.2d 854 (1933).  Also, statutory construction should avoid strained or absurd consequences.  Krystad v. Lau, 65 Wn.2d 827, 400 P.2d 72 (1965); Alderwood Water District v. Pope and Talbot, Inc., 62 Wn.2d 319, 382 P.2d 639 (1963).  Likewise, it is well established that where there is an ambiguity involving a pension statute any doubt is to be resolved in favor of the beneficiaries of that statute.  Bowen v. Statewide City Employees Retirement System, 72 Wn.2d 397, 433 P.2d 105 (1967).  And finally, it is the rule that statutory exceptions are generally to be strictly construed to the end that all doubts be resolved in favor of the general provision of a law rather than the exception.

            Giving effect to these rules and noting, as well, the problems with alternative (2), it therefore appears to us (by process of elimination if nothing else) that alternative (3) above, represents the approach which would most likely be upheld by the courts if the question which you have asked were to be litigated.  In the absence of § 1, chapter 105, supra, there clearly would be no legal barrier to the receipt, by a public employee, of a retirement allowance from one pension system (based solely upon services rendered as a member of that system) while he is, at the same time, acquiring rights to an additional pension under another system (likewise based solely upon subsequent services as an employee covered by that system).  Conversely this new law, by its express terms, clearly does establish such a barrier in the case of those retirees who are already receiving, or are eligible to receive, a pension from another public retirement system at the time they take a new job which is covered by a different system.  But it obviously does not (or otherwise we presumably would not have received your question at all) so clearly encompass an individual who, though he may become so later, is not yet eligible for a pension from his prior system when his eligibility for membership in a second system is (like the hypothetical individual above described) first to be determined.  In fact, as above pointed out, the only basis for such an extension of the impact of the new law is its inclusion of the added phrase ". . . shall be estopped from . . . accruing any contractual rights whatsoever."  Yet it would appear to us that there is a quite plausible alternative explanation of even that language.