State Board Supplemental Retirement Plan

The SBSRP is available only to those who were active participants in the SBRP on June 30, 2011. The Legislature eliminated this benefit to SBRP participants who were not active participants in the SBRP prior to July 1, 2011.

The SBRP functions as a “defined contribution” plan throughout a participant’s career, with the amounts the participant contributes (matched 100 percent by the Participating Employer) defined in the plan as 5 percent, 7.5 percent, and 10 percent, depending on age.

The SBRP contribution rates and the 100 percent employer match provide for excellent retirement savings rates, and make the SBRP a very attractive retirement plan when compared to higher education retirement plans in other states. Benefit at retirement is dependent upon accumulations (contributions and earnings) at retirement and the payout option selected.

By contrast, the SBSRP is a “defined benefit,” or formula-driven, lifetime income benefit. The Legislature set separate eligibility criteria for the SBSRP, as described in the “Eligibility Age and Service Requirements” section below.

This benefit was designed to act as a "floor" to ensure that participants achieve at least a basic level of retirement income based on their service. Historically, less than 5 percent of SBSRP retirees who qualify for a calculation actually receive a supplemental benefit — because their projected SBRP benefit is more than the “floor” or calculated minimal benefit.

The SBSRP Benefit is defined under Washington state law. Specific information about the benefit can also be found in the State Board Retirement Plan Document. SBSRP benefits are funded by the community and technical college system; no employee contributions are required.

The SBSRP calculation is complex and will be performed once for each qualifying retiree, and only at the effective date of retirement. This calculation requires the assistance of a professional actuary, and is based on both historical rates of return and the interest and mortality rates in effect at the time the participant retires. As a result, the State Board will not provide projected calculations. Once calculated, using the actual date of retirement, there are no future re-calculations.

The SBSRP benefit is based on the following:

• Eligibility: based on age and years of service.
• The definition and calculation of “Goal Income.”
• The definition and calculation of “Assumed Retirement Income.”
• A comparison of the Goal Income and the Assumed Retirement Income.

Note: The retiree’s actual SBRP 401(a) account balances, investment returns, or elected distribution options have no effect on the calculation of the SBSRP benefit. However, your actual SBRP contribution history is an important factor in the calculation. (See Service Factor section below.)

Any Supplemental Benefit amount due to a retiree is paid by the State Board regardless of, and in addition to, any SBRP benefit the retiree receives. Division of SBRP assets due to a divorce does not impact the SBSRP calculation or benefit because the benefit is based upon formulas, not on actual account balances.

To be eligible for the calculation of the SBSRP, you must meet one of the following minimum eligibility requirement categories at the time you retire under the SBRP:

Full Benefit Eligibility

• Age 65 or older, and
• 10 or more continuous years of service, or its equivalent, in the SBRP.

Reduced Benefit Eligibility

• At least age 62, and
• 10 or more continuous years of service, or its equivalent, in the SBRP.

Disability Retirement

• Meet special SBRP disability retirement provisions at any age.

After you retire, (assuming you have met one of the eligibility requirements described in the proceeding section) your employer’s benefits office will submit a request for a calculation along with years of service and salary information to the State Board. The benefit calculation, described below, compares the results of two hypothetical retirement incomes: "Goal Income" and "Assumed Retirement Income." Generally, the results are provided within three to four months after your retirement effective date. Payments, if any, would be retroactive to your date of retirement.

• Goal Income is based on salary and years of Plan participation.
• Assumed Retirement Income is the theoretical lifetime benefit based on your actual contributions and projected earnings using an investment allocation defined in state law.

If an eligible participant’s Goal Income is greater than his/her Assumed Retirement Income, a "SBSRP benefit" is paid. If the Goal Income is less than the Assumed Retirement Income, there is no SBSRP benefit. Both the Goal Income and the Assumed Retirement Income are calculated as required by law, and described below.

“Goal Income” is defined by state law and is calculated as follows:

Goal Income = (Average Monthly Compensation) X (Eligible Years of Participation) X (Service Factor)

Average Monthly Compensation is calculated using SBRP-eligible salary for the highest 24 consecutive months of service in a SBRP-eligible position.

Eligible Years of Participation includes all continuous years of participation in the SBRP up to a maximum of 25 years.

If you participated in both SBRP and a Department of Retirement Systems (DRS) plan (e.g., PERS or TRS) at another WA State Higher Education employer, your years of participation are included in the goal income calculation if:

• You transferred directly from the DRS plan to the SBRP and there was no break in service; and,
• Your DRS contributions were not withdrawn prior to retirement. (Note: Withdrawals include beginning a retirement income from a DRS plan prior to your SBRP retirement.)

If you were on an approved leave of absence(s) without pay, you can recover up to two years of service if:

• You paid both the employer and employee contributions on return from the authorized leave of absence, and
• You returned to employment with a Participating Employer immediately following the leave of absence for a period of not less than two years.

Service Factor as used in the calculation is 2 percent, unless at age 50 you elected to not increase your SBRP retirement plan contribution to the 10 percent rate. (Prior to 1998, the contribution increase to 10 percent was an option.) The service credit factor is reduced to 1.5 percent for any period of service earned after age 50 in which you did not participate at the 10 percent contribution rate.

"Assumed Retirement Income" is a theoretical amount of monthly income from an annuity that your actual retirement contributions would have generated if they had been allocated equally between a fixed dollar and a variable dollar annuity. (This assumed allocation split is required by state law.) Professional actuaries (not State Board employees) perform this calculation. As noted, the Assumed Retirement Income is a theoretical amount that is likely to be different from actual SPRP retirement income, due to investment and payout choices made by participants.

If applicable, DRS retirement plan income will be an offset from the calculated assumed income. Former DRS plan participants are required to provide the State Board official documentation of the DRS calculation of their DRS plan’s single life income option before the State Board can perform the SBSRP calculation. Failure to provide the timely authorization to the State Board to obtain this information will not allow the State Board to complete the calculation and eliminate the retiree’s eligibility for a Supplemental Benefit.

Participants are only eligible to receive a SBSRP monthly benefit payment if the calculated Goal Income is greater than the amount of the calculated Assumed Retirement Income. The payment is reduced by 0.5 percent times the number of full calendar months that benefit payments begin prior to age 65, unless the retirement was due to disability.

A sample calculation sheet is available for you to review.

If qualified to receive SBSRP income, Participants have four income options. These survivor options are listed in order of the highest to lowest initial payment amount. That is, each option listed below Single Life is reduced from the option listed above it.

• Single Life Supplemental Payment: The retiree receives the full payment as a lifetime income with payments stopping upon death. This provides the highest monthly payment to the retiree during his/her lifetime.
• One-Half (1/2) Supplemental Payment to Survivor: Retiree receives this reduced monthly payment for his/her lifetime. Upon death of the retiree, surviving spouse/beneficiary will receive one-half (½) of the original benefit amount. If spouse/beneficiary passes away before the retiree, the retiree continues to receive the original benefit amount for his/her lifetime with no additional reduction.
• Two-Thirds (2/3) Supplemental Payment to Survivor: The retiree receives a reduced monthly payment for his/her lifetime. At the death of either the retiree or death of the spouse/beneficiary, the monthly payment amount drops to two-thirds of the original benefit amount.
• Full Supplemental Payment to Survivor: The retiree receives a reduced monthly payment for his/her lifetime. Upon the death of either the retiree or spouse/beneficiary, the payments continue unchanged to the survivor for life.

The survivor options require that the designated beneficiary be the retiree's surviving spouse; or with the written consent of the spouse (or if no spouse) such other person who has an insurable interest in the retiree's life. If requested by the State Board, this insurable interest must be documented and filed by the retiree with the State Board Human Resource Office prior to the start of any supplemental income. Upon request, the retiree will receive income quotes from the State Board using the actual dates of birth for the participant and the survivor.

The SBSRP benefit is taxable income to the retiree or surviving spouse/partner.

If you are an active SBRP participant who is eligible to retire and eligible for a SBSRP calculation, but die prior to retirement, the Plan will perform a calculation as if you retired on the date of death. If the results are positive, and you had previously designated a beneficiary for the SBSRP, the State Board will calculate the survivor benefit for that individual. If you had not previously designated a beneficiary under the SBSRP, the State Board will assume a two-thirds (2/3) benefit to your spouse, or registered domestic partner, if any.

To be considered a retiree of the SBRP, participants must submit a completed “Intent to Retire” form through their employer and retire while an active participant in the SBRP. If you separate from a Participating Employer or otherwise lose eligibility and cease active participation in SBRP prior to achieving eligibility to retire, no SBSRP Benefit will be calculated or due.