Luke Maselink, senior actuary with the Office of State Actuary (OSA), told the Select Committee on Pension Policy that Washington’s retirement systems are in strong condition on current measurements, but that ongoing risk monitoring is essential. “This is a report that’s required by statute every 2 years,” Maselink said, opening the informational presentation.

The OSA presented two families of metrics: affordability (contribution-rate levels and the share of the state general fund devoted to pensions) and solvency (program funded ratios). On the solvency side, OSA reported that combined program funded ratios have steadily increased since 2016 and that the combined measurement for 2024 is roughly 100 percent. The office said most open plans (plans that still accept new members) have funded ratios above 95 percent. The three closed legacy plans—PERS 1, TERS 1 and LEOFF 1—were reported at roughly 87 percent, 91 percent and 160 percent, respectively, at the 2024 measurement, according to OSA slides.

Maselink said contribution rates have been decreasing for most employers, driven in part by a large investment return in fiscal 2021 (about 30 percent) that is being recognized gradually under the system’s smoothing method and therefore will influence metrics through 2028. He also said recent legislation reduced some employer funding for PERS 1 and TERS 1 and placed a multi-year pause on other contributions, which lowers near-term contribution rates.

The actuary presented forward projections that show modest declines or plateaus in required contribution rates over the next several biennia under current law and assumptions, and projected that the combined funded ratio would rise above 100 percent into the early 2030s in OSA’s baseline scenario. However, Maselink emphasized the projections’ limits: they use a single scenario and “standard actuarial caveats apply.”

On risks, OSA stressed three: investment experience, policymaker decisions, and demographic/member behavior. As a stress test, OSA modeled a one-year market drop of minus 5 percent in 2026; under that scenario, the office said contribution rates would begin rising in the 2029–31 biennium as previously deferred losses are recognized. In a stochastic analysis simulating thousands of investment paths, OSA estimated a roughly 40–45 percent chance that an open plan’s funded ratio would fall below 90 percent at some point during a 10‑year window and a roughly 25–30 percent chance of dropping below 80 percent.

Maselink and other OSA staff recommended continuing the current practices that produced the recent improvements—reasonable long-term assumptions, adequate contribution rates, routine review of assumptions, and monitoring of investment and demographic experience.

The presentation was informational; no committee action was taken on the financial condition report itself. Committee members asked follow-up questions about deferred asset recognition, smoothing periods and the dollar magnitude of deferred gains; Maselink said the smoothing method is systematic, that the smoothing window varies with the size of deviations (up to eight years for large deviations) and that the office would follow up with dollar estimates requested by members.