November Pension Report

Historical Differences Between LEOFF 1 and LEOFF 2 Disability Retirements.

The LEOFF Retirement System in Washington State comprises two distinct plans: LEOFF 1 and LEOFF 2. Each plan has specific criteria for disability retirement, reflecting differences in eligibility standards and benefits. Understanding these distinctions is crucial for members navigating the disability retirement process and to appreciate the historical difference between the LEOFF 1 standard and the LEOFF 2 standard.  It is interesting to compare these two standards to understand how much more difficult it is for a LEOFF 2 member to qualify for a disability retirement than it was historically for a LEOFF 1 member.

Historical LEOFF 1 Disability Retirement Standards

Established in 1970, LEOFF 1 provided retirement benefits for law enforcement officers and firefighters. Under this plan, a member was eligible for disability retirement if they were unable to perform their duties with average efficiency due to physical or mental disability. RCW 41.26.120, outlines the process that was used:

1. Application and Examination: A member who believed they were disabled had to apply for disability retirement and undergo an examination by a medical authority appointed by the local Disability Board.

2. Board Determination: If the examination confirmed that the member was physically or mentally disabled from performing their own specific duties, the Disability Board granted a disability retirement allowance (either a duty related disability, which qualified the member for non-taxable pension benefits, or a non-duty related disability).

3. Allowance Calculation: The basic retirement allowance is 50% of the member's final average salary, with potential additional allowances for eligible children, not exceeding 60% of the final average salary.

The standard for LEOFF 1 focused on the member's ability to perform their specific duties with average efficiency, considering the physical and mental demands of their role.  This is a comparatively low bar to qualify as a disability under LEOFF 1 vs. LEOFF 2.

LEOFF 2 Disability Retirement Standards

LEOFF 2, established in 1977, serves members hired after October 1, 1977. The criteria for disability retirement under this plan are more stringent. According to RCW 41.26.470, a member is eligible for disability retirement if they are "totally incapacitated for continued employment by an employer" (i.e. not just average efficiency as was true for LEOFF 1 disabilities). Key aspects include:

1. Total Incapacity: The member must be unable to perform any duties for their employer, not just their specific role, unlike LEOFF 1 who only had to be unable to perform the duties of their actual position at the time of application for a disability retirement.

2. Determination by the Director: The Department of Retirement Systems (DRS) evaluates the disability application (as opposed to a local Disability Board for LEOFF 1), considering medical records and findings from the Department of Labor & Industries to determine if the disability was sustained in the course of employment (at which time tax exempt benefits would come into play).

3. Benefit Calculation: The disability retirement benefit is calculated using the standard retirement formula but is actuarially reduced based on the difference between the member's age at retirement and the plan's normal retirement age of 53. This benefit calculation is a bit different for duty-related disabilities as provided under RCW 41.26.470(7) (which can be more generous).

The emphasis in LEOFF 2 is on total incapacity for any employment with the employer, reflecting a more restrictive standard compared to LEOFF 1.

Rationale Behind Different Standards

The differing standards between LEOFF 1 and LEOFF 2 stem from legislative intent and evolving perspectives on disability retirement. LEOFF 1 was designed with a focus on compensating members who could no longer perform their specific duties with average efficiency, acknowledging the physical demands of law enforcement and firefighting roles.

In contrast, LEOFF 2 introduced a more stringent standard, requiring total incapacity for any employment with the employer. This change reflects a shift towards ensuring that disability retirement benefits are reserved for those unable to perform any work for their employer, potentially as a measure to control costs and maintain the financial sustainability of the retirement system.

Examples of Qualification

LEOFF Example:

A firefighter under LEOFF 1 suffers a back injury that prevents him or her from performing his or her specific firefighting duties with average efficiency. They apply for disability retirement, and the local Disability Board's medical examination confirms the disability. Since the firefighter cannot perform their specific duties effectively, they are granted a disability retirement allowance.

LEOFF 2 Example:

A firefighter under LEOFF 2 experiences a severe injury that renders him or her unable to perform any duties for their department, including administrative roles. They apply for disability retirement, and the DRS determines that the officer is totally incapacitated for continued employment by the employer. Consequently, the firefighter is eligible for a disability retirement allowance, subject to actuarial reduction based on their age at retirement (except duty-related benefits are controlled by RCW 41.26.470(7)).

Conclusion

The standards for disability retirement under LEOFF 1 and LEOFF 2 differ significantly, reflecting changes in legislative intent and policy over time. LEOFF 1's focus on the inability to perform specific duties with average efficiency contrasts with LEOFF 2's requirement of total incapacity for any employment with the employer. Understanding these distinctions is essential for members seeking disability retirement, as the criteria and benefits vary between the two plans.