RPEC v. Charles

In RPEC v. Charles, 148 Wn.2d 602, 62 P.3d 470 (Wash. 2003), the Washington Supreme Court held, as we do in the present case, that retirees and State employees did "have vested contractual rights to the systematic funding of the retirement system to maintain actuarial soundness." RPEC, 62 P.3d at 483. However, the Court also held that "there is no indication that the lowered employer contribution rates render the system actuarially unsound." Id. at 484. Consequently, the Court held that the "appellants have not met their burden of proof that a question of fact exists as to whether the system is actuarially unsound, i.e., the modifications made in EHB 2487 have not been shown to affect Retirees' and Employees' vested pension right." Id. Importantly, however, the State Actuary in RPEC had determined that the lowered employer contribution rates would not render the system actuarially unsound: "The stated reason for reducing the rates was that the 1998 valuation from the State Actuary determined that the funding goals expressed in former RCW 41.45.010 (1998) could still be met using lower contribution rates, primarily because of investment returns on the pension funds that were higher than anticipated." Id. at 476.