Pension raid is happening right now in Washington

Retired Washington firefighters and police officers are suing the state to stop one of the most dangerous pension raids in American history.

They should win, and the courts should not have to work hard to get there.

House Bill 2034, passed during the 2026 legislative session, strips billions of dollars out of the Law Enforcement Officers’ and Fire Fighters’ Plan 1 (LEOFF 1) pension fund and redirects that money to unrelated state spending. The state calls the maneuver a “termination and restatement,” as if the phrase itself changes what the bill does.

It does not.

According to the House bill report, the legislation terminates LEOFF 1, creates a “restated LEOFF 1,” and transfers enough assets to fund the new plan at 110 percent of liabilities. Everything above that line would be declared a surplus, available for the state to spend on general obligations as it sees fit.

LEOFF 1 is not being terminated in any meaningful sense. Washington is not buying annuities, closing the trust, and ending the state’s obligation, as a private employer might do when terminating a pension plan. The state would continue owing the same pension promise through a state-run retirement system.

States have done plenty of irresponsible things with pensions. They have skipped contributions, underfunded plans, expanded benefits during strong markets, stretched out debt payments, and used optimistic investment assumptions to make annual costs look lower than they really are. Washington did its own version of that in 2025, when lawmakers raised the assumed rate of return for several state pension plans. That move made the budget look better by assuming higher investment returns in the future, thereby lowering the amount the state is required to pay into the pension plans.

HB 2034 goes well beyond the usual pension games. It reaches into a pension trust and removes assets for non-pension purposes.

That distinction matters because public pension law is built around a basic rule: pension assets exist for, and are held for the exclusive benefit of, their beneficiaries.

Pew found that every state has adopted the exclusive benefit rule in statute, constitution, or regulation, requiring fiduciaries to act for the exclusive purpose of providing benefits to beneficiaries. The beneficiaries are the retired workers, surviving spouses and others entitled to benefits. The state can be the sponsor, employer, funder, guarantor and stakeholder. Those roles matter, but none of them make the state a beneficiary.

This is why the precedent is so dangerous. The problem is not merely that LEOFF 1 is overfunded, although that is why lawmakers targeted it. The problem is the legal theory behind the raid. If the Legislature can take pension assets because it believes the remaining money is enough to keep checks going out, then every pension fund in the country becomes vulnerable.

Once courts accept the idea that pension assets may be redirected as long as retirees are expected to keep receiving monthly checks, the statutory protections around pension funds become moot. A plan would not need to be massively overfunded to become a target. Lawmakers could argue a smaller cushion is sufficient, that future contributions can make up the difference, that the state guarantee protects retirees, or that the budget emergency justifies taking money now.

If Washington courts uphold this law, the entire dispute will shift from whether pension assets are protected to how much money politicians think they can safely remove.

Instead of simply admitting it is taking the money, the state says it is terminating the plan, recreating it, and then taking what is left over. Courts are not required to pretend the label controls the substance.

A pension plan has not truly ended if the same state-run system continues paying the same benefits while the state keeps the obligation and removes the surplus assets.

— Ryan Frost is the budget and tax policy director at the Washington Policy Center.