Plan 1, Plan 2 or Plan 3: what's the difference in Washington DRS?

A side-by-side look at the three plans in PERS, TRS and SERS, from the pension formula to the early retirement cuts and the Plan 3 investment account.

Rules checked October 18, 2026, against drs.wa.gov and the Revised Code of Washington

The three plans side by side

PERS (public employees) and TRS (teachers) have all three plans. SERS (classified school employees) has only Plans 2 and 3. The rules below are the same across PERS, TRS and SERS unless noted.

Sources: DRS: PERS Plan 1, DRS: TRS Plan 1, DRS: PERS Plan 2, DRS: PERS Plan 3, RCW 41.40.820.

Plan 1 numbers are for members still working in a covered job. A Plan 1 member who left public service before qualifying generally needs to be 65 with five years for a full pension.

Average final compensation: 2 years or 5

Average final compensation (AFC) is the pay figure the formula uses. Plan 1 uses your highest two years in a row. Plans 2 and 3 use your highest 60 months in a row (RCW 41.40.010). A shorter period usually means a higher AFC, because your last two years of pay are often your highest. In all plans, the months can come from any point in your career, as long as they are in a row.

Plan 1 has one more difference: the 2% formula stops growing at 60% of AFC. That is 30 years of service. Plans 2 and 3 have no such cap.

Early retirement: three different cuts

Plan 1 members still on the job can retire with a full pension at the ages in the table above, so they don't face these cuts. Plans 2 and 3 count anything before 65 as early retirement. Plan 2 needs at least 20 years to retire early, and Plan 3 needs 10. Which cut you get depends on two things: whether you have 30 years of service, and when you were hired.

With 30 or more years of service:

With fewer than 30 years (DRS sample factors):

Multiply the full pension by the factor. A factor of 0.80 means you keep 80%. Source: DRS: PERS Plan 2.

• Under 30 years: the actuarial factor. The pension is reduced to make up for paying it longer (RCW 41.40.630). DRS says the sample factors above can change with the State Actuary's figures, and it publishes the current tables by month on its administrative factors page. For example, its 2027 table keeps 0.9069 of the pension one year early and 0.4018 ten years early (DRS: 2027 factors).
• 30 years, hired before May 1, 2013: the 2008 early retirement factor (ERF). The cut is 20% at 55 and shrinks 3 points a year to 2% at 61. At 62 or older there is no cut. The law once offered a flat 3% per year cut instead. Members who retired on or after September 1, 2008 under that older rule had their pensions recalculated under the 2008 schedule starting January 1, 2024, so the 2008 schedule is the one that applies today.
• 30 years, hired on or after May 1, 2013: the 5% ERF. The cut is 5% for each year before 65, prorated by month. There is no full pension at 62 for this group.

These cuts are permanent. They don't go away when you reach 65.

Cost-of-living raises

• Plans 2 and 3: an automatic cost-of-living adjustment (COLA) every July 1 after you've been retired a full year. It follows Seattle-area consumer prices, up to 3% a year, and extra inflation is banked for later years. In July 2026, members retired before 2025 got the full 3% (DRS: COLA). In Plan 3, the COLA applies to the pension, not the investment account.
• Plan 1: no automatic COLA. At retirement you can choose the optional COLA, which lowers your starting pension in exchange for yearly raises of up to 3%, and never lets the pension fall below where it started. The legislature has also passed one-time raises, such as the 2026 increase of 3% capped at $110 a month for eligible PERS 1 and TRS 1 retirees (DRS: 2026 Plan 1 increase).

How Plan 3's investment account works

In Plan 3, your employer funds the 1% pension. Everything you contribute goes into your own investment account. You choose a rate when you start, and it stays set until you change to a different Plan 3 employer (DRS: PERS Plan 3).

Your investment choices:

• Self-Directed, One-Step: an age-based Retirement Strategy Fund. This is the default if you don't choose.
• Self-Directed, Build and Monitor: you pick your own mix from the funds offered.
• WSIB Total Allocation Portfolio (TAP): one fund managed by the Washington State Investment Board, valued monthly.

DRS lists fund fees from 0.16% to 0.22% for the Retirement Strategy Funds and 0.5162% for TAP, plus small administrative fees (as of July 2025). The account has no vesting period: it is yours from day one. When you leave, you can take one-time or regular payments, roll it over, buy an annuity, or leave it invested. Withdrawals before 59 and a half may face an extra 10% federal tax unless rolled over.

Plan 3 also has a feature Plan 2 lacks: if you leave with at least 20 years and wait to start the pension, it grows by 0.25% a month, compounded, until it starts (RCW 41.40.790).

The 90-day choice for new hires

New PERS, TRS and SERS employees have 90 days to choose Plan 2 or Plan 3. If you don't choose, you are placed in Plan 2. The choice is permanent, and Plan 2 members cannot move to Plan 3 later (DRS: Plan Choice Guide). The default changed from Plan 3 to Plan 2 in 2020 (DRS: plans).

The same career in each plan

Which plan comes out ahead depends on how the Plan 3 account grows and how you use it. DRS's estimate and your account statement show the real numbers.

What to do next

1. Confirm your plan and hire date. Your DRS account shows your plan, service credit and membership date, which decides your early retirement cut.
2. Get an official estimate. DRS gives estimates within 12 months of retiring (DRS: PERS Plan 2).
3. Check the ages that matter for you. See every retirement age, with examples.

General information, not advice. We aren't part of the Washington State Department of Retirement Systems. Ask DRS for an official estimate before you choose a date or plan.